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.]