Moldova raises doubts over foreign debt payments

CHISINAU, Dec 13 (Reuters) - Moldova's finance ministry said on Thursday it will not be able to meet in full its foreign debt obligations due in December because it had not received funds from foreign creditors.

"Taking into consideration the fact that, until now Moldova did not receive financial resources
from external creditors in the amount of $36.3 million...the government of Moldova will have some difficulties meeting its obligations in December," the ministry said in a statement.
It said it was unable to meet in full interest payments due on December 7 on a loan from the
European Union.

At the end of the second quarter, the government's total debt to the European Union stood at
$46.6 million. It was not immediately clear how much Moldova was due to pay on December 7. On Thursday the government was also due to meet a $3.7 million semi-annual interest payment on a 2002 Eurobond. The finance ministry declined to comment on whether it also faced problems with that payment. It has a 21-day grace period.

In July Moldova narrowly escaped defaulting on a $3.7 million interest payment on its Eurobonds. The government then made the payment on the last day of the grace period, borrowing the cash from the central bank.

International rating agencies have downgraded Moldova's rating, saying they have doubts over the country's ability to service its foreign debt payments in future.

Moldova, a country of 4.3 million people wedged between Romania and Ukraine, is struggling under a heavy debt burden. More than a third of its projected budget spending for this year is earmarked for paying off debts.
Official figures showed Moldova's foreign debt totalled $1.539 billion at the end of March. It
comprises $1.015 billion in state foreign debt and $523.5 million in commercial debt.

The government had hoped to receive by the end of the year a $12 million tranche from the
International Monetary Fund under its $142 million loan programme.
But Moldovan officials said on Wednesday the IMF might delay until January a decision on whether to resume lending.

The IMF froze its three-year lending programme to the tiny agricultural country earlier this year
after some deputies in the newly elected Communist parliament proposed scrapping privatisation plans and introducing protectionist trade tariffs.

The finance ministry said an IMF mission was due in the Moldovan capital of Chisinau next week.

By Dmitry Chubashenko
Thursday, 13 December 2001 14:05:16