Moldovan govt intends to reduce budget deficit to below 5% of GDP by 2027

CHISINAU. Nov 6 (Interfax) - The Moldovan government plans to reduce the budget deficit next year to below 5% of GDP from 6% of GDP projected this year, Prime Minister Vasile Tofan said.

"This year's budget deficit is 6% of GDP [23.07 billion lei] following adjustments. The country will go bankrupt if we maintain the deficit at 6% of GDP. We aim to bring the deficit down to at least below 5% of GDP next year. It should fall below 4% of GDP the following year," Tofan said on the country's TV8 channel.

Tofan said that Moldova's nominal GDP should reach 430 billion lei in 2027 [with 385 billion lei expected in 2026].

"Our GDP for next year is 430 billion lei. As you can see, each percentage point of GDP represents approximately 4.3 billion lei," Tofan said. Consequently, the authorities estimate the budget deficit for next year at 21.5 billion lei.

Tofan said that government spending is set to reduce next year, though the cuts will not be drastic. "Moldova is not in a state of clinical death, not even close," he said.

As reported, the government in September initiated an increase in Moldova's 2026 state budget deficit by 2.17 billion lei, or 10.4%, to 23.07 billion lei [$1.33 billion at the current exchange rate]. This budget adjustment follows a downward revision in Moldova's projected GDP growth for this year from the 2.4% originally used for budget calculations to 1.8%.

Furthermore, it has been reported that the authorities plan to tighten tax policy in 2027, with an anticipated positive budgetary impact of approximately 5.1 billion lei, nearly $300 million. Key tax-policy changes include narrowing the scope of preferential VAT rates and significantly increasing excise duties.

The Moldovan authorities for several years have been engaged in a complex dialogue with the International Monetary Fund, which has pointed to their overly loose fiscal policy. This summer, the government reached an agreement at the expert level with the IMF on a three-year non-financial Policy Coordination Instrument (PCI). The program's key objectives include reducing the budget deficit to 3.5% of GDP by 2029, supporting domestic investment, broadening the VAT base, and reforming income tax.

The government's proposal to raise certain tax rates sparked intense public debate and sharp criticism from the business community. Against this backdrop, Moldova's then-Prime Minister, Alexandru Munteanu, announced his resignation on July 3, just eight months after taking office.

The official exchange rate as on November 6, 2026, is 17.92 lei/$1.