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Economic & Financial News Agency - Daily Electronic Magazine
www.InfoMarket.MD

Wednesday, September 18, 2002

FINANCIAL SITUATION IN MOLDOVA IS NOT MUCH WORSE THAN IN OTHER COUNTRIES, ASPIRING TO HAVE THEIR DEBTS TO THE PARIS CLUB RESTRUCTURED

The financial situation in Moldova isn't much worse than in other countries aspiring to have their debts to the Paris Club restructured.

According to the IMF Mission's Head who completed her visit to Moldova, Marta Castello-Branco, the procedure of the beginning of negotiations with the Paris Club has several preliminary stages.

Evaluation of the country's financial state is among them: the amount of the foreign debt against the amount of export, amount of foreign debt against state budget revenues and other indicators. These indicators are better in Moldova than in other countries. Then, bilateral creditors, members of the Paris Club evaluate government's actions on overcoming the crisis.

According to the Mission's head, if Moldova manages to achieve restructuring of debts to the Paris Club, it will have the right to ask other bilateral creditors to restructure its debts on similar terms.

Answering journalists' questions about restructuring of bills given by the government to the Gasprom, Marta Castello-Branco said the Fund can't exert direct influence on the Cabinet in this process. However, the Fund reserves the right to warn the government of the possible negative impact of the terms of bills restructuring on Moldova's Balance of Payments.

INTERNATIONAL MONETARY FUND IS AGAINST DRASTIC REDUCTION OF TAXES IN MOLDOVA

The International Monetary Fund stands against a drastic reduction of taxes in Moldova. This was said by the IMF Mission Head Marta Castello Branco at the news conference on  Wednesday.

According to Marta Castello Branco, it is much more important now for the republic to reduce the cost of business running, that includes both official payments (licenses and patents) and unofficial ones.

In the opinion of Mission's head, the tax burden in Moldova is not that great as in the neighboring states. She said that reduction of the tax burden has a positive effect in case when the taxable base is increased and as a result budget revenues grow. However, there isn't and there may not be precise research concerning how many more taxpayers will pay as a result of reduction of the income tax rate to 15%, but there are precise calculations as to how much budget will miss.

The Fund thus keeps its position concerning tax rate reduction.

According to the IMF Resident Representative in Moldova Edgardo Ruggiero, taking into account experience of other countries, it is necessary to reduce the number of licensed kinds of activities, to simplify some procedures regulating economy, to simplify the tax code and to introduce transparency in the country's economic policy to improve the business environment in Moldova.

Answering journalists' questions concerning the SGS company, Marta Castello-Branco confirmed the Fund's position that it is early to cancel the pre-shipment inspection in Moldova. In her words, one of the indicators of effectiveness of work of the SGS is the noticeable pressure of private business on the country's leadership to cancel SGS. The IMF won't support the government's proposal to exempt a number of goods from the pre-shipment inspection.

ACCORDING TO THE FORECASTS OF THE INTERNATIONAL MONETARY FUND, GDP GROWTH IN MOLDOVA IN 2002 WILL AMOUNT TO ABOUT 6%

According to the forecasts of the International Monetary Fund, GDP growth in Moldova in 2002 will amount to about 6%.

This was said by the IMF Mission Head Marta Castello-Branco at the press conference on occasion of completion of the visit to the republic.

In the opinion of Marta Castello-Branco, it is necessary in present conditions to be more conservative in the process of working out forecasts about the GDP growth. The Mission's Head also said the Fund is satisfied with the results of the first half-year, however, she didn't rule out that the achieved results could be a result of the seasonality factor.

According to the IMF's forecasts, inflation in Moldova will amount to some 6% till the year-end. The Fund earlier forecasted the amount of the inflation processes in the amount of 8%.

 IMF Resident Representative in Moldova Edgardo Ruggiero noted that after analyzing the 2002 budget, the mission concluded that in the fourth quarter of 2002 the Ministry of Finance will have to undertake additional efforts in order to execute its expenditures side, because in that period the budget will be under big pressure.