Finances

IMF PROVIDES US$46.1 MILLION TO MOLDOVA FOR SUPPORTING REFORMS

23 september, 2019

The International Monetary Fund (IMF) Executive Board completed the fourth and the fifth reviews under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF), which makes available to Moldova the cumulative amount of SDR33.6 million (about US$46.1 million).

According to the IMF website, also the Council also approved Moldova’s request for extension of the arrangements to March 20, 2020 and rephasing of access in order to allow for the successful completion of the program.

“The Moldovan authorities have taken decisive corrective measures to bring the Fund-supported program back on track and to achieve its objectives of ensuring macroeconomic stability and advancing reforms. Going forward, it is critical that the authorities continue to pursue prudent policies and structural reforms aimed at strengthening the financial sector, maintaining fiscal sustainability, and creating space for social and infrastructure spending”, stated Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair.

According to him significant progress has been achieved in the financial sector’s reform agenda. Important measures to secure shareholder transparency and fitness and probity of the domestic banking system were completed. Progress has been achieved in improving supervision, regulatory frameworks, unwinding bank related-party exposures, and strengthening financial safety nets.

Moving forward, exit of the second largest bank from temporary administration, addressing rising risks in the non-bank financial sector, and improving the anti-money laundering and terrorism financing framework will be critical, in addition to making decisive progress on asset recovery.

“The amended 2019 budget will help mitigate immediate fiscal pressures. Strong implementation of adopted measures will be key in ensuring fiscal sustainability, while securing the needed fiscal space for priority projects. New initiatives need to be carefully costed. Continued efforts are needed to strengthen tax administration and compliance, streamline tax expenditures, and reduce risks from SOEs and PPPs. Strengthening public investment management would help improve the efficiency of public investments and scale up public infrastructure”, the IMF maintains.

Experts stressed that the monetary policy should continue to focus on maintaining price stability, in the context of a flexible exchange rate regime. The NBM should continue to improve its operational framework and capacity. Safeguarding the NBM’s independence is critical for its ability to fulfill its mandates of maintaining price and financial sector stability.

“Progress towards structural bottlenecks is needed to unlock Moldova’s economic potential. Improving governance and fighting corruption, strengthening bank intermediation, implementing transparent and predictable energy tariff policy, and promoting a business-friendly environment will boost growth potential and raise incomes”, the IMF press release says.

As Infotag has already reported, the Republic of Moldova signed the Memorandum with the IMF on November 7, 2016. The program is designed for 3 years and is financed by means of the EFF/ECF for supporting economic and financial reforms in Moldova. Within this agreement, Moldova got access to resources of the fund with total worth of SDR129.4 million (around US$178.7 million). Out of this sum, the NBM and the Government received over US$115 million, but then the assistance was suspended due to the fact that the previous Moldovan authorities took a range of uncoordinated steps in the tax policy. After coming of the new leadership, the cooperation was resumed and the decision was taken to continue the financing and to extend the program.

Add Comment

Add Comment

  • name
  • email
  • message
Thanks!
Your comment will be published after administrator approval.