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IMF Team Concludes Two-week Mission in Chisinau


            An International Monetary Fund team led by Mr. David Owen, Deputy Chief of the Southern Division of the Fundís European II Department and IMF Mission Chief for Moldova, yesterday concluded its mission in Chisinau to review of economic and financial developments during the first three quarters of 1997.  The Fund mission had useful discussions with the Moldovan leadership, including President Petru Lucinschi, Parliament Speaker Dimitru Mo_pan, Prime Minister Ion Ciubuc, National Bank Governor Leonid Talmaci and other officials.


             The mission commended the authorities for their efforts to reduce wage and pension arrears, while keeping monetary policy sufficiently tight to result in a continuing reduction of inflation.  The mission also welcomed the progress in implementing the amended bankruptcy law and in regard to the tender for the privatization of Moldtelecom.  The mission urged the authorities to press ahead with the sale of Moldtelecom  according to the tender schedule.   

The Fund mission also expressed concern about continuing fiscal weaknesses, as reflected in an excessive budget deficit, higher-than-programmed borrowing from external sources and from the National Bank of Moldova, and continuing problems with making foreign payments on a timely basis.  Recent moves by the Moldovan Parliament, including the cancellation of tax penalties and fines, the rejection of the new VAT law in its first reading and a recommendation to the Government to reverse the June energy tariff decisions were regarded by the Fund mission as not supportive of a tight fiscal policy and undermining earlier progress on key structural reforms.  The mission urged that a strong budget for 1998 be approved by Parliament, based on realistic revenue projections and restructured and restrained expenditures, and that the Moldovan authorities move decisively to implement structural reforms approved in the summer, in land reform, energy sector restructuring, privatization, etc.   

             The mission provided the authorities with end-year targets and a package of measures to be taken during the coming weeks to strengthen the fiscal situation, to address the uncertainty created by the recent moves by Parliament, and to make decisive progress in structural reforms.  The package also addresses economic and financial policies for 1998. [The Fund will monitor developments during the fourth quarter and return in mid-January for a review of the situation at end-December and discussions on the program for 1998.]