A staff-level agreement has been reached with the Moldovan authorities following the fourth and fifth review of the economic program supported by the International Monetary Fund. IMF experts also approved the authorities’ request to extend the program duration until March 2020 to allow for its successful completion. After today's agreement is approved by the IMF leadership and Board of Executive Directors, Moldova will be able to benefit from an installment of about $46.5 million. This was announced upon the conclusion of an IMF mission which visited Chisinau during June 26-July 10, IPN reports.
"It is well known that we can benefit from macro-financial assistance only if we have a valid program with the Monetary Fund. Considering the fact that the macro-financial assistance program with the EU expires in March 2020, we have asked for the extension of the program with the IMF,” Prime Minister Maia Sandu told a press conference on Wednesday.
The prime minister added that a series of measures that the Government and Parliament would need to take to qualify for the funds. This includes steps towards rebalancing the budget and measures to make sure that essential payments, like social benefits, can be made, while also ensuring sufficient revenue. “Obviously the most important component is our ability to obtain grants and foreign funding from the European Union, of 1.368 billion lei. Funds that will go into our State Budget,” said Maia Sandu.
Ruben Atoyan said the agreement could be considered for approval by the IMF Board in September, provided that the measures agreed on are implemented. The IMF Mission head explained that the measures are meant to ensure the sustainability of public funding, improve fiscal compliance and speed up the rehabilitation of the banking and financial sector.
In 2018, Moldova’s GDP rose by 4% on a strong domestic demand and Ruben Atoyan says that the growth is predicted to remain robust in 2019, at around 3.5%. Inflation dropped sharply last year mainly thanks to lower regulated prices and a stronger nominal exchange rate of the national currency. But pressures are building up, with inflation expected to peak at about 7.5 percent at the end of the year.
The mission reached an understanding on fiscal measures needed to correct policy slippages from the 2018 package of tax initiatives and capital and tax amnesty that undermined program objectives and led to rising budgetary pressures. The authorities plan to approve a sound 2019 supplementary budget to mitigate fiscal vulnerabilities, while protecting priority social spending.
