Issue No. 40 - Thursday, November 13, 2003
IMF ready to gove more freedom of action to Moldova
The day before yesterday, the IMF experts headed
by Mr. David Owen, presented to the press their findings about the state of
Moldovan economy. The view of almost two week IMF mission is quite different
from the victorious statements of the government.
A visit of such mission is not an
extraordinary event. The IMF experts come to our country every year to
“review the developments in the economy in the course of the year.”
Notwithstanding the common nature of this mission, a special attention was
drawn to the visit of David Owen, as it was made in the context of absence
of external financing and not simple relationship between the Moldovan
government and international financial institutions.
David Owen began his speech with a spoonful of
honey: “First, we are happy to see notable economic growth the third year in a
row. There are also some positive signs in the field of private investments.”
However, “reviewing the causes of this growth, we concluded that it is mainly
resulted by remittances from Moldovan people working abroad and wage increases.
This leads to significant increase of inflation that reached 17%.” This raises
mission’s concerns: “how realistic it is to maintain the existing growth pace?
And whether it would be possible to improve the business environment so that
local firms could produce more goods and services?”
Further, David Owen said that “we welcome the
measures taken by the NBM to monitor and contain inflation. Actions need to be
taken to contain the inflation and if the remittances will grow, the NBM will
have to tighten the monetary policy.”
According to the IMF representative, fighting
inflation will be successful only if Moldova will promote a “tight fiscal policy
in order to support the NBM actions. In this regard, it is necessary to work on
the 2004 draft budget because it has financing gaps. In our opinion, the
projections of donor grants and privatization proceeds are over-estimated.”
David Owen pointed out that the government proposal to eliminate some tax
exemptions were defeated in the parliament, “some measures need to be taken in
order to close the budget deficit gap and ensure payments on external credits
David Owen did not pass over the subject of
business climate. “From discussions with many economic agents, we concluded that
the business climate is poor and does not contribute to the economic growth.”
Therefore, while meeting with the government, “we discussed the measures that
need to be taken in four fields. First, it is necessary to fight corruption.
Second, it is necessary to put an end to government interference in the market,
i.e. pricing decisions and importing constraints. Third, we want to see the
government committed to accelerate the privatization process. Also, it is very
important to liberalize the trade regime and not use import tariffs to support
some economic agents.”
The main question that interested the journalists
was if Moldova will be able to live without the IMF money? “There is no doubt
that Moldova needs external financing in order to solve budget problems and meet
financial commitments,” answered the chief of IMF mission.
However, the possibilities for resuming crediting
by the IMF are remote. “Finally, I would like to say what the government needs
to do in order to resume talks on the new program. If we look at the
relationship with the IMF during the last ten years, we can note that the
programs were not fulfilled in full. The reason for that is lack of government
ownership of these programs.” Therefore, from now on, the government shall take
the lead and develop its own programs, economic growth and poverty reduction
strategy. We are ready to cooperate in the development of the strategy paper.”
If this document will be good and supported by concrete actions of the
government, this will trigger the discussion of the new program with the IMF.