The role of international financial institutions in financing investment within the Republic of Moldova

INTRODUCTION

Relevancy of investigated topic. When the Republic of Moldova became an independent state in 1991, it had to make a considerable effort in order to become a member of a number of international organizations. The pro¬cess of joining international organiza¬tions started and supported initially by a pragmatic zeal along with the necessity to strengthen the independence status of the Republic of Moldova turned, subsequently, into a less clear exercise, at least for a part of society. However, the process keeps going on in a natural way, even if there are several opinions within the society, es¬pecially among the opposition political parties or within the civil society, questioning the importance of the Republic of Moldova membership status in different international organizations from the perspective of pecuniary issues or the national in¬terest. Thus, the national interest, the relationship between benefits and costs would have to raise the problem of reevaluating the content of the Re¬public of Moldova international cooperation.

The Republic of Moldova is a member of more than 60 international organizations, 6 of them being financial institutions, a process that started upon proclamation of its independence.

For economic, technical, scientific and cultural development Moldova uses the experience and resources of the International Monetary Fund (IMF), the World Bank, UNDP, the International Bank for Reconstruction and Development (IBRD), World Health Organization (WHO), United Nations Educational, Scientific and Cultural Organization (UNESCO), other UN organizations and its specialized agencies. In this respect all the efforts of the Republic of Moldova are channeled to use the UN opportunities as well as its specialized institutions for financial and advisory support which are organized within the country, the economic and cultural development and international cooperation in this field.

The purpose of this work is to discover the role of International Financial Institutions as major investors in Moldova and in other developing countries, as well as analyzing the main barriers the IFIs meet and problems they face in increasing the volume of funding to Moldova. This paper work describes several risks, especially on country level, the reduction of which could lead to better investment environment and attractiveness of the state. Funding from these institutions can help boost activity and increase the role and influence of the Republic of Moldova in the world.

The research paper’s objectives are the following:

- Presentation of the operating concepts of IFI;

- Distinguishing of main objectives of IFI;

- Identifying the IFI’s ways of financing the investments;

- Figuring out the IFI’s role of investors in developing world;

- Presentation of importance and positive sides of financing investments by IFI in Republic of Moldova.

- Distinguishing the most prominent investments done by IFIs in Moldova

- Analyzing the problems and solutions to increase financing from major donors.

To reflect the proposed objectives, the research project structure is determined as follows: introduction, 3 chapters, conclusions and recommendations, bibliography and appendixes.

The 1st chapter “Theoretical approaches related to international financial institutions as investors” determines the concept and types of international financial institutions, as well as the models of investment projects financed by them.

The 2nd chapter “International and national experience regarding the role of international financial institutions in financing investments” describes the relevant importance of financial, technical and advisory support from international financial institutions in the Republic of Moldova in comparison with other developing countries.

The 3rd chapter “Investments to the Republic of Moldova made by the financing from the IFIs and prospects for their expanding” includes the key IFI’s investments in the Republic of Moldova and the scope they have in developing the national economy, as well as problems and prospects for expanding of financing received by the state from external financing.

As methodological and informational base for the research served works of national and international experts, different studies and discussion papers of the international financial institutions, as well as publications, projects and reports related to the subject.