The IMF team and the Moldovan authorities have reached a staff-level agreement on policies for completion of the fourth review under the Extended Credit Facility and Extended Fund Facility (ECF/EFF) arrangements, and also on a new Resilience and Sustainability Facility (RSF) arrangement.
This comes following an IMF mission, conducted during September 25-October 16.
“The authorities and the IMF team have reached staff-level agreement on policies to complete the fourth review under the ECF/EFF arrangements. The agreement is subject to approval by the IMF’s Management and Executive Board. Completing the review will make SDR 70.95 million (about $92 million) available, bringing total disbursements under the program to about $461.3 million”, announced Clara Mira, head of the IMF mission.
“Program implementation remains generally strong, despite challenging circumstances. The authorities met all end-June quantitative performance criteria. Structural reforms are also advancing, including in fiscal governance and financial sector oversight. Work is ongoing to strengthen the framework of anti-corruption institutions, including ensuring that the Anti-corruption Prosecution Office has jurisdiction over high-level officials for all corruption-related crimes and is granted sufficient powers and capacity, and by establishing an Anti-Corruption Court”, Clara Mira was quoted in a press release as saying.
According to the source, the outlook remains highly uncertain, with significant downside risks. Escalation of the war and renewed energy shocks could aggravate prospects going forward. However, progress in EU accession, a faster recovery in domestic demand or in trading partners could boost growth and confidence.
“Fiscal policy has rightly focused on mitigating the economic and social fallout of the war, while supporting recovery. The October supplementary budget will keep the deficit within the agreed target under the program. Fiscal adjustment should commence with the 2024 budget, underpinned by robust tax collections, although a decline in external grants is projected. The authorities should continue to prepare contingency plans, protect the vulnerable, and prioritize infrastructure investment”, goes on the press release.
Article IV discussions focused on reforms to foster inclusive, sustainable, green growth and EU integration, including by improving the labor market to unlock participation and boost productivity and improving the business environment by reducing bureaucracy, improving digitalization, strengthening governance, and enhancing infrastructure investments.
