IMF staff concludes visit to Moldova

IMF staff concludes visit to Moldova

May 3, 2024

End-of-mission press releases include statements by IMF staff teams that convey preliminary findings after a country visit. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF Executive Board for discussion and decision.

  • The IMF team held constructive and productive discussions with the Moldovan authorities on the economic performance and policies underpinning the fifth reviews under the Extended Credit Facility and Extended Fund Facility (ECF/ESF) arrangements and the first review within the framework of the Resilience and Sustainability Service (RSF) agreement. .
  • The program’s performance has been solid and is generally on track, although some structural reforms have been delayed.
  • Economic recovery is taking longer than expected, against a backdrop of persistent challenges and fallout from Russia’s war in Ukraine.

An IMF mission, headed by Clara Mira, held discussions in Chisinau from April 22 to May 3 for the fifth review of Moldova’s programs under the ECF/SEP agreement and the first review under the RSF agreement. At the end of the discussions, Ms. Mira issued the following statement:

“The recovery of the Moldovan economy has been slower than expected, as the fallout and headwinds from Russia’s war in Ukraine continue. Real GDP grew 0.7 percent in 2023, below the IMF’s 2 percent forecast at the time of the last review. This was mainly due to a weaker recovery in domestic demand, particularly private consumption and investment.

“The recovery should continue in 2024, with growth of 2.6 percent, again less than previously projected. Risks include possible new energy shocks or a new wave of refugees. Faster-than-expected growth in trading partners, faster progress towards EU membership and acceleration of structural reforms are upside risks.

“The 2024 budget strengthens social safety nets, further sustains energy security, and supports growth-enhancing investments and reforms. Given that inflation has been within the BBM’s target band since November, the current monetary policy stance is appropriate. Exchange rate flexibility and the preservation of sufficient foreign exchange reserves will be essential to deal with shocks. Monetary policy should continue to focus on preserving price stability.

“The performance of the program has been solid and is generally on the right track, although with some delays in structural reforms. The authorities met all quantitative performance criteria by the end of December. The structural objectives of the end of December to strengthen tax administration and complete a selection of state-owned companies were met. The Climate Action Law was adopted. However, agreed reforms to strengthen the institutional autonomy and governance of the NBM (December) and establish an anti-corruption adjudication infrastructure, including a credible process for the selection of judges (March), are being delayed, although work is ongoing .

“We want to thank the authorities for the constructive discussions. The team will continue its discussions in the context of the Fifth Review of the ECF/EFF and the First Review of the RSF with the aim of reaching agreement at staff level in the short term. We reaffirm our commitment to supporting Moldova.

IMF Communications Department


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