A mission of the European Department of the International Monetary Fund (IMF)
headed by Mr. Graeme Justice visited Chişinău during September 20-27, 2007.
The main purpose of the staff visit has been to discuss the 2008 budget, and
follow up on the status of the agreed structural measures under the PRGF
The mission was pleased to note that the economy is doing remarkably well
given the shocks it has faced. After the ban on exports of Moldovan wine to
Russia and a doubling of natural gas prices by Gazprom last year, the
country has been hit by a severe drought. Growth in the first half of 2007
at 8 percent is impressive, although the weaker harvest will inevitably
imply some slowdown in the second half of the year. Export performance has
been encouraging, and investment prospects have picked up. As a result, the
staff has revised its growth projections from 5 percent in each of 2007 and
2008 to 6 percent and 7 percent, respectively.
The IMF’s main concern is inflation. Good progress by the National Bank of
Moldova (NBM) in reducing inflation in the first half of the year has been
set back by the drought, with inflation increasing to 13.5 percent in
August. The target under the program of reducing inflation below 10 percent
by end-2007 is still achievable, but will need a sustained effort.
A mission to conduct the third review under the program is expected to visit
Moldova in late November. That mission will assess Moldova’s performance
under the program and prepare a report for consideration by the IMF’s