INFOTAG NEWS AGENCY, MOLDOVA
BANKS & FINANCE FORTNIGHTLY BULLETIN

No. 24 of November 2001

MOLDOVA STANDS TO GET $5 MILLION, IMF REPRESENTATIVE SAYS

Following is an interview with IMF's permanent representative to Moldova Mr Hassan-Al-Atrash.

Banks and Finance: A meeting of the IMF Board for Moldova scheduled for October has
been put off indefinitely on grounds that the Moldovan government failed to fulfill a
number of provisions contained in the memorandum it signed with the fund. Things are a
lot different now. When is the Board going to be convened after all?

Mr. Hassan-Al-Atrash: The government has fulfilled a number of provisions it had agreed
on in the addendum to its memorandum with the Fund. More specifically, the government
has signed a contracted with the SGS company on pre-shipment inspection of imports, the
parliament is debating in earnest a number of laws and the cabinet has drafted the
budget for the nest year. We therefore hope the Board will be convened in December.

Question: Could you be more specific?

Answer: The exact date will depend on the Board. It is now essential that the
parliament pass the bankruptcy law. This would have to contain a separate chapter on
restructuring. Besides, the draft law on financial and lending institutions is also
pending. Yes, the law on free enterprise zones has already been passed.

Should the parliament lean towards major changes in the draft budget for the next year,
the IMF Board may not be convened at all, even though there is no separate provision to
this effect in the fund's agreement with the Moldovan government. It is also essential
that the government wrap up its negotiations with the World Bank over the third
Structural Adjustment Credit.

Q: If everything goes as planned and the IMF board will be convened in December, are we to infer that the national bank will not get $12 million in the framework of poverty
alleviation program?

A: The money may get into Moldova in three days after the Board's meeting has been
held.

Q: How much can the republic count on this year?

A: If we were optimistic, we would say that Moldova may get around $40 million in
addition to $5 along the SAC-II lines, plus WB's first SAC-III tranch ($15 million),
plus 10 million EURO from the European Union and another $4 million from the Dutch
government.

Q: Is there a chance that the republic may get this money even before the meeting of
the IMF Board is held?

A: The World Bank has said that Moldova stands to get $5 million. Regarding the inflows
from the European Union and the Dutch Government, it is technically feasible for them to
do that; however, they would wait for a go-ahead from us, or, roughly speaking, this
amount to a confirmation that Moldova lives up to its promises. Regarding the grunt from
the Dutch government, they would also need a go-ahead from the World Bank; which is also
related to the SAC-III negotiations.

Q: The government hints at "other exit routes" if the hopes of external financing do
not materialize this year. How convincing do you find that?

A: I am hardly aware of the government's planning scenarios, but I guess the government
must be counting on the cash earned on privatization of Moldotelecom, power distributors
and wineries. Another option could be clamping down on corruption, particularly in the
energy sector. This might well be the case given the government's pledge to root out
graft.