|                                                                                                                                                             |  | EBRD IMPLEMENTS MOLDOVA STRATEGY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
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|**BISNISHome PageSearchBISNISEmbassyReportsCountryReportsIndustryReportsPublicationsSourcesof FinanceLeadsand EventsExchangeRatesState ExportsOtherSources** |  | by Derek NowekAugust 1997Wedged between Romania and Ukraine, Moldova is making slow but consistent progress toward
a market economy, and the European Bank for Reconstruction and Development (EBRD) is
playing a major role in promoting this transition.  At the end of April 1997, EBRD commitments
in Moldova totaled $157.5 million in support of the private banking sector, infrastructure projects,
agribusiness, and light industry.  American companies interested in Moldova should keep the
EBRD's   programs in mind when preparing to finance projects in the country's transportation,
energy, telecommunications, and other sectors.The  EBRD's strategy for Moldova is to expand the bank's role in technical cooperation and
investment project financing in the country.  It has provided more than $30 million dedicated to
modernizing Moldovan wineries and construction of a bottle-making plant.   The bank is also
providing intensive training to selected Moldovan banks in risk analysis and other techniques to
increase competition in the country's banking system and ensure private sector access to the
lending market.Micro-Enterprise Loans
In September 1996, the EBRD, in cooperation with the Swiss and American governments,
established the Swiss-American Micro-Enterprise Program to give Moldovan start-up
enterprises easier access to bank finance, especially for very small loans.  The program's objective
is to extend $5 million to a number of Moldovan banks, which in turn will provide credits of up to
$20,000 in foreign and local currency to very small Moldovan businesses--generally defined as
those employing 20 people or less.Initially, micro-enterprise funds were made available to three Moldovan banks, Victoria Bank,
Mobias Bank, and Moldagroindbank.  By the end of April 1997, the three banks had disbursed
a total of $700,000 to a large number of Moldovan micro-entrepreneurs.  The  Swiss-American
Micro-Enterprise Program was recently expanded to include a fourth bank, Universal Bank (see
BISNIS Bulletin, July 1997, Page 7).  According to Thomas Maier, Senior Banker in the
EBRD's Moldova Team, "The addition of Universal Bank reflects the rapid growth of
creditworthy demand."  The inclusion of Universal Bank will widen access to credit for individual
businesses and provide an additional $1 million for loans to individual businesses.Infrastructure Projects
Three major public-sector infrastructure projects are currently in the EBRD pipeline for Moldova. 
They include a project to modernize the Chisinau International Airport and its air navigation
system, an energy project to improve the city's heating system, and a water and waste water
rehabilitation program.   EBRD has also announced it is providing a $19 million loan to Terminal
SA, a Moldovan joint venture between Tirex-Petrol, the state oil company, and Technovax SA,
a Greek joint-venture company, for the construction of an oil terminal on the Danube River in
southern Moldova.  The terminal will help diversify Moldova's supply sources of petroleum
products and reduce transport expenses.To further promote Moldova's transition to a market economy, the EBRD will also consider
supporting specific enterprise restructuring and privatization on a case-by-case basis.  In the
telecommunications sector, for example, the bank is evaluating whether or not to provide partial
financing for the modernization of Moldtelecom, Moldova's local telecommunications provider,
which is likely to be privatized by the end of the year.What To Do
U.S. companies can take advantage of  the EBRD's activities in Moldova by either tendering
directly for projects financed by the bank or by working with individual enterprises participating in
the micro-lending program.  According to official Moldovan statistics, more than 35,000
micro-enterprises are already registered in the country.  American companies should also keep in
mind
that they may wholly own and manage companies in Moldova, as well as freely repatriate profits
and capital.  In addition, companies with more than $250,000 in foreign investment that obtain
half of their income from sales of goods and services are entitled to a 50 percent income tax break
during the first five years of operation. This article was written using materials prepared by the
U.S. Embassy in Chisinau.  For more information on EBRD programs in Moldova, contact Dean
Peterson, U.S. Department of Commerce Senior Commercial Officer at the EBRD in London, at
011 44 (171) 338-6569 (voice), or  011 44 (171) 338-6487 (fax).  For information on EBRD
credit facilities in the NIS, visit BISNIS Online at www.mac.doc.gov/bisnis/finance/facil.htm.Derek Nowek covers Moldova for BISNIS.This report is provided courtesy of the Business Information Service for the Newly
Independent States (BISNIS)