The International Monetary Fund (IMF) Office in Moldova on its website published the Memorandum of Economic and Financial Policies of Moldova and the Government’s letter of intent. Earlier, the Moldovan authorities said that after the document is published, they will provide detailed explanations about the reforms envisioned by this, IPN reports.
The letter of intent says weak governance in Moldova’s financial sector, left unaddressed for years, enabled a large and well-orchestrated bank fraud in late 2014, with pronounced economic and social costs. Against that backdrop, real GDP contracted by ½ percent in 2015, public and public-guaranteed debt rose by 11 percent of GDP, the exchange rate depreciated some 25 percent, international reserves fell by one-third, and monetary conditions had to be tightened significantly to prevent a sharp increase in inflation. The situation has stabilized in recent months, but remains fragile. A concerted effort, with the financial and technical support of the international partners, will be critical to restoring confidence and allowing for broad-based inclusive growth.
To address these challenges, the Moldovan authorities committed themselves to a comprehensive economic reform program that aims to decisively strengthen economic governance and transparency, and reduce risks. “A number of key measures will be put in place immediately to demonstrate our commitment to program policies and objectives. These prior actions address long-standing issues in the financial sector, not just through bold changes to legislation and regulations, but also through early enforcement actions that will demonstrate a departure from the culture of supervisory forbearance,” says the letter of intent.
The Government also says that it will provide the International Monetary Fund with the information it requests for monitoring the progress made in implementing the program.
On November 7, 2016 the Executive Board of the IMF approved three-year arrangements under the Extended Fund Facility and the Extended Credit Facility with the Republic of Moldova to support the country’s economic and financial reform program. The cumulative access under the arrangements is SDR 129.4 million (about US$178.7 million, or 75 percent of the Republic of Moldova’s quota).
