IMF DOESN'T LIKE MOLDOVA'S BUSINESS ENVIRONMENT
Head of the IMF mission Marta de Castello Branco and Fund's Resident
Representative in Moldova Edgardo Ruggiero
The state of the Moldovan economy
is fragile, because it remains vulnerable to external shocks. This was said
by the IMF mission head Marta de Castello Branco at
today’s press conference.
She noted in this connection that one of the
reasons for this situation id the
limited structure of the Moldovan export. In case of a regional crisis,
which can be similar to that in Russia in 1998, the republic, which depends
on the export of certain group of goods risk to face serious problems.
According to her, the RM economic growth is
conditioned by the increase in the volume of funds, transferred to the RM
from its citizens, working abroad. However, this funds are mainly used for
Marta de Castello Branco has underlined that
the IMF recommends the RM government to redirect these funds for investments
into the real sector of economy that will allow to increase the production
and export volumes.
The IMF considers the Growth and
Poverty Reduction Strategy to be a good document and awaits action on its
practical implementation on the part of the RM government.
Marta de Castello Branco noted that
the above Strategy is the best instrument for pursuing the policy of the
authorities. According to her, its last version is a well-structured
document, containing clear objectives and tasks. The government has only to
rework the Plan of Actions on the implementation of the measures, given in
the Growth and Poverty
She has underlined that the key
momentum for the IMF will be the one, when the RM authorities begin to
realize it in practice. She has also noted that the Strategy contains
stimuli for economic growth, but does not gives concrete measures.
The IMF will begin the
talks on the new crediting program for Moldova after it is convinced that
the republic changes the course of its economic policy. IMF mission head
noted that the experts noted the low pace of reforms
and the reduction in the inflow of foreign investments. The business climate
lives much to be desired. She has also underlined that the IMF expects
concrete and active actions for the
practical implementation of the Growth and Poverty Reduction
The IMF experts consider
that the policy, pursued by the RM authorities confronts with the spirit of
the Growth and Poverty Reduction Strategy. In this context, Marta de
Castello Branco said that the introduced limit for the export of certain
products reduces free market competition. She made a reference here to the
recently approved Law on the Offshore Duty, amendments to the Law on Oil
Products, the Law on the Declaration of the incomes of the high-ranking
The mission head underlined
that the declaration of the incomes and the property of state officials is
very important for improving the management quality. Marta de Castello
Branco also underscored the low course of the
structural reforms, the reduction in foreign investments.
The IMF recommended that the RM government
should regularly effect current payments to the external creditors in order
to have their consent for the restructuring of the delayed indebtedness. The
mission head noted that the amounts of the delayed payments remain being
large. That is why, the RM government can reach agreement with them, if it
effects accurately its current payments.
It should be note that since August 2003 the
government has not paid $26 million on the credits and the interest. In 2004
the RM plans to allocate $77 million or 22% of its budget for servicing its
external debt. In 2003 the RM allocated $52.5million or 17.2% of its budget
for this purpose. The principal payments constituted $34.3 million and the
interest constituted $18.2 million.