Moldova & IMF IMF Activities Publications Press Releases

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Chisinau-12.05.2001/14:39:06/(BASA-economic) The International
Monetary Fund (IMF) has asked the Moldovan government to accept it
as a consultant in issues contradicting the December 2000
memorandum, in particular in issues concerning the growth of the
public spending.

IMF Resident Representative Hassan Al-Atrash stated at a meeting
with Moldovan Deputy Premier Valerian Cristea on Friday that any
essential modification of Moldova's social policies would affect
the relations with the Fund.

Moldovan officials were earlier quoted as saying that the number of
groups benefitting from nominal compensations would be extended and
the pensions and salaries would be increased. The parliament
recently adopted laws that increased the spending in compensations
for war veterans by 60 million lei, though this amount was not
contained in the 2001 budget.

Al-Atrash said the Moldovan legislators should have first consult
the IMF.

He also said that the Fund was not opposing the support for
veterans, but stressed that any law must have financial coverage.

Al-Atrash appreciated the economic program of the government
installed by the communist majority as containing some positive
measures - a bigger stress on the fight against corruption and
smuggling, maintaining low inflation and improving the fiscal
system, and elimination of the extra-budgetary funds. Still, there
are provisions inconsistent with the Memorandum - price control on
some goods, trade restrictions in order to protect the local
producers, possible restoration of monopolies on tobacco and
alcohol, and introduction of privileges in energy.

In the second half of 1997, IMF froze the ties with Moldova for a
period of 18 months and showed concerns over the grave financial
situation and excessive public deficit, which was 7.6 percent.

Moldova has not managed to receive at least half of the loans from
the Extended Facility Fund, which was approved in May 1996 in the
amount of 135 million Special Drawing Rights (190 million dollars)
for three years.

Chisinau reimbursed in March, including to IMF, 5.24 million
dollars. The amount of foreign debts reduced by 9.7 million
dollars as a result of the appreciation of the dollar compared to
other currencies, the BNM also said.

In March "Moldova paid all guaranteed debts according to the
schedule." Concerning direct debts, the government failed to repay
an amount of 868,000 dollars to the World Bank.

On March 31, the amount of state guaranteed debt was 709,000

In 2000, the external debt managed by the Moldovan government rose
by 17.8 percent, amounting to 781.3 million dollars. But it did
not exceed the level established in the budget - 820 million
dollars. The public debt includes the debt managed by the
government plus IMF loans.

According to 2001 law budget, the foreign debt managed by the
government will not exceed by the end of this year the level of
815.6 million dollars.

Governmental officials stated that Moldova would pay this year
81.3 million dollars in foreign debts, plus another 178 million
dollars in 2002, and 95.8 million in 2003.

2002 will be a critical year for Moldova as regards foreign debt
service, if the servicing of the foreign debt takes as much as
half of the public revenue.

The IMF's Executive Board approved the three year loan under the
PRGF for the Republic of Moldova in an amount equivalent to SDR
110.88 million (about 142 million dollars) on December 21, 2000.
Two tranches, totaling nearly 25 million dollars, have already been
disbursed under the PRGF: the first tranche of 12 million dollars
was disbursed on December 29, 2000 and the second tranche of 12
million dollars was disbursed on February 23, 2001. The third
tranche would be disbursed not earlier than August.

According to government officials, Moldova has fulfilled most of
the conditions under the Memorandum on Economic and Fiancial
Policy, except for a number of laws, which remain queued since the
parliamentary crisis at the beginning of this year. Among these
there is a law on bankruptcy, law on free enterprise zones,
amendments to the law on banks.

According to the Memorandum on Economic and Fiancial Policy, the
Moldovan government and central bank are committed to increase the
international net reserves up to 67 million dollars and the
currency reserves up to 229 million dollars by the end of March.

The central bank was also limited to crediting the government in a
maximum amount of 1.419 billion lei. At the same time, Chisinau
pledged to amend the Fiscal Code and Law on Banks, including the
clause that bankrupt banks are closed by courts and not the
National Bank.

After the arrival of the Communists to power, IMF officials were
quoted as saying that the Fund would continue crediting Moldova in
order to reduce poverty and obtain economic growth. IMF builds its
relations with all member nations through the support for their
economic programs and policies, but not through the support for any
political parties or individuals, the officials stressed.

The new Moldovan government promised to strengthen the cooperation
with the International Monetary Fund, World Bank, European Bank for
Reconstruction and Development and other lenders, but noted that
these ties will be based on "national interests" and that "the
government will honour all its financial obligations."

The Tarlev cabinet expects a 5-percent economic growth, a two-fold
decline of the inflation rate down to 10 percent and reduction of
the budgetary deficit down to 1.5 percent of the gross domestic
product. In 2000, the inflation rate was lowest in the past ten
years: 1.6 percent.


Chisinau-12.05.2001/14:39:06/(BASA-economic) Fondul Monetar
International solicita sa fie consultat de Guvernul moldovean in
cazul in care acesta va adopta decizii ce vor conduce la
cresterea cheltuielilor bugetare.

Rezidentul FMI la Chisinau, Hassan Al-Atrash, a declarat ieri in
cadrul intalnirii cu vicepremierul Valerian Cristea ca modificarea
esentiala a politici sociale a Guvernului va afecta relatiile
Republicii Moldova cu FMI.

Oficialitatile au anuntat ca va fi extins numarul categoriilor de
populatie ce beneficiaza de compensatii nominative, vor fi majorate
majorate pensiile si salariile, iar recent Parlamentul a adoptat o
lege privind acordarea unor indemnizatii veteranilor de razboi ce
necesita cheltuieli in suma de 60 mln lei, neprevazute de buget.
Hassan Al-Atrash a deplans faptul ca legislatorii nu au consultat
FMI inainte de a adopta aceasta lege.

Rezidentul FMI a spus ca aceasta institutie financiara nu este
impotriva sustinerii veteranilor, insa orice lege trebuie sa aiba
acoperire financiara.

Prin semnarea la 1 decembrie a Memorandumului privind politicele
economice si financiare autoritatile moldovene s-au angajat sa
reduca deficitul bugetar pana la 1,5 la suta din Produsul Intern
Brut. Noul Guvern a reconfirmat acest angajament in programul
de guvernare, aprobat de catre legislatori.

In jumatatea a doua a anului 1997 FMI a stopat finantarea
Republicii Moldova pe o perioada de aproape 18 luni, alertat de
situatia financiara grava si cresterea excesiva a deficitului
bugetar care atinsese nivelul de 7,6 la suta.

Republica Moldova nu a reusit sa obtina nici 50 la suta din Fondul
Extins de Facilitati, aprobat in mai 1996 in suma de 135 milioane
DST (190 mln dolari SUA) pe o perioada de trei ani, deoarece nu a
respectat clauzele Memorandumului privind politicele
economice si financiare.

In anul 2000, deficitul bugetar a constituit 1,6 la suta, cel mai
mai jos nivel din ultimii zece ani.