Public Debt Sustainability and Budget Deficit Balancing Strategies in the Republic of Moldova

Abstract

In recent years, the Republic of Moldova has witnessed a series of economic challenges, accentuated by the tense political and social situation and the effects of the conflict in Ukraine on the economy. The acute problem of the budget deficit poses serious risks to the financial stability and economic progress of the nation. This research aims to explore the evolution of Moldova's budget deficit in the current context, highlighting the main causes and discussing potential improvement strategies. The research methodology includes analysis of official documents, statistical data and literature in the financial-economic field. The data show a budget deficit for 2022 of around 8.9 billion lei, representing 3.25% of GDP, rising to 15.6 billion lei or 5.2% of GDP in 2023. Moldova's peak inflation rate was 34.62% in October of the same year, while energy and raw material costs have risen considerably. The increase in the deficit is seen to be closely linked to the increase in state expenditure. The research highlights the urgency of implementing structural reforms and sound public finance management to ensure economic stability. In addition, it underlines the crucial role of international support and a move towards European integration in Moldova's economic recovery. CZU: 336.14:65.261.62(478); JEL: E62, H62