Moldova is currently in the midst of an energy crisis. Prices of energy have been rising and Moldova receives almost all of their energy supply in gas supplied by a Russian company, however only 67% of their gas needs are being satisfied. Because of this Moldova's parliament declared a state of emergency to secure more. Negotiation attempts with the Russian company have been made but were unsuccessful. Moldova even accused Moscow of intentionally undersupplying them but Russia denies doing anything intentionally. The state of emergency allows Moldova to look towards other European countries for their energy supply. The rising energy prices combined with the global supply chain issues and pandemic recovery has resulted in rising costs for most products in the economy. Food prices have been effected the most rising by 8.3% compared to the 6.7% inflation rate. This was unexpected by the National Bank of Moldova and they are scrambling to react appropriately. The inflationary pressures are on the demand side so they have raised their interest rate from 4.65% to 5.5% to discourage borrowing and encourage savings. They do not expect a quick recovery and fear the inflation rate may exceed 10%. Moldova relies heavily on foreign aid and are again looking for outside assistance to stabilize them through this crisis.
https://www.euronews.com/2021/10/22/europe-s-energy-crisis-moldova-declares-state-of-emergency-over-gas-prices
3 comments:
Gazprom will suspend gas exports to Moldova if it does not get paid for previous supplies. Moldova owes Gazprom $709 million for previous supplies. Moldova's gas contract with Gazprom expired at the end of September. Both sides have failed to agree on a new price since then. Hopefully, Moldova will not face more increases in the inflation rate. In my opinion, Moldova has to sign a contract with Russia, since they have one of the best prices on the market.
It was very interesting to learn about this crisis in Moldova and how the country is being impacted more than others due to its heavy reliance on other countries. It would be very interesting to find out why their food prices are so much higher compared to the inflation rate. The country's decision to raise its interest rates in order to encourage savings is also a smart one.
Many of the current articles being presented for this blog period are focusing on the supply chain issues and how they have very quickly become significant. As Salman said, it is interesting to see how dependent some countries are on outside aid and importing other country's supplies. In global economics, one aspect of a country that struggles with poverty is those who have poor (bad) neighbors and are landlocked. Moldova is landlocked and the closest water access is the Black Sea, which I would assume does not allow for easy boat transportation (if any) due to the excessive salt concentration, however, I could be wrong. Hopefully all the supply chain issues begin to level out as prices continue to skyrocket across the world.
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