Moldova & IMF IMF Activities Publications Press Releases

Limba romana                                                                                                      Russian

December 20, 2007

Johan Mathisen
IMF Resident Representative in the Republic of Moldova



A mission of the European Department of the International Monetary Fund (IMF) headed by Mr. Graeme Justice visited Chişinău during December 5-21, 2007. The main purpose of the staff visit has been to conduct the Third Review of the performance under the PRGF arrangement[1] and hold the discussions for regular Article IV consultations. 

The mission assessed performance in implementing macroeconomic policies and structural reforms agreed in the Memorandum on Economic and Financial Policies (MEFP) of 2007, and held discussions for the new MEFP for 2008. The mission was pleased to note that performance under the program so far has been positive. 

The mission has noted that growth has been remarkably resilient in the face of shocks, and investment is picking up, supported by foreign direct investment (FDI) and strong remittances. The resolution of the wine embargo, and the approval of the trade agreement with the European Union provide an opportunity to step up the pace of reforms and boost growth.  

High inflation remains the main concern. Good progress by the National Bank of Moldova (NBM) in reducing inflation since late 2006 was set back by the drought, causing a spike in food prices, in line with regional trends. A renewed effort will be needed to ensure inflation is brought down to single digits in 2008. Also, fiscal policy will need to continue to withdraw fiscal stimulus and support disinflation efforts in early 2008. 

Key challenges for the government are to ensure that growth is supported by appropriate public sector restructuring to met the needs of a rapidly evolving economy, better physical and service infrastructure, energy sector restructuring, a friendly business environment, and better education and social services that make certain the benefits of economic transformation are felt by all.  

The mission reached a preliminary agreement with the Moldovan authorities on a MEFP for 2008. This agreement, as always, will need to be reviewed by the IMF Management, following which it will be submitted to the IMF’s Executive Board for consideration. It is hoped that the IMF Executive Board will be able to consider this proposed agreement in early March 2008.


[1] The Poverty Reduction and Growth Facility (PRGF) is the IMF's concessional facility for low income countries. PRGF loans carry an annual interest rate of 0.5 percent, and are repayable over 10 years with a 5.5-year grace period on principal payments. The PGRF arrangement with Moldova totals about USD 174 million, of which about USD 102 million have been disbursed so far.