Moldova & IMF IMF Activities Publications Press Releases

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Ruben Atoyan (IMF): Needless to say, it is disappointing to see little progress with recovering funds stolen from Moldova's banking system

The IMF published a report on the completion of the three-year arrangements with Moldova and stated in its analysis that Chisinau had succeeded to stabilize both its economy and finances and the banking sector.

However, the IMF recommends that Government continue to spend prudently and further strengthen its institutions.

In an interview to Free Europe Radio, given shortly after the publication of the report, Ruben Atoyan, the IMF’s Mission Chief for Moldova, referred in detail to the recommendations, and also described the new vulnerabilities faced by Moldovan economy in the context of the COVID-19 pandemic.

Ruben Atoyan told us in the interview he gave us on Wednesday that the vulnerabilities that hamper Moldova’s development at the moment, after the banking system had been strengthened during the previous IMF-supported program, are associated with good governance and functionality of institutions.

Issues ranging from persistent corruption to the lack of rule of law and the high level of informal payments, from tax issues associated with enterprises and weaknesses in the non-banking sector to the loopholes in AMLFT legislation are just some of those that need to be addressed further with strong commitment by the authorities, and the new agreement between Government and the IMF would focus on them, says the IMF official. ‘And I don't need to tell you about the disappointment with the way how the stolen assets are being recovered,’ Ruben Atoyan added. ‘But apparently the authorities are well aware that these are the key issues to be addressed under the new IMF-supported arrangement,’ he says.

However, both the completion of the IMF-supported program and the IMF report come against the backdrop of a new global challenge - the coronavirus pandemic. Moldova is at high risk, the IMF representative estimates, and this is not only because it is in the very midst of a crisis itself, but also because its most important partners are strongly affected. ‘Many remittances come from Italy, a country strongly affected by the pandemic. Also, remittances come from Russia, which is facing a double blow, as a result of the pandemic and the drop in oil prices. Therefore, the Republic of Moldova will be affected by shrinking trade and remittances,’ estimates Ruben Atoyan and continues: ‘The state will probably collect less tax revenue, healthcare costs will go up and some measures will be needed to support businesses.’

‘We stand ready to offer our support to tackle these issues also, in our future discussions with the authorities,’ says the IMF representative.

Several days ago, the IMF announced that it was ready to mobilize emergency support of one trillion of US dollars for countries affected by the epidemic, while also calling on governments to put in pace policies to help the people and companies most affected by the pandemic.

When asked whether Moldova could count on this support, Ruben Atoyan said that the IMF can make available to Chisinau about 100 million USD dollars, that Government is aware of the availability of this funding, and that so far they have not requested any such financial support from the IMF.

Earlier this month, when the IMF had completed its final review visit to Chisinau and the Moldovan authorities were proudly announcing that they would be receiving the last tranche of USD 20 million from the loan made available since 2016, the Moldovan Prime Minister, Ion Chicu, told us in an interview that his government might start negotiating a new arrangement with the IMF as early as in April. Now, when the coronavirus pandemic has become the global news highlight, the Chisinau government's interest in a new arrangement with the IMF is expected to increase exponentially, says Veaceslav Negruţa, expert of Transparency International Moldova and former Minister of Finance:

‘Unfortunately, some elements have arisen in the meantime, from February until now, even from the very day when the IMF approved the last tranche of the credit to Moldova on March 11. There is great unpredictability regarding the economic and financial impact of the epidemic on Moldova’s economy. In addition, the impoverishment of population and the reduction of the fiscal potential over the next 3 -6 months will follow; remittances will also be affected greatly. All these things need to be understood, as trends, their impact needs to be assessed, and a major revision of the 2020 budget will also be needed. This should be done before starting discussions with the IMF on a new arrangement, and they need to focus now on mitigating the impact of the crisis caused by the pandemic and saving as much as possible of the population's income.’

Recently, when Prime Minister Chicu spoke in Parliament, asking approval to declare the state of emergency over the next two months, he said that he was considering a number of measures to support the business community, but implied that Government’s immediate efforts aim at stopping the spread of the disease and only later they would start considering solutions that would help to avoid economic disasters.