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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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