The legislative body on November 17, 2016 approved two state loans from the International Monetary Fund, of almost US$44 million and of about US$59 million. The money will be used to finance the state budget deficit, IPN reports.

Minister of Finance Octavian Armasu said the two loans will be provided through two financing mechanisms. The first loan of 31 400 000 Special Drawing Rights (SDR) will be provided through the Extended Fund Facility. The interest rate on this is equal to the SDR interest rate.

According to the minister, the commitment fee is 0.15% a year, while the service tax is 0.5% a year. If Moldova respects the repayment plan, the commitment fee will be refunded. The loan is repayable in 10 years.

The second loan of 43 100 000 SDR will be offered under the Extended Credit Facility. The interest rate on this is 0% annually until 2018, but will be reexamined by the IMF every two years. The loan is repayable in ten years, while the disbursement period is three years.

Octavian Armasu said the first tranche of US$24.2 million was already transferred to the National Bank of Moldova and will become available when Parliament approves the loans. The money will go to finance the budget deficit, including investments, current costs and debts.