Moldova & IMF IMF Activities Publications Press Releases

Limba romana                                                                         Russian

International Monetary Fund
Mission to Moldova

March 7, 2002


Conclusion of IMF Mission to Moldova,
February 26 to March 7, 2002 

The mission was lead by Richard Haas of the IMF's European II Department and included economic and legal experts from several IMF departments. The purpose of the mission was to review the economic and financial policies of Moldova and to determine whether these policies are in accordance with the Memorandum on Economic and Financial Policies (MEFP) signed by the Moldovan authorities in December 2000. This would be a precondition for the resumption of the IMF's financial support for Moldova.

The mission noted that monetary and budgetary policies continue to be prudent and broadly in accordance with the MEFP. Progress was also made on the inter-governmental agreement with Russia regarding the debt of Moldovagas to Gazprom; the current draft no longer contains a state guarantee for the debt of Moldovagas, which would be incompatible with the MEFP.

However, two issues remain outstanding:

(i) The MEFP required that a new market-oriented Civil Code be passed by Parliament by December 31, 2001. While this deadline has been missed, rapid and verifiable progress with the adoption of the Civil Code, leading to its full entry into force by January 1, 2003, will be a precondition for future financial support for Moldova from the IMF.

(ii) The resumption of financial support to Moldova by the IMF will also depend on Moldova securing additional financing from the World Bank. The main obstacle in this respect has recently been insufficient progress on key structural policies such as agricultural reform and privatization. These structural reforms are a necessary condition for macroeconomic stability and sustainable economic growth in the medium run.

Furthermore, the mission was concerned that several measures implemented earlier under the IMF program may be in danger of being reversed. In particular, the mission emphasized to the authorities that Pre-Shipment Inspection (PSI) will only be successful if it is fully supported by the government and by the customs administration. A meaningful evaluation of Moldova's experience with PSI can only be undertaken after the inevitable initial implementation problems have been resolved. The mission therefore urged the authorities to continue to fully implement PSI.

Similarly, the mission is very concerned that Parliament has recently approved in first reading an amendment to the Law on Financial Institutions that would allow the courts to over-rule decisions by the National Bank of Moldova with respect to the licensing of commercial banks. If this amendment were enacted, the independence of the National Bank of Moldova and its ability to effectively supervise commercial banks would be undermined; this would be incompatible with an IMF program. The mission was encouraged to learn that the Government vigorously opposes the proposed amendment.

It is expected that an IMF mission will return to Moldova in the near future with a view to evaluating progress in resolving the outstanding issues and concluding the first review under the PRGF program. Once this review is approved by the IMF's Executive Board, this will permit a resumption of the IMF's financial support for Moldova.

Richard Haas, Mission Chief