Interview with Hassan
Al-Atrash, former IMF's resident representative to Moldova
I am optimistic about Moldova's prospects, says former head
of IMF's mission. But optimistic in long-term
B&F: You have been IMF's resident representative to Moldova for over 4 years.
Which events and people will stay in your memory?
Mr Al Atrash: Drawing up some conclusions from my work here, I can say I
learned a couple of lessons that could accelerate the reforms. First of all,
it is imperative that the restructuring of the energy sector and power plants
privatization keep going. Multimillion debts have kept on accumulating in this
sector for a number of years and the sector continues running into debt, and I
doubt anyone knows precisely how much we are looking at. The energy sector has
been and still is "a state within a state".
Second of all, it is urgent that administrative reforms get under way.
Salaries in this sector are miniscule. I personally know people who get two
hundred something lei a month. It is little wonder that corruption
proliferates in the republic. Another factor that could contribute decisively
to the success of reforms would be a general political consensus that reforms
are a must and that they should be persevered with. It is the lack of
political consensus that explains many of the problems that put reforms in
jeopardy. In any of the governments that I have been working with, be that the
government headed by Mr Sturza, Mr Braghis of Mr Tarlev, the degree to which
officials understood the need for reform was very unequal. The understanding
of the need for reform and the need to maintain good relationship with the IMF
was there and it was common for all governments. But this was only on the
surface, though. Incidentally, this is what we see in other countries as well.
One more lesson I have drawn is that success requires strong institutions: a
potent ministry of finance, a potent national bank.
I feel bad about having to leave Moldova at the time when everything is still
very much up in the air, when the government's relationship with the IMF is
not what we would like it to be. Still, I hope the talks between the IMF team
and the government will go on and will yield progress.
Question: It seems like your life in Moldova has not been all that easy....
Answer: I would like to believe that in my dealings with Moldova's leaders, I
acted transparently and in good faith. Take my word on it, none was more
disappointed than I when all the work we had done went to the wall. I mean
the government's signing of the agreement on gas supplies last year, even
after our numerous warnings not to do that. I am also sorry that after the
agreement had been signed, the Moldovan government held that it rigorously
adhered to IMF's requirements and that the IMF was simply "looking for an
excuse". But the addendum to our memoranda with the government that we signed
last summer leaves no further ambiguity: it says unequivocally that any
further increase in the country's foreign debt is unacceptable.
I recall that when I first met Premier Tarlev, he plaintively said something
to the effect of "unenviable external debt legacy" and that the government
would have to lay out 70 percent of the budget revenue if it were to repay it.
The agreement on gas supplies has far-reaching consequences: it goes much
further than it may seem at first sight. We are looking at nothing short of
hundreds of millions in external debt. Will Moldova be able to pay it back?
Q: What disappointed you during your stay in Moldova?
A: The opposition to reforms is very strong in Moldova, and lobbyists for the
energy sector are virtually impossible to resist. It goes without saying that
I've met a lot of people truly committed to and enthusiastic about reforms,
some of them in the government and government-controlled entities. However,
these are rather few in number. Political uncertainty has an impact as well.
During my stay here I worked with two presidents, two parliaments and three
governments. This is not to say that the reshuffling was undemocratic or
rigged - it was not. But incidentally, political turmoil usually started at
exactly the time that proved crucial for reforms, when a lot of efforts
yielded some obvious success, at least at the drafting stage. This all would
then go to the wall and the whole process would have to be started all over
again. I am skeptical about Moldova's chances for political serenity, at
least in the nearest future. Now that the ministers of finance and economy
who had been negotiating with us have resigned, things got as complicated as
you can ever get. There is no doubt that those ministers will be replaced by
others, but I am not sure what their views will be, what kind of policy they
will preach and how serious they will be about reforms. Still, I am an
optimist with regards to Moldova's prospects, or rather, I am an optimist with
regards to Moldova's long-term prospects. Besides, there is too much personal
for me in Moldova - I've got plenty of relatives here now and I am not at all
aloof to their faith.
Q: What do you think is going to happen if the government's negotiations with
the IMF fail to yield any progress?
A: Well, other IMF missions will arrive to start where the previous mission
left off. The talks will go on. But with one crucial reservation, though: the
Board meeting will not be convened in April. Nor will the meeting of the Paris
Club of government creditors will take place, a meeting crucial if Moldova is
to fulfill its hope to restructure $27 million in bilateral debts. Nor will
the World Bank supply, any time soon, its preferential loans to Moldova
pledged under structural adjustment arrangements. It would all have to wait.
But it can happen in October or November if the talks achieve a breakthrough.
Q: How is Moldova to pay its foreign debt then?
A: It may have to rely on whatever it earns on privatization, but this is far
from certain. The country could also pay off its external debt with the help
of the World bank but this will eat deep into the country's foreign exchange
reserves. This would be risky indeed: where will the country be in a year or
two if the foreign exchange reserves are exhausted? But I do hope that the
ongoing negotiations with the IMF mission will yield a breakthrough and the
Board meeting will be convened in April as planned.
Q: Which of Moldovan officials impressed you the most?
A: Well, every government had powerful personalities on board. I think Mihai
Manoli was a grandiose minister. Former Deputy Prime Minister Alexandru
Muravski was in that league too.