Press Release

Interlic News Agency - http://www.interlic.md

MOLDOVA MUST EXECUTE THREE CONDITIONS FOR GETTING NEXT TRANCHES OF CREDIT FROM IMF

Chisinau, October 30, INTERLIC. For a positive decision of a question on allocation to Moldova of the next two tranches of the US$ 25 m credit within the framework of the Poverty Reduction Program the republic has to execute three conditions before the appointed at December 18 sitting of the Board of Directors of the International Monetary Fund.

According to the Permanent Representative of the IMF in the Republic of Moldova Edgardo Rugiero, the first condition consists in the approval of laws on the state budget and the budget of state social insurance for 2003 corresponding to the stipulated earlier recommendations of the Fund's experts.

The second and third conditions are exclusion of any restrictions for export and approval by the parliament of the Law legalizing introduction in Moldova of the pre-shipment inspection.

Making comments upon the results of the work in Moldova of the estimation Mission of the IMF, Edgardo Rugiero stressed that the RM government has executed all stipulated earlier structural actions and achieved improvement of situation at the macroeconomic level.

The Permanent Representative of the IMF emphasized that in view of it the Fund's experts even reconsidered their former forecasts on the rate of inflation and growth of the gross domestic product. Experts of the IMF consider that the gross domestic product in the current year will make 6% and 5% in the next one. The mid-annual rate of inflation, under forecasts of the Fund, in this year will make 5% and not more than 6% in 2003.

According to Edgardo Rugiero, the basic discussions in the course of negotiations with the government were about problems of the tax policy, in particular, the size of the income tax and assignments in the Social Fund. In the center of attention of the parties there was also a problem of reforming in the sphere of public health services.

The Permanent Representative of the IMF in Moldova also said that the IMF Mission ascertained progress in implementation of the Poverty Reduction Program.

EXPERTS OF IMF COME FOR CAREFUL REDUCTION OF TAX BURDEN

Chisinau, October 30, INTERLIC. Experts of the IMF agreed with reduction in Moldova of the income tax for juridical persons from 25 down to 22 per cent. According to Marta Castello-Branco, in the course of negotiations with the Cabinet of Ministers was considered a number of measures directed at expansion of the taxable base, due to which it is possible to compensate losses from reduction of the income tax.

However, representatives of the IMF approved only a part of them. Marta Castello-Branco emphasized that the IMF experts are not against reduction of the tax burden, however, in their opinion, it is necessary to do it carefully in order not to lose a part of the budget's revenues.

In general, as the Fund's experts consider, work on improvement of the business and investment climate, and also combat with corruption are more important problems for Moldova now than reduction of the income tax.

MOLDOVAN AUTHORITIES TO ADOPT LAW LEGALIZING PRE-SHIPMENT INSPECTION

Chisinau, October 30, INTERLIC. The Moldovan parliament has to pass the law legalizing introduction in the republic of the pre-shipment inspection (PSI) of the imported goods. It is one of the conditions Moldova must execute before the sitting of the Board of Directors of the IMF appointed at the middle of December. At this sitting the question of allocation to the republic of the next tranches of the credit within the framework of the Poverty Reduction Program will be considered.

The Head of the estimation Mission of the International Monetary Fund, Deputy Director of Division "B" of the Department Europe II of the IMF Marta Castello-Branco informed about it today at the press conference dedicated to summarizing of the visit to the Republic of Moldova.

She emphasized that in the course of negotiations with the government an agreement that the inspection will work in Moldova until the customs service of the country gets stronger and works properly was achieved. Marta Castello-Branco reminded that mechanism of the PSI works worldwide as the temporary instrument for strengthening of customs services. As she said, as usual this process requires 2-3 years.

The question is a professional training, introduction of special computer cost estimation systems of the imported goods. "Such problems can't be solved within few months," - the Head of the IMF Mission stressed.

Marta Castello-Branco emphasized that, in opinion of the IMF, the PSI is being introduced in Moldova successfully and the Fund's experts see no sense in terminating of the given program when it began to confirm its efficiency in practice.

The Head of the IMF Mission stressed that introduction of the pre-shipment inspection directed at elimination of technical smuggling and increase of revenues in the budget from the custom duties. It is especially important for Moldova as the lion's share of revenue part of its budget the customs' assignations make.

GOVERNMENT IS READY TO ELABORATE DRAFT BILL LEGALIZING INTRODUCTION OF PRE-SHIPMENT INSPECTION

Chisinau, October 30, INTERLIC. The government is ready to elaborate a draft bill legalizing introduction in Moldova of the pre-shipment inspection (PSI). Prime Minister Vasile Tarlev stated this.

The Head of the Cabinet of Ministers commented at the request of journalists upon the results of negotiations with the IMF Mission on a problem of the PSI. He stressed that the Fund's experts expressed the understanding of that decisions of the Constitutional court are out of discussions and must be executed. We would remind that the CC recognized unconstitutional the decision of the government on introduction of the pre-shipment inspection.

At the same time, as Vasile Tarlev emphasized, considering the inspection an important and effective program, the Fund's experts suggested authorities of the republic to correct the mistake made earlier in the course of adoption of the program and elaborate the appropriate bill legalizing introduction of the PSI.

According to Vasile Tarlev, the government will work in this direction.

MOLDOVA PLANS TO SIGN WITH IMF A NEW MEMORANDUM ON ECONOMIC AND FINANCE POLICY OF GOVERNMENT AND NBM

Chisinau, October 30, INTERLIC. The Moldovan leadership and representatives of the International Monetary Fund plan to sign in November a new Memorandum on economic and finance policy of the government and the National Bank of Moldova for 2003. Project of the above-mentioned document elaborated basing to the Draft Bill on the State Budget for 2003 stipulates priorities of the economic policy for the next year.

Content of this document was considered today in the course of the meeting of Prime Minister Vasile Tarlev with Deputy Director of Division "B" of the Department Europe II of the IMF Marta Castello-Branco.

Marta Castello-Branco positively estimated achievements of the government in this year, having marked the considerable economic growth.

In return Prime Minister Vasile Tarlev stated that the RM government attaches especial importance to fulfilling of obligations taken before the IMF and hopes for receiving of the next tranches of the credit allocated within the framework of the Poverty Reduction Program.

As it is planned these credits Moldova would get till the end of this year or in the beginning of the next one.