Moldova & IMF IMF Activities Publications Press Releases

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Chisinau, 4 july ( INFOTAG ). Talks between Moldova's government and the
IMF on a new cooperation program may be resumed as early as the fourth
quarter of this year, IMF Mission Chief for Moldova Thomas Richardson
confirmed at a news conference in Chisinau marking the end of his visit to
Moldovan capital, June 22-July 1.

To assess changes in Moldova's macroeconomic situation over the past nine
months the Mission has met with the national government and NBM officials
raising, among other topics, monetary and fiscal policy for 2005-2006 and
structural reforms envisaged by the Economic Growth and Poverty Reduction
Strategy Paper (EGPRSP) and EU-Moldova action plan.

We've acknowledged progress in certain areas as well as problems still
unsolved for objective reasons such as the recent parliamentary elections.
We, therefore, intend to return to Chisinau in September or October to check
the situation. Depending on the latter we will be able to decide whether to
proceed with talks on the new cooperation program. (For this purpose), IMF
delegation will arrive in Chisinau in the fourth quarter of 2005, Richardson

Despite concern about growing inflation recorded at the beginning of this
year we've been satisfied with the measures taken by the National Bank of
Moldova to stabilize monetary situation and sterilize financial input in
order to hold the inflation in leash.

Inflation has been substantially reduced over the past one and half years
as a result of (cautious) monetary management. We, therefore, expect the
inflation to remain within the limits of 8-10% (preset by the NBM strategy),
held Richardson.

The IMF Mission Chief has highly appreciated efforts in the public sector
as well as the optimization of cadastre system in the central and local
governments set to introduce adequate salaries and reduce corruption.

He expressed hope that the reformed government would be more adapted to the
needs of market economy.

We welcome the introduction of a "guillotine" law as a tool to reduce
government intervention in the business sector, emphasized Richardson.

Among other topics raised at the meeting with the government were
industrial privatization, role of the State Creditors' Board in supporting
the business sector, and technical amendments to the financial legislation
recommended by the IMF and World Bank.

The year of 2005 is likely to see continued growth of (Moldovan) GDP,
albeit not as sizeable as in 2004, Richardson added.

We remain optimistic as regards Moldova's economic development and look
forward to discussing the new cooperation program with Moldovan government,
he said.


Chisinau, 4 july ( INFOTAG ). Privatization of public enterprises is
worthwhile only if new owners are able to manage them better than the State,
believes Thomas Richardson.

He said at the news conference it is useless to keep in the State ownership
enterprises that only generate losses. In such instances, their assets should
be sold out and the proceeds should be used for, e.g., road repair.

Thomas Richardson expressed concern that the State Creditors Board backs
some enterprises. In his viewpoint, the annulment and freezing of debts are
not always justified, for this is done at the expense of public finance.
Therefore, the Board's activity should be revised.

He appreciated the Government's proposal to lower the income tax on both
individuals and legal entities. In his words, Moldova as a country with high
unemployment should have an attractive fiscal policy so that to prevent
people from going abroad for work. At the same time, the Government should
look for possibilities to broaden taxable income basis.

The IMF mission head disapproved of the intention to introduce in Moldova a
new method of managing the value-added tax by means of using special VAT
accounts. This method was introduced in Bulgaria, and attempts were made to
use it in Russia and Ukraine. However, it requires considerable extra
expenses from enterprises and it blocks their working capitals on the
accounts. It seems fairly strange to Thomas Richardson that Moldova
persistently uses the so-called 'guillotine law', on the one hand, and is
going to create new obstacles to entrepreneurship development, on the other.