GDP in Moldova will register this year up to 5% increase – IMF experts

Experts of the International Monetary Fund (IMF) are optimistic about the prospects of economic development in Moldova and think that the Gross Domestic Product (GDP) will register this year increases of up to 4.5 - 5%, against 3% forecasted in October last year. This statement was made on Wednesday, February 28, at a news conference by the Representative of the IMF European Department Thomas Richardson at the end of the assessment mission of February 21-28. IMF experts have assessed progress of the Government and National Bank as concerns the fulfilment of the commitments under PRGF Programme and macroeconomic prospects for 2007. As Richardson states, the external environment has improved to a certain extent, compared to the situation in October last year, obtaining a much lower price than the expectations of the natural gas import and agreement on resuming the exports to the Russian market. IMF official mentioned that Moldovan authorities show commitment in carrying out the economic reforms that they had assumed by signing the Programme with IMF. Richardson also said that the rate of inflation continues to be high enough, although in January 2007 it registered downward trends, and stood at 13%. “We think that the National Bank of Moldova (NBM) has firmly assumed its commitment to keep an austere monetary policy with a view to decreasing the inflation rate, so that by the end of the year to reach the level of under 10%”, the official said. Minister of Economy and Commerce Igor Dodon, attending the news conference, mentioned that in order to reduce the rate of inflation, NBM monetary policy will be oriented to the sterilisation of the flows of foreign and national currencies, as well as to optimisation of the budgetary expenditures. On May 5, 2006 IMF’s Executive Board approved the PGRF arrangement with Moldova in the total amount of about US$118.5 million, the first tranche of which – about US$17 million – was transferred to the National Bank of Moldova in mid-May 2006. On December 15, 2006 IMF’s Executive Board approved an increase in the size of the loan to about US$167 million. The second disbursement was approved for an amount equivalent to about US$ 48.2 million. The Poverty Reduction and Growth Facility (PRGF) is the IMF's concessional facility for low income countries. PRGF loans carry an annual interest rate of 0.5 percent, and are repayable over 10 years with a 5.5-year grace period on principal payments.