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14 Sep, 2022 11:19

Poor European nation fears economic crash – Bloomberg

Soaring gas prices and the lack of Russian supplies could seriously hurt Moldova’s economy, the country’s prime minister warns
Poor European nation fears economic crash – Bloomberg

Moldova’s economy may face the double shock of a cutoff of Russian gas and “extraordinarily high” energy prices as it braces for winter, the country’s prime minister, Natalia Gavrilita, told Bloomberg on Tuesday.

According to Gavrilita, the country, which is among the poorest in Europe, is preparing for all scenarios, with annual inflation exceeding 30% and an October 1 deadline approaching to negotiate debt repayment with Russia’s Gazprom. With no progress in the talks a full cutoff of gas supplies may be looming, she said.

Moldova, a former Soviet republic of 2.6 million people sandwiched between Ukraine and Romania, relies heavily on Russian gas. Last October, Gazprom and Moldovan energy major Moldovagaz extended their long-term gas supply agreement for a further five years until September 2026. However, Moldovagaz has been struggling to meet its payment commitments to the Russian gas giant after prices under the contract rose sharply this year.

“Even if Gazprom continues the deliveries, we still have to reduce consumption because the prices are very, very high,” Gavrilita said, noting that the soaring prices are an “anomaly” for summer, “and we don’t know how much they will continue to grow during the winter.” 

As part of the measures to alleviate the burden, the Moldovan government has switched the heating system in the capital of Chisinau from gas to heating oil and plans to reduce consumption by 15%. Officials have also opened talks with Romania for potential gas supplies at a more affordable price.

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