» October 26 2004
Renewal of External Financing Is Not Under Discussion. Not Yet
Last week in Chisinau two press-conferences
dedicated to the matters of cooperation of Moldova with international
financial institutions took place. In particular, resident representative of
the International Monetary Fund informed the journalists that next IMF
mission is coming to Moldova with the aim of evaluating the economic
situation of the country as well as the course of reforms and the
perspectives of implementation of the Economic Growth and Poverty Reduction
Strategy Paper. International organizations will not discuss the issue of
renewal of financing for Moldova, however IMF representative mentioned that
the results received in the process of the mission's work will be presented
in a report for consideration of the Board of Directors of IMF at the
beginning of the next year.
Already after the presentation of the report
it will be possible to discuss thematically the perspectives of
collaboration between IMF and Moldova, including the renewal of financing.
At the same time, Edgardo Ruggiero reminded once again that the Monetary
Fund assigns resources to replenish monetary reserves of the country and not
to invest into development as it is in the case of the World Bank.
He also mentioned that the discussion of the
Economic Growth and Poverty Reduction Strategy Paper by the Board of
Directors of IMF and WB planned for November will hardly influence the
situation, because the Strategy represents a document of the Government of
Moldova, whereas international financial institutions can approve and
support the document, but not adopt it. In his opinion, Moldova could have
started the implementation of the Strategy half a year ago. Rudgiero
emphasized that the World Bank and other donor organizations will support
the implementation of the Strategy. In particular, this applies to the
project in the social and environment fields, treatment works and water
Also, last week, Paul Bermingham, the new
Director of the World Bank for the country, who replaced Luco Barbone in
this position in the beginning of October, and Shigeo Katsu, the
Vice-President of WB for Europe and Central Asia, were with a working visit
to Moldova. At the final press-conference they informed the public that on
the 14th of December, the Board of Directors of the World Bank will discuss
its Country Assistance Strategy for Moldova for 2005-2008. The document will
be based on the Economic Growth and Poverty Reduction Strategy Paper
developed by the Government of Moldova with an active involvement of the
The high-level officials praised the quality
of the document and urged the authorities to put it into action more
actively. As it is known, the World Bank plans to support the Country
Assistance Strategy for Moldova and this assistance may reach around 90
million dollars within the next three years. It is interesting that one of
the conditions for providing the financing is the Government's commitment to
the strategy, as well as readiness of Moldovan legislators to support the
The amount of financing the Strategy may
increase by 45 million dollars, in case the Strategy receives all the
necessary support of Moldovan authorities at all levels and is put into
practice consequently, without "one step forward - two steps backward"
principle that has become very usual for Moldova.
Among the priorities, WB representatives
mentioned projects in social sphere, fighting AIDS program, environmental
protection and improving public finances management, as well as the project
on competitiveness and improving business climate.
In case the framework document of the WB
Country Assistance Strategy is approved by the Board of Directors by
mid-December, the decisions on financing certain projects will be taken
separately for each project. He also mentioned that the Country Assistance
Strategy is a live document, and nobody should be surprised if it is amended
repeatedly in the process of its implementation.
Both representatives of the World Bank and
the Monetary Fund mentioned that one of the biggest problems regarding the
implementation of the Economic Growth and Poverty Reduction Strategy Paper
is the lack of institutions and specialists throughout the country, without
which the implementation of the Strategy is impossible, as well as the
necessity for capacity building.
Edgardo Ruggiero emphasized that if Moldovan
Government applies for technical assistance - assistance from experts who
have experience in the implementation of similar projects on poverty
reduction in other countries, it will get such assistance. In his opinion,
Moldova needs both financial and expert assistance.
In his turn, Shigeo Katsu stressed the
importance of NGO development throughout the entire country, because they
are the ones that can take the responsibility for the implementation of
various projects within the Strategy, especially those directly related to
combating poverty locally. He also pointed out that the World Bank is ready
to continue to providing such assistance to our country.
As for the possibility of the renewal of
financing from international financial institutions within their regular
programs, it depends solely on Moldova and its readiness to follow the
well-known principles. Meanwhile, international organizations note
positively the economic growth of the republic, but at the same time they
mention that it is not the result of governmental efforts to implement
reforms and is not of a long-term nature.
As Edgardo Ruggiero accentuated, the economic
growth of the country in based not on investments, which would prove its
stability and quality, but on the growth of consumption, both external - in
Russia and CIS countries, and internal, as a result of transfers made by
Moldovans who work abroad. According to statistics, direct foreign
investments into economy make $69 million, i.e. only 24% of the amount of
money transferred by Moldovan workers from abroad.
The opinion of experts is that Moldova needs
an institutional reform to make the country more attractive for foreign
investments. The importance of trade liberalization and removal of trade
barriers, including secret ones, was stressed once again. As an example, Mr.
Ruggiero mentioned the unofficial ban on export of scrap metal and sunflower
seeds. Shigeo Katsu, in his turn, mentioned that some aspects of the
economic policy of the authorities "raise concern and undermine trust". It
applies to agriculture, power engineering and business climate, as well as
"the existing gap between the adopted legislation and its implementation in
As Edgardo Ruggiero mentioned, another task
of the mission will be to identify inefficient spending of the government
that above all lead to corruption. At the press-conference, he refused to
clarify what kind of spending he meant, but as it is know, Moldova is in the
beginning of the election period, thus, it would be naive to expect the
authorities to follow IMF requirements, as well as to expect a serious
discussion about the renewal of financing from international financing
institutions until the end of elections.