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Weekly Newspaper 
"Chisinau Observer"


Moldova's Uphill Financial Balancing Act

This week, the Head of the IMF Permanent Mission in Moldova, Mr Hassan Al-Atrash's 3-year tenure has expired The Moldovan leadership's official stance has been always mixed with respect, indignation and sometimes enmity towards the IMF. Some of the country's dignitaries would call this financial structure and the role of the IMF’s representatives in Moldova "imperative evil". Since October 1999, the financial assistance to the republic was primarily determined by Hassan Al-Atrash.

He never influenced the country's politics directly, although it seems that his observations about Moldova's political and economic events were that of regretful incredulity. The following interview with Mr Al-Atrash was conducted at his office on the ground floor of the House of Parliament while crowds of people were running riot in the central square. He diplomatically stated that the latest events in Chisinau will not negatively affect the decision making of the IMF Mission in Moldova, and affirmed us that the Fund is interested "in economic issues only."

KO: Mr Al-Atrash, during your mission in Chisinau, the IMF was quite reluctant to unblock financing to Moldova.

HA: I have been working here since October 1999. Over this period of time, Moldova has received two credits of $15 million in December 2000 and $15 million in February 2001. One of the main reasons to why this happened rarely was the country's political instability. I came to Moldova in October 1999. Almost immediately, the IMF went on a visit to Chisinau and worked out an agreement with the government of Moldova headed by Mr Ion Sturza.

However, in November, Sturza's government was impeached and in December, the new government led by Dumitru Braghis was formed. In February 2000, we reached an agreement with that government, In April, the government voted down the law on privatization. In the second half of 2000, we commenced negotiations about the new mechanism of financial policy for this country. In October 2000, the privatization law was finally ratified and in December, the Fund, as well as the World Bank, apportioned money. In February 2001, we also allocated finances and in April, a new government came to power.

Initially, we had doubts as to the viability of the government's economic programme. However, problems were efficiently resolved and by November 2001. It seemed to have jarred into a stable progress. Before we sent documents to our Board of Directors for approval, the Moldovan leadership signed the bilateral agreement with Russia on gas supply that stipulated state guarantees. Consequently, the procedure was halted for an indefinite a period of time.

KO: How would you characterize the relationship between Moldova's leadership and IMF?

HA: By and large, we have reached compromises with the three governments of the country. Because of the government's removal and the 1999 and 2000 delay in the law on privatization, we were unable to call the Board. However, we could speak of the constructive dialogue with all .three governments. I am almost sure that the current government will get credits; the only problem to settle is when. Primarily, the gas supply question is to be resolved.

KO: What will be the most optimistic scenario for the Moldovan leadership with the IMF be in the near future?

"HA: In March-April, the Board is meeting after which the decision of money transfer will be determined I cannot specify now the amount of money to be allotted. We do not know terms of agreement in advance. Almost immediately, the WB will launch financing as well. In April, the country will be able to get money. Simultaneously, the Paris dub is to agree on the debt-restructuring plan

KO: Are you leaving Moldova less optimistic than when you arrived in 1999?  

HA: It is only predictable that IMF's representatives leaving the country are less optimistic than when they first come to the republic. I think the impression is basically influenced by the results we had attained Moldova is currently in the process of acquiring the characteristics of the market economy. The representative who is appointed to head the mission in this country for the first time is not familiar with every detail. He is also to face resistance on the part of local bureaucrats, and understand that the power supply sector of economy is quite an acute problem to address. Later, the country's political and economic crisis becomes comprehensible; therefore, I am less optimistic. I know that when leaving Moldova in 1999, my predecessor had same impressions. He came to the republic in 1996 being quite idealistic. However, by the end of his term in 3 years, he understood that everything here was much more complicated...

KO: Do you think that Moldova may suffer the Argentinean crisis?

HA I do not think so. At least not in the near future. Moldova and Argentina are too different to be compared.

The possible postponement of the Annual Meeting of the International Monetary Fund and the World Bank should in no way impact the resumption of IMF lending to Moldova. IMF Resident Representative in Chisinau, Hassan Al-Atrash, told to the agency "InfoMarket.MD".

He said that the Supplement to the Memorandum, discussed by the recent IMF mission with the government and the National Bank of Moldova, stipulates for certain measures, which the Cabinet of Ministers of the republic is to take prior to the Executive Board meeting. As soon as these are fulfilled, the IMF will be able to fix the Board date to discuss the resumption of IMF lending.

Hassan Al-Atrash emphasized that the date of the IMF Board meeting to discuss Moldova was in no way connected with the Annual Meetings which may be postponed due to events in the USA. It totally depends on how fast Moldova would fulfill the prior actions stipulated in the Supplement to the Memorandum.

According to the IMF Resident Representative, events in the USA, which took place on September 11, would not impact IMF financial aid to Moldova and the timing of the Board meeting on Moldova. As "InfoMarket" has earlier informed, the Annual Meetings of heads of Ministries of Finance and Central Banks of 183 IMF member states, scheduled for September 29-30 in Washington may be postponed to a later date owing to terrorist attacks in the USA.

By Anastassya OKUNEVA