Unfavorable initial conditions, and extreme vulnerability to external shocks, as experienced by Moldova's economic transition, culminated in the 1998 regional financial crisis, which fostered the need for radical fiscal retrenchment, namely, reductions in social sectors expenditures. Currently, and despite a seemingly reasonable, attainable growth, the challenge for the Government 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 a major program of public service reform
b) strengthening the government decision-making process, through the introduction of a system of Cabinet Committees, and the restructuring of the State Chancellery into a non-political Government Secretariat
c) strengthening strategic prioritization in budget formulation, through a structured approach to developing, and implementing the Medium Term Expenditure Framework
d) strengthening the budget process, through increased budget coverage - deepening Treasury coverage - and setting a stronger, internal/external accountability framework. Similarly, recommendations call for a strengthened civil service management, by amending the Civil Service Law, securing the application of key merit principles, and de-politicization, while launching a functional program to rationalize government structures. Furthermore, sector-specific reforms in the social sectors should be accelerated, particularly for education and social assistance, balancing basic education, primary health care, and emergency services.