Moldova may receive about US$77m under ECF/ EFF arrangements

The International Monetary Fund (IMF) mission for the second review under the Extended Credit Facility/Extended Fund Facility (ECF/EFF) arrangements with Moldova and the Moldovan authorities have reached a staff-level agreement on the completion of the review. The agreement is subject to approval by the IMF Management and Executive Board. Executive Board consideration is expected in early April, the mission’s head Nikolay Gueorguiev said at the conclusion of the visit to Chisinau on February 16. According to the official, completion of the review will enable Moldova to draw SDR 50 million (about US$77 million) under the arrangements to support its budget and the external reserve position, Info-Prim Neo reports. “The program is broadly on track, although the implementation of several structural benchmarks has been delayed by last year’s elections and technical difficulties. The authorities are committed to move expeditiously to implement these measures,” Nikolay Gueorguiev said at a joint news conference with Premier Vlad Filat. “Moldova’s economic recovery has gained speed in 2010, and real GDP returned to its pre-crisis level. In 2011-12, we expect growth to maintain a strong pace of 4½-5 percent; the external current account deficit to remain elevated on account of strong domestic demand; and inflation to decline to 7½ percent by end-2011 and 5 percent by end-2012, notwithstanding the recent surge in international food and energy prices.” The IMF mission welcomed the authorities’ decision to bring the budget deficit down to 1.9 percent of GDP in 2011 and continue the fiscal adjustment in 2012. This policy would help to largely rid the budget from its dependency on exceptional foreign aid and make public finances more resilient to macroeconomic risks. Fiscal adjustment should be achieved by containing current spending and strengthening revenue, while expanding space for infrastructure investment and well-targeted social assistance, Nikolay Gueorguiev said. He also said that the NBM’s recent tightening measures adequately anchor expectations and address current concerns over the inflation impact of higher international food and energy prices. The mission led by Nikolay Gueorguiev visited Chisinau during February 2 – 16.