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IMF still concerned about inflation in Moldova
The main concern of the International Monetary Fund in Moldova is, once again, inflation. IMF Resident Representative Johan Mathisen told a news conference Friday that after a positive trend registered at the beginning of the year, the inflation has increased substantially over the last couple of months. In his words, a strong push is needed to lower inflation down to a single-digit level, as agreed with IMF and in line with the neighbour countries.

“It is clear that Moldova will not be regarded as a safe destination for investment until macroeconomic stability is firmly established”, the IMF official said.

Johan Mathisen announced that an IMF staff visit is scheduled for September 20. The main discussions of the mission with the Government are expected to focus on the Budget Law draft for 2008, as well as on actions that can be taken to offset the impact of recent food price increases, which will obviously trigger another price hikes.

According to the IMF official, fiscal performance appeared to have been better and economic growth stronger than expected, especially in the first quarter. “Of course we are yet to assess the full impact of this year’s drought”, Mathisen said.

Johan Mathisen didn’t exclude the fact that, if IFM finds it suitable, it will review the indicators for this year, as it was in 2006 when Moldova was affected by the Russian embargo on Moldova wines.

Moldova’s performances under the three-year agreement with IMF are formally assessed twice a year. The next assessment mission is scheduled for late November. The IMF mission will assess, among others, the competitiveness of Moldovan products in external markets, in view of the recent appreciation of the national currency.

The Executive Board of the International Monetary Fund resumed disbursements to Moldova in early May 2006, after more than a 3-year long break. On 15 December 2006 IMF’s Executive Board approved an increase in the size of the loan to about USD 167 mln.

IMF urges Moldova’s Government to avoid controlling bread prices

Chisinau (IPN) The International Monetary Fund (IMF) urges the Government to try to find more efficient means to mitigate the impact of potential bread price hikes on the poor segment of the society than the practice of controlling bread prices, IMF Resident Representative Mathisen told a news conference Friday.

While IMF understands the intention behind the proposal to control bread prices, because the increase in food prices has a substantial impact on the poor, in economic terms, administering prices, such as on bread, is very inefficient. The consequences in many other countries have been that instead of targeting the groups that actually need the assistance, the measure targets everybody. In addition, the companies whose production was subject to price control have been totally decapitalised, the IMF official explained.

Also Friday, Prime Minister Vasile Tarlev stated at the meeting of the Commission for Emergencies that the Government will obse rve the compliance of bakeries with the laws concerning prices on the so-called ‘social bread’. He stated that there are no reasons for increases in bread prices, not until January at least. According to the prime minister, most of the bakeries have stockpiled the necessary supply of products so as not to raise bread prices.