Assessment of the Degree of Readiness of the Republic of Moldova for EU Accession through the Lens of the Maastricht Criteria

Abstract

This study analyzes the prospects of EU accession of Republic of Moldova through the lens nominal convergence, also known as Maastricht criteria. Four indicators were analyzed and compared to EU benchmark: price stability, the sustainability of public finance, long-term interest rates and exchange rate stability. The results indicate the economic performance of Republic of Moldova at current state regarding the requirements in adopting the euro and highlight challenges faced by regional countries that are distinctive for emerging economies, such as catching-up effect and structural economic differences between EU member countries and countries on their way to accession. Generally, none of the Maastricht criteria are currently fully met, considering higher than required inflation rate and long-term interest rates, lack of alignment with the Exchange Rate Mechanism II (ERM II), and a high budget deficit. While analysis of experience of regional countries highlights diverse outcomes and time horizons for euro adoption, meeting nominal convergence criteria for Republic of Moldova is supposed to be possible only after achieving EU membership, following years of external assistance and structural economic transitions toward EU standards. UDC: 338.1(478):061.1EU; JEL: F15, E62, P27