- The war in Ukraine has resulted in significant spillovers to Moldova.
- The resources under the augmented ECF/EFF arrangements will help Moldova
address challenges emanating from the war in Ukraine, catalyze additional
external financing, protect social cohesion by providing needed budget
support to most vulnerable, and give further impetus to crucial reforms. The
immediate disbursement of US$144.81 million will help Moldova meet pressing
war-induced balance of payments financing needs.
- The program is on track. The goals of addressing balance of payment
imbalances, and strengthening governance and institutional frameworks,
through an ambitious set of structural reforms are maintained.
Washington, DC – May 11, 2022: The
Executive Board of the International Monetary Fund (IMF) today concluded the
 under the Extended Credit Facility and Extended Fund Facility
 for the Republic of Moldova. This makes about USD 144.81 million (SDR
108.15 million) available to Moldova immediately. The Board also approved an
augmentation and rephasing of access under the program. Total access under the
blended 40-month ECF/EFF arrangements approved in December 2021 (Press
Release) was increased by about US$260.11 million (SDR 194.26 million) to
about US$795.72 million (SDR 594.26 million).
Spillovers from the war in Ukraine are affecting the Moldovan economy through
a variety of channels, including a spike in energy prices, trade disruptions,
adverse confidence effects and the indirect impact of sanctions. Already over
400,000 refugees fleeing the conflict have entered Moldova—by far the highest of
any country in per capita terms. Most have since transited to other countries,
but about a quarter of them currently remain there. The immediate disbursement
under the blended ECF/EFF program will allow Moldova to meet pressing balance of
payments financing needs arising from these shocks.
Following the Executive Board discussion, Mr. Kenji Okamura, Deputy Managing
Director and Acting Chair, made the following statement:
“Directors commended the Moldovan authorities for their strong commitment to
the Fund-supported program, despite the challenging environment. They noted that
the spillovers from the war in Ukraine and international sanctions on Russia and
Belarus, including trade disruptions, higher and more volatile energy prices,
and the continued influx of a large number of refugees, have had a significant
impact on Moldova and led to increased external financing needs.
“Directors commended the authorities for their swift response to the crisis
and welcomed the adoption of the supplementary budget to protect vulnerable
households, accommodate refugees’ humanitarian needs and maintain social
cohesion. Directors underscored, however, that strong implementation of the
budget envelope as well as careful monitoring of revenue performance and
additional spending pressures will be important going forward. They emphasized
that fiscal plans should remain anchored by a strong commitment to debt
sustainability. Given the unprecedented uncertainty, Directors welcomed the
authorities’ readiness to activate contingency plans, should risks materialize.
“Directors welcomed the central bank’s decisive policy response to increased
inflation. They noted that the financial sector has remained resilient despite
temporary liquidity pressures. Going forward, Directors broadly concurred that
careful calibration of monetary tightening to balance financial stability and
growth objectives will be important. Further foreign currency interventions
should be limited to preventing a disorderly adjustment of the exchange rate and
curbing excess exchange rate volatility.
“Directors commended the authorities for keeping the program on track and
making good progress on key reforms, including the completion of structural
commitments on fiscal governance, financial sector oversight, oversight of
state-owned enterprises, and strengthening anti-corruption legislation. They
encouraged continued progress on the integrated taxpayers’ register, the
comprehensive tax expenditure analysis, and the reinforcement of the National
Bank of Moldova’s institutional autonomy.
“Directors emphasized that the program’s focus on addressing significant
governance weaknesses and institutional vulnerabilities remains critical and
welcomed the emphasis on strengthening the rule of law and financial
supervision. They noted that continued reforms under the program—if
appropriately sequenced and resolutely implemented—will boost productivity,
unlock private investment and support inclusive, sustainable growth.”
An ad hoc review between scheduled reviews can be requested by a
program country when the increase in the underlying balance of payments
problems cannot await the next scheduled review. Ad hoc reviews require
an assessment by the IMF Executive Board that the program is on track to
achieve its objectives.
Arrangements under the ECF provide financial assistance that is
more flexible and better tailored to the diverse needs of low-income
countries (LICs), including in times of crisis (e.g. protracted balance
of payments problems). Those under the EFF provide assistance to
countries experiencing serious payment imbalances because of structural
impediments or slow growth and an inherently weak balance-of-payments
PRESS OFFICER: Wafa Amr
Phone: +1 202 623-7100