## Republic of Moldova: Climate Module of the Public Investment Management Assessment

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**Canonical URL:** [Republic of Moldova: Climate Module of the Public Investment Management Assessment](https://www.imf.org/-/media/files/publications/hls/2023/english/hlsea2023018.pdf)

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### Background
- Moldova has committed to an ambitious climate change mitigation and adaption agenda despite its small share of global emissions.
- National targets:
  - Reduce Greenhouse Gas (GHG) emissions by 2030 to less than 70 percent of the 1990 emission level.
  - Aim to become climate neutral by 2050 (as indicated in the draft Law on Climate Action).
- The energy sector accounts for more than 2/3 of the country’s GHGs; increasing the share of renewable energy sources is a key measure and will likely rely on government investment.
- The 2019 PIMA found sound design in the PIM framework but limited effectiveness due to exclusion of externally funded projects and projects executed through budgetary funds.
- A new Government Decision (GD) on capital investment projects was adopted in 2022, increasing PIM regulation coverage to all projects irrespective of funding source or sponsoring entity. An implementing Order of the Ministry of Finance is yet to be issued.
- Objectives of the C-PIMA technical assistance:
  - Assess progress implementing 2019 PIMA recommendations relevant to climate.
  - Analyze sensitivity of public investment practices to climate objectives using the C-PIMA framework.
  - Identify main gaps and weaknesses and propose a prioritized action plan.
  - Recommend follow-up technical support by FAD or development partners.

### Summary of Findings
- Recent regulatory changes create an opportunity to strengthen climate considerations within PIM, but climate-sensitive PIM is at a nascent stage.
- Positive developments and existing practices:
  - Climate considerations have been consistently introduced into key national planning documents.
  - Existing regulation requires environmental impact assessments, including climate implications, during project preparation.
  - In sectors such as energy, regulatory frameworks for state owned enterprises and public corporations guide climate-related decision-making.
  - Budget reserves to cover some fiscal impacts of natural disasters are in place and have been used recently.
  - Several plans, strategies, and legislation on climate and PIM are currently being drafted or are pending approval.
- Key gaps and weaknesses:
  - Limited coordination across central and local governments due to lack of specific guidance or firm regulation.
  - Project selection does not systematically consider climate-related issues, although project appraisal may include them.
  - Limited understanding of climate-related risks to public infrastructure; no systematic mitigation steps taken.
  - Gaps exist in the regulatory framework for managing climate implications on infrastructure.
  - The forthcoming Ministry of Finance Order implementing the 2022 GD could be updated to strengthen climate change considerations.

### Summary of Recommendations and Priority Actions
- Institutional leadership and regulation:
  - Strong leadership is needed from the ministries of Finance and Environment as accountable entities on PIM and environmental policy.
  - Finalize and adopt key regulation and strategies related to PIM and climate change.
- Main priorities:
  - Improve project appraisal and selection.
  - Strengthen budgeting and portfolio management (identified as main priorities given current weaknesses, particularly on budgeting).
  - Ensure sector strategy updates align with the adopted development plan Moldova 2023 and adopt a disaster risk management strategy to improve PIM climate sensitivity.
- Project appraisal and selection reforms:
  - Include analysis of climate change impacts in project appraisal and selection processes.
  - The forthcoming PIM regulation should include climate vulnerability as part of the total cost reflected in the cost benefit assessment, not only in the risk assessment.
  - Develop a traffic light system to identify projects with a positive, neutral, and negative impact on emissions to inform project selection.
- Budgeting, information, and asset management:
  - Strengthen information on climate-related spending to close existing data gaps.
  - Require line ministries sponsoring major new public investment projects to provide data in their budget submissions on estimated climate impacts and climate vulnerability.
  - Based on ministry inputs, the Ministry of Finance should identify major climate-related investment projects and publish a table with this information alongside budget documentation.
  - Use this published information to support the buildup of an asset register including climate-related vulnerabilities.
- Implementation support:
  - Recommend follow-up technical support by FAD or other development partners to help implement the prioritized reforms.

*High-Level Summary Technical Assistance Report — Republic of Moldova: Climate Module of the Public Investment Management Assessment, November 2023.*

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_Source: https://www.imf.org/-/media/files/publications/hls/2023/english/hlsea2023018.pdf_