Moldova & IMF IMF Activities Publications Press Releases

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Weekly Newspaper "Moldavskie Vedomosti"

Issue No. 28 (623) - Saturday, March 27, 2004

IMF continues not to give money to Moldova

Resumption of IMF financing to Moldova is conditioned by the Moldova’s government economic policy. This view was presented by Marta Castello Branco, chief of the IMF staff mission which was in Chisinau for one week.

At the concluding press conference, Marta Castello Branco has made a few unpalatable conclusions for Moldovan government. According to her, in spite of the growth that started in 2000, the reforms slowed down in Moldova and even reversed in some sectors. IMF believes that, first of all, this had a negative impact on the level of foreign direct investments into Moldovan economy, which as it is, is the lowest in Europe.

On the other hand, as underlined by Castello Branco, this has been partly offset by the remittances of Moldovan workers from abroad. The IMF adheres to the opinion that the economic growth in Moldova is fueled mainly by these remittances. “These money have encouraged growth but our main concern is whether this growth is sustainable,” said Castello Branco.

The IMF experts spoke positively about the draft Economic Growth and Poverty Reduction Strategy Paper (EGPRSP) worked on by the Ministry of Economy. One of the main goals of the IMF staff mission was to review this document. “We have the feeling that we and the government are converging regarding diagnostics but we still have differences regarding implementation of the strategy,” said Marta Castello Branco.

IMF believes that Moldovan government actions are not consistent with the substance of the strategy paper. This applies to restrictions on exports of goods, primarily grain crops, as well as government attempts to monopolize some sectors of Moldovan economy. “This is not good as we want to see more competition in Moldova,” underlined Castello Branco.

The International Monetary Fund is discontented with other actions of Moldovan government as well. This applies to the intentions to regulate prices on fuel and bread, as well as the forthcoming introduction of off-shore tax. IMF believes that Moldova needs to improve its business environment and reduce the government’s involvement in business activity. “As the level of investments will start to go up, we will be able to say that the business environment improved. It all depends on the perception of investors,” said Marta Castello Branco.

The chief of the IMF staff mission has also indicated that the Fund will continue the dialogue with Moldova. However, IMF and government representatives still did not agree on what are the best measures to solve Moldova’s economic problems. “We need to see implementation not just declaration of intentions. Once we see a change in direction in government policies, we can quickly resume a dialogue related to the program of financing support to Moldova,” said Castello Branco.

Andrey Polinin