Johan Mathisen, IMF Resident Representative in Moldova, stressed
that the IMF study (“The Impact of the Financial Crisis on
Low-Income Countries”) was primarily aimed at the advanced
countries' donor community and urged to pay attention to
inadmissibility of reducing their financing. Developing
economies prove to be more vulnerable to global recession.
Moldova was pooled in the study with other low income countries.
Since the end of last year IMF experts were actively signaling
to Moldovan authorities about the first signs of the impact of
global crisis on the national economy. Now this threat is even
more visible. Although the country got recently a quite good
financial system stability rating, it did not get immunity
though from the external impact of the crisis, in the context of
a sharp deterioration of the situation in the region as a whole.
“A simulation exercise using vulnerability tests by three key
indicators for the development of the country (FDIs, exports and
remittances) raises concerns, - stated Johan Mathisen. - It is
not clear yet, how strong and deep the impact is going to be. We
are monitoring risks closely and will start active discussions
with government about undertaking necessary measures only after
the president's election”.
Also, the IMF Resident Representative said that Moldova, as
member country, can count on a special attention from this
organization with regard to attracting additional financial
resources for balance of payment support into the country.
Moldova is in such position that it can draw upon not only
concessional lending, but also on other lending instruments that
are, on one hand, more expensive, but on the other had allow for
higher financing and free access to financial resources as
needed; namely, the so-called standby agreements. “During the
February IMF mission we did stretch out a helping hand.”
So does Moldova need an anti-crisis plan? Many analysts are sure
that the time for taking preventive measure was lost. The
influence of world crisis cannot be stopped. The readiness of
international financial structures to provide aid at any moment
depends on the authorities’ desire to actively influence on the
situation with the goal to minimize the consequences for
country’s economy. IMF experts say that there are 2 ways of
anti-crisis behavior of countries. First – a managed
depreciation of nominal exchange rate of the national currency.
This is applied by the majority of neighboring countries, aiming
to stimulate the domestic production. Second – to increase
country’s competitiveness by reducing domestic demand (reducing
imports, productions costs, wages, CPI level and lending volumes
in the economy). Such a path was chosen by the Baltic States.
From IMF’s experience, as Johan Mathisen said, the second path
turns out to be more painful for the economy in general and
leads to the deepening of recession. In any case, any method to
minimize the risks will be subject of consultations with the
country’s authorities, stressed Mr. Mathisen.
To come back to the situation in Moldova, the deflation
experienced during several months now is a clear reflection of
the commitment to undertake “anti-crisis measures” as per the
second scenario. On one hand, active “dollarization” of the
economy and supporting the nominal exchange rate of leu should
give a positive signal to the enterprises regarding the
stability of the financial trend. On the other hand, maintaining
high real interest rates for lending on the background of the
deflation that we see, as well as shrinkage of volume of lei,
are accompanied by an overall reduction of level of business
activity, a reduction of demand for credits. Consequently, this
may push the enterprises to cut production costs to the maximum,
as well as to cut spending associated with labor force. Time
will show how long one can balance on the edge of possibilities.
translation from Russian]