Resident Representative of IMF in Moldova is confident that the money offered by the fund will be used correctly

Johan Mathisen, the Resident Representative of the IMF in Moldova is confident that funds provided within the Poverty Reduction and Growth Facility (PRGF) will be used correctly in Moldova. Asked to comment upon the opinion of some local economists concerning the risks of embezzling the money promised by the international financial bodies and foreign donors, Mathisen told Info-Prim Neo that for the confidence of appropriate use of money, the IMF is organizing permanent monitoring missions in order to observe the way the funds are used in Moldova, rule applied to all the countries which borrowed money from the IMF. The official said that the assistance provided by the Fund to Moldova will be transferred to the National Bank of Moldova increasing national currency reserves. In this way, the assistance offered by the IMF is different than the one given by the World Bank or the European Commission which offers assistance for different projects and budgetary assistance. Such a mission was present in Moldova in 2006, making a comprehensive evaluation, which included all the aspects of the WB’s activity, also being estimated the internal procedures of the WB, carrying out internal and external audit at the WB, Mathisen mentioned. According to him, the main conclusions of the mission are positive in the case of Moldova. On December 15, after the meeting of the Consultative Group, which took place in Brussels on December 12, the Executive Board of IMF approved the augmentation of the three-year PRGF loan to a total amount equivalent to USD 167 mln from the original amount of USD 120.6 mln. Completion of the review makes available a disbursement of an amount equivalent to USD 48.2 mln to Moldova. USD 17.2 mln had been disbursed so far. The first estimation related to Moldova’s programme on the economic reforms and poverty reduction within the agreement referring to its financing mechanism (PRGF), ascertains that “Moldova's performance during the first six months of its PRGF-supported program has been encouraging”, despite sharp increases in natural gas import prices and disruptions in wine exports to traditional markets, which have slowed growth, fuelled inflation, and posed risks to the banking system. The authorities had been appreciated for the efforts to quickly adjust to the new external environment. They have passed through higher energy prices to consumers while seeking ways to compensate the poor. Prudent fiscal policy is helping to tame inflation while preserving social and infrastructure spending. The National Bank of Moldova (NBM) intends to make more effective use of its monetary policy instruments to bring short-term real interest rates back into positive territory, thus curbing inflation expectations. The Poverty Reduction and Growth Facility (PRGF) is the IMF's low-interest lending facility for low-income countries. Loans under the PRGF carry an annual interest rate of 0.5 percent, with repayments made semiannually, beginning 5.5 years and ending 10 years after the disbursement. Moldova did not have a Programme with the IMF since 2003. Moldova received only three instalments of about USD 37 mln from the total USD 147 mln included in the previous programme.