"Moldova has a limited choice of policy options available"
Interview with Johan Mathisen, IMF's Resident Representative in
IMF included Moldova in the list of countries vulnerable to the crisis, and
experts simulated two scenarios – an optimistic and a pessimistic one. The
second one, even at the theoretical level, envisages dramatic outcomes for
Moldova: economic recession and depletion of [international] reserves. What is
the probability of it coming true? It seems though that we are taking the worst
scenario route, if we consider the decrease of international reserves by about
USD 400 million in only two months and the first six days of March.
First of all, let me say that this paper was a theoretical cross-country
exercise carried out for a large number of low income countries that are being
affected by the global slowdown. Moldova was included as it is one of the few
low income countries in Europe. Note that similar exercises have also been
carried out for higher income countries in the region. The impact of the global
recession for the whole region as a whole has been more severe than initially
anticipated, and many countries are now coming to the IMF for assistance. As a
consequence, the impact of the recession on the reserves of many central banks
has been more severe than been at first forecast. Indeed, as you point out the
impact on the National Bank of Moldova's reserves has been substantial, but the
stock of reserves remains high.
In your opinion, what path could Moldova take to mitigate the impact of the
crisis, and if there is a number of scenarios, which one would be the most
effective and the least painful? Which would be the best anti-crisis solution
Unfortunately, like other countries in the region Moldova's policy options are
limited by financing constraints and the need to avoid unduly increasing the
debt burden for the country. Indeed, as you say there are a number of scenarios,
and the right solution for Moldova will depend on a number of sometimes
competing objectives, including the need to address the social consequences of
the recession, maintaining macroeconomic stability, and while preserving
competitiveness to ensure that Moldova has a quick recovery.
After the last visit of Graeme Justice, IMF Mission Chief, to Moldova it
was announced that the Fund is ready to provide financial assistance to the
Republic of Moldova to mitigate the impact of the crisis. Are there any
estimates how much money might be needed to help our country to save itself from
The IMF has been supporting Moldovan, and stands ready to provide further
assistance if called for. No specific assistance has been discussed. However, as
you may have heard the international community has committed to a substantial
increase in the IMF's resources to help countries overcome the impact of the
What consequences might occur from keeping the national currency strong
and, on the other hand, high lending interest rates in the context of deflation
and decrease of broad money?
With the global slowdown countries have faced substantial preserves. The
immediate challenge for the authorities has been to preserve economic stability
and orderly economic adjustment. As the global recession eases the challenge
will increasingly be how to promote growth and a rapid recovery.
When will discussions on a new program start?
This is for the government to decide.
Did you already feel the impact of the crisis yourself, as an individual?
As an individual who has worked many year of trying to improve Moldova's
economic prospects, I am of course concerned, and hope I can be of assistance
during these difficult times.