IMF Executive Board Completes Fourth Review Under
the Extended Fund Arrangement for Moldova
The International Monetary Fund (IMF) today completed the fourth review under
the Extended Fund Arrangement for Moldova. As a result of the review, Moldova
will now be able to access SDR 25 million (about US$ 34 million).
In commenting on the IMF Executive Board's discussion of the review,
Shigemitsu Sugisaki, Deputy Managing Director, said: "Directors recognized
that Moldova's economic and financial situation had been severely affected by
the Russia crisis in mid-1998. They also noted that, since independence, Moldova
had been unable to achieve sustained economic growth because of severe
structural impediments. Against this background, Directors were encouraged by
the structural and financial policy measures recently adopted by the new
authorities. They stressed that timely and sustained policy implementation will
be critical to help catalyze donors' support for the authorities' program.
"Directors emphasized the need for a determined tightening of fiscal
policy and welcomed recent measures notably regarding tax administration.
Directors expressed concern that domestic arrears had continued to mount in the
first half of the year, which underscored the importance of achieving the
reduction in the fiscal deficit targeted under the program. They also welcomed
the recent tightening of monetary policy.
"Directors welcomed acceleration of the pace of structural reform,
particularly with regard to the privatization of the energy and
telecommunications sectors. They supported the recent moves to strengthen the
financial system, including the closing of some banks, the takeover and
restructuring of the Savings Bank, and increases in capital adequacy ratios.
They noted Moldova's commendable progress in liberalizing its foreign trade and
exchange regime and encouraged the authorities to firmly resist incipient
pressure for protective tariffs.
"Directors noted Moldova's efforts to honor its external and domestic
obligations. However, they expressed concern regarding its debt servicing
difficulties. They noted the authorities' commitment to clear their external
arrears as soon as possible, and encouraged them to seek a prompt negotiated
settlement with their creditors," Sugisaki said.