New IMF Chief concerned about Moldova’s inflation

The new International Monetary Fund’s Mission Chief for Moldova Graeme Justice, visiting Moldova for the first time, is concerned about the inflation in Moldova. The IMF official told a news conference on Thursday, September 27, that the National Bank of Moldova has made encouraging progress in bringing down inflation, yet the progress has been set back by the effects of the drought, which caused a 13.5% inflation rate in August. But the target under the IMF arrangement to bring the rate of inflation below 10% is still achievable with the right policies, and sustained and strong effort from the central bank, Graeme Justice believes. In his words, it seems that Moldova is doing remarkably well. The 8% growth recorded in first half this year is a significant achievement in a country which has suffered successive shocks: first the ban on wine exports to Russia, then higher energy prices, and finally the drought. It will inevitably slow down the economic growth to an estimated 6% in second half this year. However prospects for Moldova are good, Graeme encouraged reporters. IMF will conduct a new formal assessment mission in late November. The IMF mission will assess, among others, the competitiveness of Moldovan products in external markets, in light of the recent appreciation of the national currency. The Executive Board of the International Monetary Fund resumed disbursements to Moldova in early May 2006, after more than a 3-year long break. In December 2006 IMF’s Executive Board approved an increase in the size of the loan to about USD 167 mln.