This report looks at the fiscal, environmental and social impacts of energy subsidy
reform in Moldova with a particular focus on energy affordability. Reduced value added
tax (VAT) rate on natural gas consumption and a VAT exemption on electricity and heat
consumption by domestic users represent the largest fossil-fuel consumer subsidies
in Moldova. Reforming these will imply an increase of the VAT rate, which will lead
to an increase of gas, electricity and heat tariffs for households, and will in turn
affect household consumption levels, related expenditures and energy affordability.
If reform measures are to work, they will need to be accompanied by a carefully-designed
social policy to protect poor households.