The Executive Board of the International Monetary Fund (IMF) on September 21 completed the first reviews under the 40-month ECF/EFF arrangements with Moldova, providing the country with access to SDR 20.65 million (about US$ 27 million). This allows for the immediate disbursement of SDR 20.65 million (about US$ 27 million), usable for budget support, bringing Moldova’s total disbursements under the blended ECF/EFF arrangements to SDR 185.95 million (about US$ 242 million), IPN reports, with reference to the IMF.

According to the IMF, spillovers from the war in Ukraine continue to weigh on Moldova’s outlook. The economy is expected to stagnate in the near term, with inflation remaining high amid rising food and energy prices. The current account and fiscal deficits are expected to widen significantly in the current year.

“Despite these challenges, the authorities remain firmly committed to the Fund-supported program, which aims to support the vulnerable, while advancing governance reforms and addressing developmental needs to create conditions for sustainable and inclusive growth. They have successfully completed structural commitments on fiscal governance, financial sector oversight, and on strengthening anti-corruption legislation, and even included additional conditionality to support the fiscal structural agenda,” said Kenji Okamura, IMF Deputy Managing Director.

The IMF recommends the Moldovan authorities to maintain an appropriate policy mix given persistent inflationary pressures, budget financing constraints, and exceptional downside risks around the baseline. Furthermore, concerted efforts are needed to improve spending efficiency, foster budget credibility, mobilize domestic revenue, and advance energy and SOE reforms. It also recommends safeguarding the independence of the National Bank of Moldova and promptly adopting the legislation to reinforce the institutional autonomy of the Bank by end-October as this is critical.