-
The IMF team had constructive and
productive discussions with the Moldovan authorities on economic performance
and policies underpinning the fifth reviews under the Extended Credit
Facility and Extended Fund Facility (ECF/EFF) arrangements and the first
review under the Resilience and Sustainability Facility (RSF) arrangement.
-
Program performance has been
sound and broadly on track, although some structural reforms have been
delayed.
-
Economic recovery is taking
longer than anticipated, in a context of persistent challenges and
spillovers from Russia’s war in Ukraine.
An IMF mission, led by Clara Mira, conducted discussions in Chisinau during
April 22-May 3 for the fifth reviews of Moldova’s programs under the ECF/EFF
arrangement and the first review under the RSF arrangement. At the end of
discussions, Ms. Mira issued the following statement:
“The recovery of the Moldovan economy has been slower than expected, as
spillovers and headwinds from Russia’s war in Ukraine continue. Real GDP grew by
0.7 percent in 2023, below the IMF’s 2 percent forecast at time of the last
review. This was due primarily to a weaker recovery of domestic demand,
particularly private consumption and investment.
“Recovery should continue in 2024, with growth of 2.6 percent, again less than
previously projected. Risks include possible renewed energy shocks or a new wave
of refugees. Faster-than-anticipated growth in trade partners, faster progress
towards EU accession, and acceleration of structural reforms are upside risks.
“The 2024 budget strengthens social safety nets, further sustains energy
security, and supports growth-enhancing investment and reforms. With inflation
within the NBM’s target band since November, the current monetary policy stance
is appropriate. Exchange rate flexibility and preserving sufficient foreign
exchange buffers will be critical to address shocks. Monetary policy should
remain focused on preserving price stability.
“Program performance has been sound and broadly on track, although with some
delays in structural reforms. The authorities met all end-December quantitative
performance criteria. End-December structural benchmarks on strengthening tax
administration and completing a triage of state-owned enterprises were met. The
Law on Climate Action was adopted. However, agreed reforms to strengthen the
institutional autonomy and governance of the NBM (December) and to establish an
anti-corruption adjudication infrastructure, including a credible process for
the selection of judges (March) are being delayed, although work is ongoing.
“We would like to thank the authorities for the constructive discussions. The
team will continue its discussions in the context of the Fifth ECF/EFF and First
RSF Reviews with the goal of reaching a staff-level agreement in the near term.
We reaffirm our commitment to support Moldova.
Source