IMF likely to increase financial support to Moldova

Chisinau, April 13 / MOLDPRES /- The International Monetary Fund (IMF) team of experts, led by Ruben Atoyan, held talks on April 4-11 with the Moldovan authorities on increasing access to finance under the program supported by the Extended Lending Mechanism and the Extended Financing Mechanism.

"Following productive discussions, the Moldovan authorities and the IMF team reached an agreement at expert level on increasing access to finance under the program supported by the Extended Lending Mechanism (ECF) and the Extended Financing Mechanism (EFF). The IMF experts will recommend increasing the financial support provided to the Republic of Moldova by about 267 million US dollars, so that the total amount granted under the program will be about 815 million US dollars ", said at the end of the mission Ruben Atoyan.

The additional financial assistance will be used to cover the urgent need to finance the balance of payments following the negative shocks, including the war with Ukraine and international sanctions imposed on the Russian Federation and Belarus, and to catalyze the support of the international community.

"This agreement is expected to be approved by the IMF's Executive Board, which plans to consider applying for an increase in funding under the program for May. The first disbursement under the augmented program, amounting to about 149 million US dollars, will be made immediately after the completion of the first evaluation of the implementation of the program and will be allocated for budget support ", the quoted source specified.

"The war in Ukraine has significantly affected the economy of the Republic of Moldova. For 2022 we forecast an economic stagnation, but our forecasts have a high level of uncertainty. The slippage in trade relations and the rise in commodity prices will increase the current account deficit in 2022 to 13.3 percent of GDP. We estimate that in the years 2022-2023, the urgent need to finance the balance of payments arising from the growing shocks will amount to about US $ 1.7 billion, and those costs will be financed by the resources provided by the IMF and the assistance provided by the IMF. other donors. Since the outbreak of the war, there have been temporary pressures on liquidity in the banking sector, but the sector has shown resilience, having solid reserves of liquidity and capital ", according to the Fund's representative.

The experts of the Monetary Fund estimated that the authorities of our country "correctly prioritized the necessary measures to face the humanitarian crisis in a rather complex environment".

"Fiscal policy continues to focus on managing the significant influx of refugees and the need to mitigate the negative effects of rising energy and food prices. Within the limits of its mandate to ensure price stability and maintain financial stability, the National Bank of Moldova has increased the base rate to curb inflation and conducted interventions in the foreign exchange market, mitigating exchange rate volatility. Although the circumstances were complicated, the authorities were able to honor the structural commitments made in the program for the end of March, including the fight against corruption and the rule of law, budgetary governance, financial sector supervision and the reform of the regulatory framework. the state-owned enterprise sector, ”said Ruben Atoyan.

According to the forecast, in 2022 the budget deficit will increase to about 7.2 percent of GDP, due to reduced revenues and increased spending on humanitarian and economic support. The funding gap is to be filled by mobilizing funding from the IMF and other partners, which will complement resources in domestic capital markets.

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