Russian Backing

On June 22, Russian President Dmitry Medvedev stated that he supports the efforts of outgoing Moldovan President Vladimir Voronin to restore order in the country following the disputed April 5 parliamentary election. Russian Prime Minister Vladimir Putin also stated that Moldova could receive US$500mn of financial aid from Moscow, with the first US$150mn tranche possible in 6-8 weeks. Meanwhile, Moldovan CPI growth fell to -1.6% y-o-y in May, from -0.3% in April. This means that Moldova has now entered consumer price deflation, having posted multi-year high inflation of 16.9% y-o-y in May 2008. The speed of disinflation in turn explains the National Bank of Moldova's June 19 decision to cut its key base rate by 100bps to 9.00% - a record low.

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