Moldova & IMF IMF Activities Publications Press Releases


Chisinau, June 18 (INFOTAG). The International Monetary Fund may resume
lending for Moldova not earlier than next September. The disbursement of the
next $15 million tranche under the IMF's Poverty Reduction and Growth Facility
(PRGF) arrangement may take place after the IMF Board meeting programmed for the
beginning of autumn, Marta de Castello Branco, Advisor to the IMF European II
Department, stated at a news conference here today.

Marta de Castello Branco is heading a Fund mission which is analyzing the
Government's financial and economic policy, and fulfillment of the remarks and
proposals formulated by the mission during its previous visit to Chisinau last

She pointed out, this time the negotiations were more productive, and the
mission has reached a preliminary agreement with the Government of Moldova. The
agreement stipulates 3 tasks which the Cabinet is supposed to realize, so that
the IMF Board could approve lending resumption.

Namely, (1) it is necessary to amend the 2003 State Budget and Social Fund in
conformity with the parameters agreed on with the IMF earlier; (2) to eliminate
export restrictions and Government's direct interference into companies'
activities; and (3) to introduce the pre-shipment inspection (PSI) of goods
imported to the Republic of Moldova.

The conditions are to be met before July 21, because there exists a certain
document visa procedure in the IMF, and any delay makes it impossible to prepare
papers to Board meeting.

"For Moldova, it is very important to observe this timing. One should bear in
mind that the PRGF expires next December. If the lending resumption question is
discussed in September, we will be in a position to ask PRGF extension for one
more year. Otherwise, Moldova may lose chance for financial assistance within
this program already this year, so it will have to wait till next Memorandum on
Economic and Financial Policies is signed with the International Monetary Fund",
said Marta de Castello Branco.

It was particularly stressed by her and Mr. Edgardo Rujiero, IMF Resident
Representative in Moldova, that the July 21 is the time by which Moldova must
not only pass new PSI law agreed on with the IMF, not only approve a company to
run the inspection, but also to embark on the PSI activities proper.

The two officials underlined, the Government should work harder to improve
business environment to eliminate a multitude of restrictions and checks causing
companies' discontent. For an example, they indicted too complicated a procedure
of obtaining the certificate of origin of goods issued by the Chamber for
Industry and Trade. In other countries, such documents are issued by customs

The IMF representatives highlighted some decisions taken here without an
account of financial coverage and Budget strains, such as e.g. the Law on
veterans which will require considerable Budget expenditures and will damage
other reforms agreed on with the IMF and World Bank before, such as pension
reform and telephone tariffs re-balancing.

"On the whole, the Government works to make its financial and economic policy
closer to a market economy", Marta de Castello Branco said.

In her words, the mission and the government have agreed to change some
macro-economic indictors for the year 2003. Thus, the GDP growth is expected to
be 6%, inflation rate no higher than 8% (initially, the figures were set at 7
percent and 6 percent, respectively).

The Memorandum on Economic and Financial Policies was signed by the Moldovan
authorities in December 2000 under the IMF's Poverty Reduction and Growth
Facility (PRGF). The IMF has allocated a $142 million credit for the PRGF, of
which Moldova has already received 3 tranches $12.6 million each.


Chisinau, june 18 (INFOTAG). The Moldovan Government should work harder to
improve investment environment in the country, Marta de Castello Branco told the
news conference today, stressing that direct investment attraction is one of the
crucial tasks to rehabilitate the national economy.

She said that last year, Moldovan citizens working abroad transferred home over
$250 million through the banking system alone. With an account of other channels
to deliver cash here, IMF experts presume that the actual incoming figure should
be about $500 million, which is approximately compatible with tax revenues to
the Budget. "To a certain extent, this money compensates for the lack of
investment", she said.

In her opinion, the money, coming from Moldovan workers abroad, postpone for a
certain time the steps which the Government must make to improve the investment
environment and business opportunities as a whole.

To achieve this, it is very important to treat all economic operators equally,
root out protectionism, and ensure de facto the economy liberalization. However,
foreign investors working in Moldova realize that the situation here is quite
different. Their opinion means very much for other, potential investors in the
Moldovan economy, said Marta de Castello Branco.

During the 10 years since the Law on foreign investment was put into force in
Moldova, the investment figure has amounted to $463 million. In 2002, direct
investment did not exceed $100 million, and was $35 million less than in 2001.
The per capita investment indicator in Moldova is about $150 - much smaller than
in Romania, Bulgaria, Ukraine, Russia.