IMF mission expected in Chisinau by month's end

A mission of the International Monetary Fund will be in Moldova at the end of April to conduct the third review of Moldova's Cooperation Program with the IMF. The announcement was made by IFF Resident Representative in Chisinau Tokhir Mirzoev in an interview with Radio Moldova, Info-Prim Neo reports. Recently the IMF provided to Moldova a loan disbursement of 50 million Special Drawing Rights (SDR), or $79 million, including $24 million for budget consolidation purposes and $55 million for enhancing the National Bank's currency reserves. “By offering this loan disbursement the IMF has demonstrated that it supports Moldova's efforts in carrying out the Cooperation Program. Of course, there is still a lot of work to be done in implementing reforms, but we are confident that the Moldovan authorities will deliver on their commitments”, said Tokhir Mirzoev. The 2011 Budget Law provides for a budget deficit of 1.9% of GDP, as compared to 2.5% in 2010. This, according to Tokhir Mirzoev, is a reasonable figure considering the country's economic situation. “Our expectations are the same. This year Moldova will see a 4.5% economic growth in real terms, and the annual rate of inflation is expected to be 7.5%. The growing consumption trend is expected to remain, leading to a greater deficit in the current account, but hopefully in the medium term this will reduce to normality”, said the IMF official. Concerning the reforms agreed under the Cooperation Program, Tokhir Mirzoev said that while any reform entails certain costs, such reforms are beneficial for the country. For example, the fiscal administration reform will help to improve the situation in the public finance sector and will reduce the human factor in the relationship between the revenue service and the taxpayers. The education reform will gradually make this system more efficient and will improve the quality of the educational services. The public service reform will help to bring it closer to the needs and aspirations of the people, etc. “The idea is to minimize these costs as much as possible. We ought to know and seek to analyze the relation between costs and future benefits. We think that the benefits delivered by these reforms to all the people and the country will be much bigger than the costs involved”, said Tokhir Mirzoev. The IMF official also said that the shift from an economic model based on consumption and remittances to a model which is based on attracting investment, on greater exports of goods and services, rather than of manpower, is a process which cannot be achieved in one day or one year. The transition to a different economic growth paradigm depends on the pace of promoting reform. A great role in this respect is played by the efforts to penetrate the region's markets, in particular of the European Union, in addition to keeping the traditional ones. When asked how long it would take Moldova to achieve the development level of the EU countries, the IMF official said: “It's like the story with the cart and the horse. If you're asking how long it will take them to reach the neighboring village, the answer is: it depends on the speed of the horse. And if those behind the reins are not doing a good job, then they might not reach any destination at all. In certain circumstances one can go the whole way very fast. The external factor is also crucial in this respect, but for the most part it depends on the speed with which reform is promoted”, said Tokhir Mirzoev. According to some estimates made by local economic experts, if maintaining a 10% rate of annual growth, Moldova will need at least 7 years to achieve Latvia's development level and 14-15 years those of the Czech Republic or Slovenia. In 2010 Moldova saw an economic growth of over 6.9%.