Moldova & IMF IMF Activities Publications Press Releases

Limba romana                                                                                                  
28.10.2009 | 17:39

Prime Minister Vladimir Filat and head of IMF mission Nikolay Gueorguiev held a press conference today

At the conference, the officials announced the results of the negotiations between Moldova's government and IMF mission. Thus, the sides reached a preliminary agreement on a new economic programme which sees a financial support worth about 590 million dollars for Moldova till 2012. The officials also agreed that, in the immediately next period, Moldova will be able to use another 180 million dollars to finance the budgetary needs.
[click on the picture to enlarge]                                                [click on the picture to enlarge]                          

The prime minister stressed the importance of the concerned agreement. He emphasized the specific context in which the talks were held, and said that the de-blocking of the relations with the foreign creditors is a vital necessity for Moldova in such a situation. "Moldova was affected both by the world economic and financial crisis, and by the previous government's inability to undertake proper actions to diminish the impact. Thus, in the first half of 2009, the balance of payments had a deficit of 556 million dollars, the Gross Domestic Product (GDP) dropped by 7.8 per cent, the current account decreased to 11.2 per cent of the GDP, the public revenues diminished by ten per cent against the same period of 2008, the budgetary expenses increased 13 per cent before the elections, the forecasts of the annual budget deficit reached 16 per cent of the GDP, and dropped to 9.5 percent now," Vladimir Filat specified.

The prime minister also said that the consensus got in the negotiations with IMF is important also by the fact that it represents a signal received by the foreign donors and potential investors. In this respect, the government assumes responsibility to promote measures of economic re-launch and stabilisation to improve the economic indexes, carry out important structural reforms which will unchain the economic processes.

The government plans to reduce the number of the categories of goods subjected to obligatory certification and  licencing and other types of authorisations imposed to business activity, implement a single desk without interferences on behalf of the governmental agencies which have no connection with this process, modernise the legal framework to authorise constructions in order to reduce the duration and number of related procedures to get permit for construction, simplify procedures of starting and liquidating business, simplify the procedure of fiscal reporting by promoting the use of e-declarations.

Referring to the social dimension of the agreement's conditions, discussed with the IMF mission's experts, the prime minister said: "More speculations were made on alleged social requirements of the IMF, which could have affected some categories of residents. I avail myself of this occasion to make certain specifications: there will be no salary cuts; the general quota of the value-added tax (VAT) will not be increased; there will be no redundancies, the present retirement age is not scheduled to be changed, and the 24-per cent salary increases for teachers will be preserved and further applied."

At the same time, under the agreement, a string of measures are to be undertaken to optimise the number of employees in the budgetary sector. Speaking on this issue, Vladimir Filat specified that, in 2010, the making redundant of a surplus of 4,000 units in the budgetary sector will be, in fact, the enforcement of a decision passed by the previous government. Earlier, Moldova's government has assumed certain commitments in this respect, and namely: to gradually reduce the number of employees in the budgetary sector - by 3,000 units in 2008, 3,000 units in 2009 and 4,000 units in 2010. Official data show that, in 2008, 3,200 people were made redundant, and in the first half of 2009 - 1,663.

A reform of the pension supply system will follow, in line with the established policies. The clauses staying at the basis of achieving this goal include the following: the privileges seen for the civil servants, judges and prosecutors will be gradually removed starting from 2010, in case of early retirement through the increase of the retirement age by six months annually till reaching the standard retirement age; the obligation to pay the social insurance contributions will be extended so as to comprise all the people employed in Moldova, in line with the bilateral agreements, the mechanism of guaranteeing the right to allowances for temporary labour inability will be improved till 2011.

To reduce the impact of the recession on the most vulnerable segments of the residents, the government is set to consolidate efforts to implement a new social assistance system. The allocations for social assistance, including the payments for unemployment, will amount to 630 million lei within the new system in 2010, which is by 40 per cent more against 2009.

Among the principal measures of increasing the budget revenues, which the government plans to apply, the prime minister mentioned: increase of the quotas of excises to a string of goods, including petrol, tobacco products, cosmetic goods, luxury vehicles, etc., so as to get them closer to the quotas applied in the neighbour countries, as well as in accordance with the European Union's standards. This will increase the revenues by about 500 million lei (0.8 per cent of the GDP) in 2010; reintroduction of the tax on the legal entities' incomes by applying a single ten-percent quota on a wide and uniform basis while comprising all the sectors and regions. At the same time, the prime minister sent a clear-cut message to the business circles as regards the preservation of the legal entities  income tax at the zero quota till 2012, so as to not to increase the fiscal burden on the economic agents in the crisis period.

"This agreement is favourable for Moldova, and offers clear opportunities to the country. Moldova has completely another prospect starting from this moment," the prime minister said.

For his part, the head of the IMF mission, Nikolai Gueorguiev, welcomed the government's commitment to restore the fiscal and budgetary, as well as the external viability, maintain the financial stability and support he economic growth fostered by investments.
The programme aims at inverting the tendencies of increase of the fiscal and budgetary lack of balance, which showed themselves in late 2008 and during 2009, as well as at increasing the budgetary spending for investments and social protection.
Nikolay Gueorguiev's speaking notes [pdf]                 [click on the picture to enlarge]
Source: Government's Press Service