Press Release

IMF TO OFFER NEXT FINANCING TRANCHE TO MOLDOVA BY LATE SEPTEMBER

Chisinau, 19 May /MOLDPRES/- The International Monetary Fund (IMF) will disburse the second tranche of 17 million dollars to Moldova by late September 2006.

IMF's Permanent Representative to Moldova Johan Mathisen today told journalists that the money is meant to complete the National Bank's currency reserves. The credit is offered for ten years, with a 5.5-year grace period and an interest rate of 0.5 per cent. The first tranche of about 17 million dollars was given on 10 May 2006.

The IMF official also said Moldova has registered promising macroeconomic performances over the last year, and maintained macroeconomic stability and economic growth. The real Gross Domestic Product (GDP) registered a rise of about 7 per cent, and the inflation level went down to 10 per cent. An austere fiscal policy and stability in the bank sector were registered too.

The IMF Executive Council positively appreciated the financing programme elaborated and submitted to the IMF by the government, Mathisen said, adding that it is in line with the EU Action Plan for Moldova and Economic Growth and Poverty Reduction Strategy Paper (EGPRSP). He voiced hope that the programme will create conditions necessary to assure a lasting economic growth in Moldova.

Participating in the conference, Premier Vasile Tarlev said "the existence of a programme with IMF and an acceptable level of currency reserves involve a higher rating of the country. At the same time, the programme opens the way to negotiations
with creditors - the Paris Club's members. The bilateral debts, including arrears accumulated in late 2005, stood at 290 million dollars. Our will is to reschedule this debt for 15-20 years, with an 8-10-year grace period, depending on the source of crediting," the premier said.

Tarlev also said that according to the IMF mission's recommendations, the government elaborates an "outgoing" strategy for the banks, in which the state holds a significant share, including the Banca de Economii a Moldovei (savings bank). Thus, the government's intention is to privatise the Banca de Economii by wooing a strategic bank investor.

The premier said the sides agreed to employ a consultancy company to assess the real value of Banca de Economii. "It is in our interests," he said.

On 5 May 2006, the Moldovan government and IMF signed a new three-year financing agreement worth about 118.2 million dollars, under the mechanism for Economic Growth and Poverty Reduction. /MOLDPRES/

IMF Conditioning the Further Financing of Moldova on Promoting Specific Reforms

Moldova has to ensure full independence for the National Bank of Moldova (BNM) over the monetary policy, and the government shall not be credited directly by BNM. These are some of the requirements made by the International Monetary Fund (IMF) so that RM could benefit from the whole credit offered by IMF.

IMF Resident Representative in Chisinau, Johan Mathisen mentioned on Friday, 19 May, at ta press conference that according to the new Agreement concluded with RM, the government shall transfer its deposits of BNM commercial banks, except the accounts of the National Company of Medical Insurances, National House of Social Insurances, special and stock funds. IMF also requires efficient management of public patrimony, liquidation of Creditors’ Council by transmitting its functions to other fiscal bodies, modernizing the financial sector, improving the business environment etc.

„All these objectives will be obtained only if along with the Macroeconomic Program approved by IMF, there will be implemented reforms in other fields as well, the judicial systems, agriculture, fight against corruption and others,” the official mentioned.

Mathisen highlighted that the Program with IMF allows RM to launch itself on a sustainable increasing economic path, which will be based on local investments, as well as foreign ones. According to him, this has already certain outcomes. Due to approval of the Program, the Club of Paris accepted re-scheduling foreign debts of Moldova, providing the possibility to use about 100 million dollars not for paying the external debt, but for satisfying the most urgent needs of the country.

IMF Executive Board approved, on 5 May 2006, a new Agreement with Moldova, for a three-year term, on the base of Poverty Reduction and Economic Growth Mechanism, about 118,2 million dollars. The first amount of 16,9 million dollars of IMF credit was provided on 10 May and will be used for keeping the stability of the national currency and payment balance, as well as for crisis situations. A part of the credit will also be used for implementing the goals of the Economic Growth and Poverty Reduction Strategy (SCERS).

Info-Prim Neo, May 19, 2006