IMF does not regard Moldova as a country that depends on remittances anymore

The International Monetary Fund does not consider and does not regard anymore Moldova as a low-income country that depends mainly on remittances, the head of the Mission of the IMF’s European Department Graeme Justice told a news conference on December 20. “We consider and regard Moldova as a country that goes through the early transition period,” Justice said. The IMF Mission has been in Chisinau between December 5 and 21 to carry out the third assessment of the programme regarding the financing mechanism for poverty reduction and economic growth. The IMF official said that the economic situation in Moldova has considerably improved since the program with the IMF was signed. At the same time, the rate of inflation remains a reason for concern and the risks of a rising inflation are persistent. At the same conference, Prime Minister Vasile Tarlev said that the Government and the National Bank are making every effort to curb inflation and reduce its impact. The economic growth was important despite a number of shocks like the ban on wine imports, the doubling in energy prices, the drought and now the winter with snow, Graeme Justice said. According to him, very few countries could have positive results after such shocks. If speaking about the future, Justice said, the emphasis must be put on economic growth stimulated by the development of the private sector and by an optimised and improved public administration. The head of the IMF Mission says that Moldova needs a public service that would offer good salaries in order to attract the most skilful personnel. As to public finances, they are in a good condition, Justice said. The budget for 2008 with a deficit of 0.5% of the GDP is of a good quality from out viewpoint, while the prospect of robust income growth offers the opportunity of promoting reforms in the public sector, the IMF official said. As regards the financial sector, it is still underdeveloped, Justice said. The lending rate in economy is lower than in other countries of the region. Only 10% of the rural population has bank accounts. This sector must be developed into a modern, European one, the official added. The head of the Mission of the IMF’s European Department said that he is a little disappointed at the situation created in the heating sector. He stated that the situation is worrying, especially after the Chisinau authorities decided to reduce the heating charge. The given decision exacerbated the situation and undermined the financial viability of this important sector, which is to no one’s benefit. The IMF official said that the charges should be increased so as they enable to recoup the costs, while the poor families should benefit from compensations as part of a well-planned social assistance programme. The IMF Mission and the Moldovan authorities reached a preliminary agreement over a new Memorandum of Economic and Financial Policies for 2008. The agreement is to be examined by the IMF’s administration.