In an interview to Free Europe Radio, given shortly after the
publication of the report, Ruben Atoyan, the IMF’s Mission Chief for
Moldova, referred in detail to the recommendations, and also
described the new vulnerabilities faced by Moldovan economy in the
context of the COVID-19 pandemic.
Ruben Atoyan told us in the interview he gave us on Wednesday that
the vulnerabilities that hamper Moldova’s development at the moment,
after the banking system had been strengthened during the previous
IMF-supported program, are associated with good governance and
functionality of institutions.
Issues ranging from persistent corruption to the lack of rule of law
and the high level of informal payments, from tax issues associated
with enterprises and weaknesses in the non-banking sector to the
loopholes in AMLFT legislation are just some of those that need to
be addressed further with strong commitment by the authorities, and
the new agreement between Government and the IMF would focus on
them, says the IMF official. ‘And I don't need to tell you about the
disappointment with the way how the stolen assets are being
recovered,’ Ruben Atoyan added. ‘But apparently the authorities are
well aware that these are the key issues to be addressed under the
new IMF-supported arrangement,’ he says.
However, both the completion of the IMF-supported program and the
IMF report come against the backdrop of a new global challenge - the
coronavirus pandemic. Moldova is at high risk, the IMF
representative estimates, and this is not only because it is in the
very midst of a crisis itself, but also because its most important
partners are strongly affected. ‘Many remittances come from Italy, a
country strongly affected by the pandemic. Also, remittances come
from Russia, which is facing a double blow, as a result of the
pandemic and the drop in oil prices. Therefore, the Republic of
Moldova will be affected by shrinking trade and remittances,’
estimates Ruben Atoyan and continues: ‘The state will probably
collect less tax revenue, healthcare costs will go up and some
measures will be needed to support businesses.’
‘We stand ready to offer our support to tackle these issues also, in
our future discussions with the authorities,’ says the IMF
representative.
Several days ago, the IMF announced that it was ready to mobilize
emergency support of one trillion of US dollars for countries
affected by the epidemic, while also calling on governments to put
in pace policies to help the people and companies most affected by
the pandemic.
When asked whether Moldova could count on this support, Ruben Atoyan
said that the IMF can make available to Chisinau about 100 million
USD dollars, that Government is aware of the availability of this
funding, and that so far they have not requested any such financial
support from the IMF.
Earlier this month, when the IMF had completed its final review
visit to Chisinau and the Moldovan authorities were proudly
announcing that they would be receiving the last tranche of USD 20
million from the loan made available since 2016, the Moldovan Prime
Minister, Ion Chicu, told us in an interview that his government
might start negotiating a new arrangement with the IMF as early as
in April. Now, when the coronavirus pandemic has become the global
news highlight, the Chisinau government's interest in a new
arrangement with the IMF is expected to increase exponentially, says
Veaceslav Negruţa, expert of Transparency International Moldova and
former Minister of Finance:
‘Unfortunately, some elements have arisen in the meantime, from
February until now, even from the very day when the IMF approved the
last tranche of the credit to Moldova on March 11. There is great
unpredictability regarding the economic and financial impact of the
epidemic on Moldova’s economy. In addition, the impoverishment of
population and the reduction of the fiscal potential over the next 3
-6 months will follow; remittances will also be affected greatly.
All these things need to be understood, as trends, their impact
needs to be assessed, and a major revision of the 2020 budget will
also be needed. This should be done before starting discussions with
the IMF on a new arrangement, and they need to focus now on
mitigating the impact of the crisis caused by the pandemic and
saving as much as possible of the population's income.’
Recently, when Prime Minister Chicu spoke in Parliament, asking
approval to declare the state of emergency over the next two months,
he said that he was considering a number of measures to support the
business community, but implied that Government’s immediate efforts
aim at stopping the spread of the disease and only later they would
start considering solutions that would help to avoid economic
disasters.
