Moldova & IMF IMF Activities Publications Press Releases


The supplement to the Memorandum with IMF - everything works according to the plan. But whose plan is that?

InfoMarket.MD News Agency comment

The supplement to the Memorandum with the International Monetary Fund, elaborated during the last visit of the representative of this organization Richard Haas, which was
the top secret, is finally made public (Logos-press). While studying thoroughly the supplement it becomes unclear, why the administration of the country kept it in secret. In general it is a classical and even typical document. Its specifics is only that the supplement has an official stamp of the new Moldavian government, which was proposed and approved by the party in power - communists.

Thus, the new government has agreed with the conditions and market principles of the international financial organizations. And one more fact - many articles of Memorandum contradict the real actions of the administration.

First of all, the government is obliged to continue the market policy, "…creating the necessary conditions for the development of the private business and economic growth while the main role private sector will play." The cabinet of ministers also promises to hold well-grounded financial policy and program of privatization, to support the liberal currency and trade regime. The following phrase is of great interest - "We understand that the price and marketing margin control system we had before was not effective. Moreover, the price control is also a "non-effective tool for the defense of the poor." The phrase, more likely for the party of social - democratic orientation, but not for the communist one. We may believe that the cabinet of ministers would turn down its intention to regulate the prices of the most necessary goods, or at least to reduce the list of products. This desire is mentioned in the supplement, but it is said there about the exclusion from the list "… namely, of the construction materials.." Nothing is said about the bread, milk and medicine.

Besides, the government of Moldova hopes to register 4,5 - percent growth of the Domestic Gross Product in year 2001 and 3,5 -percent growth in 2002. During this year the government forecasts the coming of consolidated income (including the grants), which will amount to 5556 million leis, and the expenses - to 6727 million lies. The cabinet of ministers also commits itself to strengthen the partial moratorium for the hiring of personnel in the entire state sector; to annul the weak social aid programs, such as the organization of summer camps and the sea treatment for the employers and members of their families (what do the trade unions do?); and also to shift the responsibility for the payment of the first month of the employee's sick leave to the employer. According to the supplement, " … we will increase the salary fund only if we have enough resources (besides the incoming from privatization)." However, as it is known, there is never enough money (or resources). In addition - " … no additional resources will be allocated for the sate reserve funds (except for those included in the budget), and the operation with the state reserve funds will be repeated only on the commercial basis". Nevertheless, notwithstanding all the claims of the Finance minister Mihai Manoli that the reserve fund of the government is for along time empty, the cabinet of ministers unceasingly obliges the Ministry of Finance to allocate funds for the non-planned expenses.

In the supplement the government declares its adherence to "…remove the mutual report, current tax payments and natural arrears operations". However, the power structures do not waver to propose the "budget officers" (voluntarily) to get the arrears of wages by means of cereals. Isn't it the mutual report? We continue - "…we abstain from introduction of any tax liberation, recesses, amnesties or postponements". Recently, during the negotiations with the IMF mission, the cabinet of ministers approved the bill about the writing-off the penalties and fines of enterprises, which regularly paid out the current budget receipts. At the same time, the government is ready to abstain from the nationalization of the companies, having debts to the state, except for special cases, when they have an agreement with the World Bank. It is hard to imagine, that the World Bank would ever agree with the term "nationalization".

The administration of Moldova swears not to expose the law about the National Bank of Moldova to any amendments, saving its status of the independent public juridical person. In connection to this, according to the supplement, the money and credit policy of the NBM will be directed to the achievement and support of the low inflation on the level of 10%. The government is also ready to propose the law about the money laundering to the parliament, to continue the process of privatization of "Moldtelecom", of the electricity distribution network, of wine factories, to impose the pre-shipment inspection. Besides, they promised IMF not to introduce the export prohibitions, quotes and licenses. The cabinet of ministers promises to save the liberal trade regime, and also "…permanent control indices of the structure reforms concerning the import tariffs".

In return, Moldova requests only one thing - to support its efforts in the restructuring of the external debt within the framework of the Paris Club. Moldova will ask the administration of Netherlands to assist in "… the organization together with the World Bank of the meeting of the consulting group for the mobilization of the necessary donors' support". The future of Moldova is behind these two brief proposals. If the government does not come to an agreement about the restructuring of the debt (for that they formally should not implement one of the conditions of Memorandum or of its supplement), the default will be announced to Moldova. Many people say that it is not that terrible and give as an example the situation in Russia and Ukraine in 1998. But Moldova does not have such minerals and big internal markets as these countries. In case of Moldova, default means very serious problems. Because of this the government has to follow the conditions of IMF, which essentially contradict with the election platform of the communist party. But what to do - the policy is the art of probability.