Executive Board Approves Disbursement for Moldova
Board of Directors of the International Monetary Fund on Monday, January 4,
1999, approved the completion of the third review of Moldova’s three-year,
Extended Fund Facility program and disbursement of SDR 25 million
(approximately US$35 million) to the National Bank of Moldova later this week.
The IMF Executive Board also approved an extension of the EFF program
by one-year to May 2000, with SDR 50 million to be available under the program
in four tranches in 1999 and SDR 22.5 million available in 2000, provided that
targets and conditions are met The
SDR 135 million EFF program was approved initially in May 1996 with
disbursement of SDR 11.25 million, and subsequent disbursements took place in
September 1996 (SDR 11.25 million) and July 1997 (SDR 15 million).
Moldovan authorities were commended on adoption of a tightened fiscal stance
in the second half of 1998, in the wake of the regional financial crisis and
on approval of cautious state and social fund budgets for 1999. The efforts of
the Government and National Bank to ease pressures on the national currency
and to remain current on foreign debt and domestic Treasury bill payments
under difficult conditions in the fourth quarter of 1998 were also recognized.
Note was taken of the recent stabilization of the leu, the strengthening of
the Treasury bill market and a partial rebuilding of foreign exchange reserves
by the National Bank in December. Hopes were expressed that the depreciation
of the leu would ease pressures on the external balance of payments and lead
to growth of exports.
Concerns were expressed about
the continuing weakness of the state budget and the authorities were urged to
speed implementation of reforms in health and education, energy consumption
and compensations, pensions, agriculture support, and public administration.
Stronger efforts will be needed to improve tax collections via
elimination of barter payments and a substantial reduction of netting
operations or “mutual offsets.” At the same time the bankruptcy law must
be implemented more aggressively to improve enterprise management and
The Board also recognized the
recent acceleration of privatization and commended the authorities on their
commitment to move forward with the privatization program for the electricity
sector, for Moldtelecom, the tobacco sector, the state fuels company Tirex-Petrol,
and for key firms in agriculture supply and marketing.
The Board noted the substantial improvement of the foreign trade regime
via reduction of the maximum import tariff from 40 to 15 percent and the cut
of the number of tariff bands to three.