Moldova & IMF IMF Activities Publications Press Releases


Chisinau, October 30 (INFOTAG). An International Monetary Fund Mission has
today accomplished its working visit to Moldova started on October 22.

The mission held negotiations at the National Bank of Moldova (NBM) which
resulted in introducing corrections to the IMF forecasts concerning Moldova's GDP
and inflation indicators for the year 2002.

Mission head Marta Castello-Branco, IMF Country Director for Moldova, told a
briefing here today that, according to the new forecast, the 2002 GDP growth will
be 6% and rate of inflation slightly above 5 percent. In 2003, the GDP will grow
by 5% and inflation should not exceed 6 percent.

After serious discussions, the IMF experts and governmental officials came to
share an opinion that by the mid-December of 2002 the Moldovan authorities will
have to achieve 3 important goals: to adopt the 2003 Budget in parameters
agreed-on with the IMF; to pass a law on pre-shipment inspection (PSI), and to
cancel restrictions on the exports of goods and services, with compulsory
publication of export tariffs and excises in various newspapers.

The PSI law adoption is going to be a really tough task for the Government to
attain, because importers are pressing on the Government and Parliament,
demanding PSI cancellation.

Marta Castello-Branco said that the fulfillment of the Government's promises by
mid-December would permit to put the Moldovan question on the agenda of the IMF
Board of Directors' sitting. Its positive decision would mean that Moldova
disposes of a program of cooperation with the Fund. Such a document would be a
very important positive signal for the Paris Club, from which Moldova has been
long requesting to restructure its external debts.

The mission experts presume Moldova has a very considerable share of Budget
revenues from trade operations. For such a small country, it is essential to
fully control imports which the pre-shipment inspection can ensure together with
Moldovan customs organs.

The mission admitted that many positive changes had occurred with the Moldovan
customs service, but not enough yet to guarantee full control over, and
transparency of, the imports of goods and services.

This problem is topical for many countries with transition economies. The IMF
experts believe it is too early for Moldova yet to make conclusions about PSI
efficiency, because the inspection has worked here for quite a short time.
Besides, the IMF is confident that the PSI works well.

The mission has compromised with the Government on the profit tax rate, which in
2003 is going to be 22%, against 25% in 2002. In the draft 2003 Budget law, the
Government was projecting to have the rate of 20 percent.

The mission's stance on Moldova's fiscal policy has not changed. The experts
believe that the profit tax rate should be lowered, but gradually and very
carefully, in order not to undermine budget revenues, and that the 3% decline
should not be detrimental for the Budget's revenue side.

Concerning the privatization of Moldtelecom, Marta Castello-Branco said the
situation on the telecommunications market is not the best now, so the Government
should think hard about whether it is worth selling 51 percent of the national
telephone operator. She believes such enterprises should not be privatized at no
matter what price. In her words, the IMF will not be objecting to the
Government's possible refusal to privatize Moldtelecom.

The experts are saying the Government is demonstrating a distinct intention to
fulfill the conditions agreed on with the IMF mission. "Moldova should not once
again miss a moment when it has all chances to meet the projected schedule",
Marta Castello-Branco said.

In her words, IMF money is never in abundance, and all countries are always
short of it. However, active cooperation with the Fund permits to more
efficiently attract direct foreign investments in economy, which Moldova needs so

In late 2000, Moldova signed a 3-year program of cooperation with the IMF aimed
at overcoming poverty and achieving economic growth. The program envisages
provision of credits by the IMF totaling $142 million. The National Bank has
already received $36 million from the Fund.


Chisinau, october 30 (INFOTAG). Prime Minister Vasily Tarlev voiced
satisfaction over the results of talks with the IMF mission which ended its work
in Moldova today.

He said the sides negotiated all aspects of the bills on 2003 Budget and on 2003
social insurance budget. The IMF has no objections to cutting the profit tax from
the present 25% to 22% next year. Taxes to be paid to the state social insurance
fund shall remain at the current level - 29%.

The Government is supposed to work out and submit to parliament a bill ensuring
legal frames for carrying out the IMF-recommended program of the pre-shipment
inspection of imported goods.

The Government has once again requested the IMF to back Moldova at the Paris
Club in restructuring the republic's external debt.