Moldova & IMF IMF Activities Publications Press Releases

CHISINAU, July 26 (Reuters) - The International Monetary Fund expects Moldova's gross domestic product to grow by five percent in 2001 after a seven percent fall this year, the head of an IMF mission to the ex-Soviet state said.
"Next year we anticipate an increase in GDP by five percent," Richard Haas told a news
briefing late on Tuesday.

Haas, whose mission is spending two weeks in the country, also said Moldova could receive a first advance under a new IMF/World Bank poverty reduction programme before the end of the year. He said a drought which hit the grain harvest led the IMF to review its initial forecast for GDP growth this year.

The government initially expected GDP to grow by two percent this year after a 4.4 percent fall last year. Moldova's GDP has shrunk by two-thirds since independence in 1991. Moldovan President Petru Lucinshi has cut the 2000 grain crop forecast to 700,000 tonnes from 1.2 million tonnes.

Haas said the year was made more difficult for the tiny agricultural state of four million
people, wedged between Ukraine and Romania, as it received no foreign financing. But he praised government economic policies.

The IMF and the World Bank, Moldova's major creditors, froze their loan programmes at the end of last year over slow reforms after parliament rejected bills on privatisation of wine and tobacco companies.

Haas said the government managed to reduce wage and pension arrears, meet all foreign debt obligations and slow down inflation. He said the Fund expected inflation to slow to 10 percent next year.

The government targets annual inflation at about 20 percent this year after 43.7 percent in
1999. The State Statistics Department said monthly consumer price inflation slowed to 1.4 percent in May from 1.6 percent in the previous month.

Haas said the government and the IMF agreed on a sustainable, financially realistic budget
for next year. "Economic policies were appropriate...I really do not see any major outstanding issues to be resolved," said Haas.

The IMF and the World Bank are working on a new joint three-year programme to reduce poverty in Moldova. Haas said the country could receive a first tranche under the programme by the year end. He gave no other details.

Pieter Stek, World Bank executive director for Moldova, said earlier this month Moldova
could receive some $50-70 million a year from the bank if the programme is approved.