The resources under the augmented ECF/EFF arrangements will help Moldova address challenges emanating from the war in Ukraine, catalyze additional external financing, protect social cohesion by providing needed budget support to most vulnerable, and give further impetus to crucial reforms. The immediate disbursement of US$144.81 million will help Moldova meet pressing war-induced balance of payments financing needs, IPN reports, quoting a press release issued by the IMF.
The Executive Board of the International Monetary Fund (IMF) today concluded the ad-hoc review under the Extended Credit Facility and Extended Fund Facility Arrangements for the Republic of Moldova. This makes about USD 144.81 million (SDR 108.15 million) available to Moldova immediately. The Board also approved an augmentation and rephasing of access under the program.
Total access under the blended 40-month ECF/EFF arrangements approved in December 2021 was increased by about US$260.11 million (SDR 194.26 million) to about US$795.72 million (SDR 594.26 million).
“Spillovers from the war in Ukraine are affecting the Moldovan economy through a variety of channels, including a spike in energy prices, trade disruptions, adverse confidence effects and the indirect impact of sanctions. Already over 400,000 refugees fleeing the conflict have entered Moldova—by far the highest of any country in per capita terms. Most have since transited to other countries, but about a quarter of them currently remain there. The immediate disbursement under the blended ECF/EFF program will allow Moldova to meet pressing balance of payments financing needs arising from these shocks,” runs the press release.
Following the Executive Board discussion, Kenji Okamura, Deputy Managing Director and Acting Chair, said the Directors commended the Moldovan authorities for their strong commitment to the Fund-supported program, despite the challenging environment. They noted that the spillovers from the war in Ukraine and international sanctions on Russia and Belarus, including trade disruptions, higher and more volatile energy prices, and the continued influx of a large number of refugees, have had a significant impact on Moldova and led to increased external financing needs.
Directors emphasized that fiscal plans should remain anchored by a strong commitment to debt sustainability. Given the unprecedented uncertainty, Directors welcomed the authorities’ readiness to activate contingency plans, should risks materialize.
