International Monetary Fund approves new installment for Moldova

Chisinau, 21 December /MOLDPRES/- The International Monetary Fund (IMF) Executive Board approved on 20 December a new installment worth 15.7 million special drawing rights (about 22.2 million dollars) from 183.1 million- dollar-loan for Moldova.

According to a press release by the IMF communication department, the Executive Board completed the second assessment report on the programme for Moldova and noted that “in general, the program conditions are respected, but joined efforts are needed to promote reforms, speed up economic growth and improve the living conditions of the people”.

The Executive Directors “welcomed the macroeconomic and financial stability Moldova has enjoyed over the past two years, as well as the progress made in the program. At the same time, they have warned that recent success had not yet become irreversible, and the risks of unfavorable developments in the medium term still remain real”, the press release reads.

In this regard, the executive directors pointed out the importance of maintaining fiscal sustainability, strengthening the effectiveness of monetary policy and implementing reforms to firmly recover the situation in the financial system, improving governance and business climate. These issues “are essential to attract foreign and domestic investment and to increase potential economic growth and improve living standards of people”.

At the same time, they appreciated the success of the authorities in reducing inflation and reiterated that monetary policy should continue to focus on maintaining price stability in the context of a flexible exchange rate regime.

The IMF believes that “well thought-out macroeconomic policies and serious structural reforms are of critical importance for achieving the goals of stimulating the potential for economic growth, creating new jobs and reducing poverty”.

“Moldova continues to record significant progress in efforts to strengthen macroeconomic and financial stability. These results are supported by the consistent implementation of the program, focusing on the serious recovery of the situation in the financial system, improving governance and business climate and attracting foreign and domestic investments”, IMF deputy head Mitsuhiro Furusawa said.

He also said that whereas significant challenges remain in sight, it is important that these efforts continue to strengthen recent success, increase potential economic growth and provide the people with a higher standard of living.

The executive directors welcomed the adoption of the 2018 budget and the medium-term budget framework allowing public investment and social spending, conductive to economic growth, while safeguarding debt sustainability. They stress the need for a permanent control over current expenditure and wage costs to exclude unjustified limitation of investment and priority social spending. Also, they encouraged increased management and efficiency of public investment.

The IMF Executive Board approved in November 2016 a three-year agreement with Moldova, financed by two loan instruments – Extended Fund Facility and Extended Credit Facility, aiming to support the economic and financial reform program of the state. Thus, Moldova has got access to 129.4 million special drawing rights (about 183.1 million dollars). The first installment amounting to about 35.9 million dollars was made available to the Moldovan authorities immediately after the agreement was approved, and the second worth 21.5 million dollars – after the first evaluation.

(Reporter V. Bercu, editor M. Jantovan)