Unfavorable initial conditions, andextreme vulnerability to external shocks, as experienced byMoldova's economic transition, culminated in the 1998regional financial crisis, which fostered the need forradical fiscal retrenchment, namely, reductions in socialsectors expenditures. Currently, and despite a seeminglyreasonable, attainable growth, the challenge for theGovernment is to improve basic outcomes in social sectors,and address inequities in access to basic social services.Key recommendations in this report suggest: a) launching amajor program of public service reform; b) strengthening thegovernment decision-making process, through the introductionof a system of Cabinet Committees, and the restructuring ofthe State Chancellery into a non-political GovernmentSecretariat; c) strengthening strategic prioritization inbudget formulation, through a structured approach todeveloping, and implementing the Medium Term ExpenditureFramework; d) strengthening the budget process, throughincreased budget coverage - deepening Treasury coverage -and setting a stronger, internal/external accountabilityframework. Similarly, recommendations call for astrengthened civil service management, by amending the CivilService Law, securing the application of key meritprinciples, and de-politicization, while launching afunctional program to rationalize government structures.Furthermore, sector-specific reforms in the social sectorsshould be accelerated, particularly for education and socialassistance, balancing basic education, primary health care,and emergency services.
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