Kit Gillet in Bucharest -

Despite the fact that it is only halfway through the year, 2015 is already one of those years that many in Moldova will try to forget as quickly as possible.

Since January, the country has had to deal with a troubled banking system caused by an apparent case of fraud so large it would have been front-page news in the international press if it had happened in a country in Western Europe or elsewhere. The country has also had to deal with a political rebalance that has seen a resurgence of pro-Russian sentiment, with local elections held on June 14 leading to an even balance between pro-Russian and pro-EU parties. Throw in the resignation of a prime minister less than four months into his term in office and you have a pretty depressing situation.

On June 19, Moldova’s outgoing prime minister, Chiril Gaburici, said that he wouldn’t serve as interim head of the cabinet until a new prime minister is appointed, following his resignation on June 12 related to allegations of forged high school diplomas.

Gaburici, a former businessman with no political experience, hasn’t had an easy ride since taking office on February 18, and few will be sad to see him go. However, it was hard enough appointing him – it took over two months to find an acceptable candidate following the elections last November that brought in a minority, pro-EU coalition.

Gaburici’s refusal to remain in office will put considerable pressure on the country's president, Nicolae Timofti, who will have to now nominate an interim head of the cabinet to perform basic administrative duties. Back in 2012 it took lawmakers more than 900 days of negotiations to appoint Timofti.

The negotiations for the formation of a new cabinet and possibly a new, broader ruling coalition will be complicated by the second round of local elections, scheduled for June 29, as well as the attitude of the Liberal Party, which wants firm guarantees from the existing parties of the minority coalition, the Liberal Democrats and the Democratic Party, that they will no longer negotiate or cooperate with the Communist Party (PCRM) or the Socialist Party (PSRM).

Economic problems

The economy is also struggling, particularly given its traditional reliance on trade and remittances from Moldovans working in Russia, both of which have suffered given the countries push towards the EU and the depreciation of the Russian ruble last year.

International financial institutions predict that Moldova’s GDP will fall into recession this year, amid weak external demand and lower wage remittances from Russia. The European Bank for Reconstruction and Development (EBRD) expects Moldova’s GDP to contract by 2% in 2015, and recover only partly by 1.5% in 2016, according to its May 14 Regional Economic Prospects report.

Meanwhile, the World Bank has earmarked $45mn for Moldova’s budget deficit financing for 2015, but will only release the money after the government takes positive steps to address the problems in the banking sector.

Chief among these problems is the missing $1bn from three of the country’s major lenders. The leaders of the two parties within Moldova's minority ruling coalition seem to agree on the need to nationalise at least one of the bank, Banca de Economii (BEM). However, the International Monetary Fund has conditioned any stand-by arrangement on, among other things, the liquidating of all three troubled banks, according to the outgoing prime minister.

Investigations are ongoing into what exactly happened and who is responsibly for the missing money. The only suspect publicly named so far in relation to the fraud is Ilan Shor, who, despite being under house arrest, was allowed to run a political campaign and just won the election to become mayor of the town of Orhei in central Moldova, winning just over 60% of votes. This is likely to further anger those who have long watched people with influence get away with criminal behaviour.

Another winner in the local elections last week was Renato Usatii, a pro-Russian businessman who will now become mayor of Moldova’s second-largest city, Balti, winning 73.7% of vote. Usatii and his party were disqualified from last November’s parliamentary elections for allegedly illegally using Russian funds to finance their campaign, and fled the country two day’s before the vote, apparently fearing for his freedom.

None of which should fill those in Moldova with much confidence regarding the short-term future of their country.