Press Release

OUTGOING HEAD OF IMF MISSION TO MOLDOVA PRAISES COUNTRY'S ECONOMIC DEVELOPMENT OVER PAST THREE YEARS

Chisinau, June 24 ( INFOTAG ). The Mission of the International Monetary Fund is satisfied with the development of the Moldovan economy over the past three years, said today the outgoing head of the IMF Mission to Moldova, Nikolay Gueorguiev.

He introduced the new IMF Mission Head in Moldova, Max Alier, who had worked in Ukraine before.

Speaking about the evolution of the Moldovan GDP since 2010, Nikolay Gueorguiev said that Moldova had the highest indexes in the region.

"This refers to the most important macro-economic indexes, the GDP growth, the inflation rate and the dynamics in the salary rise," he said.

The new head of the IMF Mission to Moldova, Max Alier said the dialogue with the Moldovan Government will start next week. He added that this dialogue aims at identifying the main goals and tasks of reforms, in order to start the discussions on a new cooperation program between the International Monetary Fund and Moldova.

According to Max Alier, the main task for the nearest future is to reach economic growth in the mid-term and long-term perspectives. The IMF Mission positively appreciated the plans of the Moldovan Government to launch "the second economic engine" by attracting foreign and local investments for increasing the export share of the country.

The incumbent Resident Representative of IMF to Moldova, Tokhir Mirzoev said that the International Monetary Fund has a concrete task: to establish the plans and main issues needed for the further implementation of structural changes and reforms.

"This will help us identify the concrete assistance, needed by the Moldovan Government," said Mirzoev.

The new head of the IMF Mission said that in the dialogue with the Moldovan Government, the sides will analyze the fulfillment of the main macro-economic indexes since November 2012.

Infotag's dossier: Until late April 2013, Moldova had a three-year ESF/EFF Program with the International Monetary Fund. Within the frameworks of this program, the IMF agreed to allot US$572 million, to the pro-European Liberal-Democratic Government of Moldova. With the help of the recommendations given by the International Monetary Fund and of the concessionary financing, Moldova managed, due to tougher budget and tax policy, to attain financial stability after the 2009 economic crisis. The greatest share of the financial assistance offered by the International Monetary Fund was used for replenishing the currency reserve of the National Bank of Moldova, which is regarded by the IMF as a "safety cushion" for the national economy, in case of external shocks and unexpected challenges. At present, the currency reserve of the Republic of Moldova has reached US$2.5 billion and continues to grow.

IMF SPEAKS AGAINST INTRODUCTION OF SINGLE TAX IN AGRICULTURE -
NIKOLAY GUEORGUIEV

Chisinau, June 24 ( INFOTAG ). The International Monetary Fund is speaking against the introduction of a single tax in agriculture, said today the outgoing Head of the IMF Mission to Moldova, Nikolay Gueorguiev, who is on his last visit to Moldova in this tenure.

He said that according to the International Monetary Fund, the spending on the introduction of this tax does not justify the expected advantages.

"This tax will not bring about any results from economic, fiscal or social points of view," said Gueorguiev.

Referring to the draft budget law for 2014, as well as to the tax policy for the next two-three years, he said that the recent meeting of the IMF Mission with Moldovan Finance Minister Veaceslav Negruta has shown that the political crisis had slightly upset the plans of the ministry.

Asked by your Infotag correspondent about the discussions of the IMF Mission with the Moldovan banks, Gueorguiev said that the sides broached the legislative amendments recommended by the International Monetary Fund, as well as the real situation in the banking sector, in particular, the transparency of banks' owners and their readiness to disclose information.

Experts of the IMF Mission believe that in this respect, the Moldovan banking legislation meets the international requirements and standards. They also think that at this stage, it is important to reform the Moldovan courts.

Speaking of the functionality of the new Moldovan Government, as well as of the fact that it has only 1.5 years for implementing reforms, the IMF experts said that this term equals to 50% of functionality of a full-fledged government.

"Elections are a real and normal process that should not negatively tell on the reforms implemented in the country. In 2010, Moldova underwent parliamentary elections, but the reforms continued," said the IMF experts.

Asked whether the Republic of Moldova will sign a new cooperation program with the International Monetary Fund this upcoming autumn, the new head of the IMF Mission to Moldova, Max Alier said that this depends on the actions of the Leanca Government, with which the fund is starting a dialogue.

Experts of this mission did not rule out the fact that this upcoming autumn, a new IMF Mission will come to Moldova to hold negotiations on a new cooperation program.

Infotag's dossier: The Moldovan Government did not receive the last tranche of US$76 million from the International Monetary Fund, because in early 2013, it adopted a string of decision that run counter to the previously-reached agreements with the IMF, for instance: the removal of the VAT in agriculture, the introduction of a single tax for farmers, as well as the salary rises for budget-paid employees.

MOLDOVAN TRADE UNIONS EXPRESS GRATITUDE TO NIKOLAY GUEORGUIEV

Chisinau, June 24 ( INFOTAG ). The Moldovan Trade Unions expressed gratitude to the outgoing head of the International Monetary Fund Mission to Moldova, Nikolay Gueorguiev, who is on his last visit to Moldova in this tenure.

At a meeting with representatives of the IMF Mission to Moldova, trade union leaders highlighted the positive results attained due to the three-year cooperation program (2010-2012) with the Government and the National Bank.

The deputy head of the Moldovan Federation of Trade Unions, Mihail Hincu thanked Nikolay Gueorguiev for his activities in Moldova. Yet, he noted that regardless of the salary rises in the country, the purchase power of the Moldovan population is decreasing.

"With the support of the International Monetary Fund, we managed to increase the minimal pay rates from 600 to 900 lei. Yet, this sum is not enough to cover the minimum subsistence basket," said Hincu, noting that the average salaries in Moldova are the lowest in Europe.

The trade unions leader also drew attention to the very low pensions, noting that 90% of the Moldovan retirees receive pensions that are below the minimal subsistence line.

In the opinion of the trade unions, Moldovan banks are crediting the real sector of the national economy under exaggerated interest rates, which hinders the gathering of tax receipts to the national budget.

Hincu asked the IMF Mission to provide support in the creation of a bank with state-run authorized capital in Moldova, which would finance large-scale projects in the national economy, under concessionary interest rates.

The trade union leaders agreed with the IMF Mission to Moldova, as regards the ongoing optimization in the education field.

"The population number is decreasing in the country, as the birth rates are dropping. Thus, the optimization of Moldovan schools is a must. The saved proceeds should be used for the development of infrastructure and for the creation of comfortable education conditions for our pupils," said Hincu.

For his part, Nikolay Gueorguiev said that the salary rises, as well as the revenues to the state budget, depend on the economic growth.

"Moldova has attained macro-economic stability. The GDP growth rates exceed the ones in other countries in the region. Now, it is important to maintain this stability and to guarantee the mid-term economic growth," said Gueorguiev, adding that this IMF Mission did not discuss the conditions of a new memorandum with the Republic of Moldova.

In his words, the conditions of a new cooperation program between the International Monetary Fund and the Republic of Moldova will be tackled by the new Head of the IMF Mission to Moldova, Max Alier, who worked four years in Ukraine, before coming to Moldova.

Infotag's dossier: Until late April 2013, Moldova had a three-year cooperation ESF/EFF program with the International Monetary Fund. The IMF Mission agreed to provide to the pro-Western Liberal-Democratic Government of the country US$572 million, due to the fact that the Moldovan authorities committed to implement reforms.