As the current program with the International Monetary Fund (IMF) expires on March 20 this year, the authorities in Moldova will ask a new program. Prime Minister Ion Chicu is to request the IMF to send a mission to Moldova after March to carry out an assessment in preparation for a new program, IPN reports.
“In the discussions with the current mission of the IMF, we agreed new actions, policies that will indeed complete this project successfully. I note from the start that the agreed policies no way affect the country’s interests. We didn’t undertake to raise taxes that would affect the economic activity. We do not affect the incomes or level of incomes of the population. All the agreed actions are exclusively in the interests of our country, our citizens,” Premier Chicu stated in a news conference held alongside the head of the IMF mission.
Asked by journalists, the Prime Minister referred to the two risks in the cooperation with the IMF that he mentioned earlier – the IMF’s inflexibility to the Moldovan authorities’ intentions to invest in infrastructure and the request to raise gas tariffs for end-users. According to Ion Chicu, these risks no longer persist. “This risk no longer exists this year as the price of Russian gas is set for a year. We do not see this risk. We will see what happens in the future. I told you that we do not live in communism. We live in a market economy and depending on the evolution of purchase prices, salaries and other factors, tariffs can go up or down,” stated the official.
IMF mission head Ruben Atoyan said the objectives of the IMF-supported program were mainly achieved. The broad reforms helped rehabilitate the banking system, strengthening macroeconomic and financial stability. The progress is also appreciable due to the unstable political landscape, including the replacement of three governments. In March, the IMF Executive Board will discuss the mission’s report and when the assessment of the program is completed, the Republic of Moldova could benefit from about US$ 20 million. The reforms done under the program contributed to increasing confidence and supported the restoration of economic growth. It is estimated that the real GDP growth reached 4.2% in 2019, more than it was expected earlier. It is projected that this indicator will remain at the level of 4% in the medium term.
The official noted that even if the perspectives are positive, there are yet particular risks related to the eventual return of political instability, reversal of particular policies or slowdown in the pace of reforms that can affect confidence and can limit the foreign financing options. The institutional vulnerabilities and those related to governance are widespread and represent a major obstacle to improving the living standards of the population. “There is a general perception that the state is corrupt and justice does not work correctly. The regulatory framework is not appropriately implemented and the existence of the imposing sector of state-owned enterprises generates budget risks and undermines competition and productivity,” stated Ruben Atoyan. In this regard, the IMF recommends prudent and well-coordinated policies so as to attenuate these risks.
The IMF mission led by Ruben Atoyan has visited Chisinau during January 22 – February 5, 2020.
