Moldova & IMF IMF Activities Publications Press Releases

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Weekly Newspaper "Chisinau Observer"

Thursday, June 5, 2003

“Very interesting discussions” in the framework of cooperation with the IMF

Today the IMF mission is arriving to Chisinau to continue negotiations with the Government of the Republic of Moldova that were interrupted in March on conditions for re-launching of external financing. Yesterday in anticipation of the mission the resident representative of IMF in Moldova Edgardo Ruggiero met with the journalists. 

Edgardo Ruggiero was quite optimistic, however among undoubtedly positive results of the activity of Moldovan authorities he could name only increase of the budget revenues. He also mentioned the activity of the National Bank of Moldova as a good example of a central bank, and activity of the Ministry of Finance as a good example of proper control. All other results can be called positive only in relative terms.  

Administrative-territorial reform 

According to Edgardo Ruggiero the Government should determine its position about the number of the staff, as there are no exact figures till now. He called discussion about the cost of transition to the regions “an interesting one”. Since if a new region is being established, its administration will have to be at least linked to telephone lines, some premises should be provided to it, as well as transport and furniture, not forget that it will need its press. And this has to be done at all levels. “We do not want to assess whether it is good or bad to transfer to a new administrative-territorial system. But I believe that 10 judets are sufficient for a small country.” Mr. Ruggiero added that “the appropriate level of decentralization is a matter that is decided by government, not by us at IMF”. 

Business environment 

Unfavorable business environment was one of the reasons for suspension of IMF mission negotiations with Moldovan Government in March of this year. Mr. Ruggiero marked that the matter is not only in pre-shipment inspection, especially since according to him, there has been developed and submitted to the Parliament a draft that satisfies all the parties. The IMF representative  also mentioned that on April 22 the Government made a special decision on cancellation of export restrictions. “But we are aware of the fact that in reality these restrictions still exist. The problem is that we never know whether there are any administrative restrictions anywhere. We shall wait for the response of economic entities”. 

IMF is also concerned about the law drafted by the government on amendments to the Law on Patents which introduces new rules for financial statements and accounting for patent holders. According to Edgardo Ruggiero, if the draft is adopted in its current version, the share of shadow economy in Moldova will increase. The IMF representative has also expressed his thoughts about the system of issuance of certificates of origin “Sometimes certificate confirms that a good was produced in Moldova, though it was imported from another country. This refers to sugar and raw leather. At the same time Moldovan  company gets a certificate for Europe, which is illegal.” 


IMF is concerned how quickly and easily decisions on tax issues are made in Moldova without any analysis of the consequences for the budget. Starting from end-April and in May the Government made several such decisions that increase budget expenditures, some of them are regardless of the agreement with the WB and IMF, and some of them “are adopted too quickly”. Cost of the drafts was calculated in the Ministry of Labor or the Ministry of Culture, after that the drafts were approved , “and only after they took effect the authorities start looking for sources of their financing!” The Law on Veterans of May 8 was given as an example (“of which we learned only after the holidays”), as well as May pension indexation not consistent with the developed system of indexation. “Now the Social Fund budget will have to be recalculated and other expenditures will have to be cut, though they are important as well”. 

Health Insurance 

Edgardo Ruggiero learned from the journalists that introduction of health insurance in Moldova is postponed, nevertheless starting from July 1 enterprises still have to transfer 2% to the compulsory health insurance fund. “It is an interesting case, - he commented. – When  we heard about introduction of health insurance last year, we said, please  wait, since a lot has to be done for the reform implementation. But the government insisted on a specific date. It was very ambitious. Now implementation has been postponed. And I do not know what economic entities must pay for, if their employees are not going to enjoy health insurance. When this project was discussed we kept saying: calculate first, as money is needed for the system to be operational.”