IMF approves ECF and EFF for Moldova
Friday, January 29, 2010
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The IMF Executive Board has approved two new arrangements for Moldova. The
Extended Credit Facility and the Extended Fund Facility in the total amount
of about US$577 million. Moldova is the first country to receive the
Extended Credit Facility which is a new Fund instrument. It features very
favorable financing terms in particular, no interest will be paid until the
end of 2011 and the interest rate will remain very low after that. The other
facility, the Extended Fund Facility also has a low interest rate at present.
In 2009, Moldova faced a difficult situation. Owing to the global crisis,
exports, remittances and foreign direct investment fell sharply while output
collapsed. The budget ran out of money creating an unsustainable situation
for the recipients of fiscal expenditure.
The IMF program helps Moldova maintain basic fiscal expenditure such as
wages and pensions while raising public investment to support growth and
social assistance spending to assist vulnerable households. The arrangements
will raise international confidence in Moldova’s economic policies thus
helping it secure additional financing from other countries and other
organizations. Last, but not least, Moldova’s businesses will benefit from
significant liberalization and deregulation of the business environment
which will make it easier to work and invest.
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