March 10, 2023 A discussion with Mr. Alfred Kammer, Director of the European Department of the IMF, by Ms. Liliana Barbăroşie for Privesc.EU, Realitatea TV and State TV "Moldova 1" The discussion was broadcasted on Privesc.EU, Realitatea TV, and on State TV "Moldova 1". Link to Privesc.EU: click here Link to Realitatea TV: click here Link to Moldova-1: click here

TRANSCRIPT:

Domnule Alfred Kammer, Vă mulțumesc că ați găsit timp în agenda dumneavoastră pentru această discuție. Este foarte important pentru noi. Apreciem. Vă mulțumim.

Thank you for having me.

Sunteți directorul Departamentului european al Fondului Monetar Internațional. Republica Moldova este în Europa, dar nu este pentru prima dată în zona dumneavoastră de preocupări, de supervizare. Ați lucrat și cu Rusia/ Într-o criză anterioară ați fost reprezentant permanent al FMI în Rusia. Ce ne puteți povesti despre aceste experiențe?

I have been working for the International Monetary Fund for 30 years now, in many roles and across all continents, and I should start off with that in 95 and 96 I was the desk economist for Moldova and was visiting this beautiful country many times in order to help during the transition to a market economy. So, so this has been a very good experience for me. In the meantime, I got a lot of experience in other assignments and I hope I bring this now as Director of the European Department, at a higher level, again back to Moldova.

Această vizită acum, în Moldova, în calitate de director al Departamentului european al FMI, cum poate fi explicată? De ce acum? De ce Republica Moldova? Care este scopul principal al venirii Dumneavoastră?

I am visiting many of our member countries in order to listen and consult with the country authorities and also to hear from people how the economy is working, how economic policy is working, and trying to get a personal insight on what are the challenges, what are possible solutions, and hear it directly in the country. I think that is an invaluable experience, much better than being something delivered on the desk in writing. And this is also a great opportunity for me to talk to the Moldovan Government. I had already meetings with the Moldovan President and the Governor of the National Bank this morning, to share with them our views on economic developments globally but also in Europe, get their insights on how they see the rest of the world, but then also discuss with you the implications on Moldova of what is happening in in the region in particular. And I think that is a good way of informing us about their views. It's a good way for us to sharing our views in order to help them set a policy for Moldova. And I should also say, and I would like to add that we have a long standing partnership with Moldova, we have been supporting governments in terms of the reform agenda, we have been supporting the macroeconomic stabilization efforts, and we have been supporting through various crises, including through the pandemic and now the latest energy security and energy crisis over the last two years. So ,we are there to support our member countries financially, with policy advice and also through our technical assistance.

Suntem la un an de la izbucnirea războiului în Ucraina și după prima iarnă în care toată lumea a încercat să se salveze, să poată rezista fără gazul rusesc. Am văzut că Europa nu a înghețat, așa poate cum și-au dorit unii factori de decizie la Moscova, cumva vă amintiți acea expresie. Totuși, economia a fost afectată. De aceea întrebarea mea este următoarea: cum apreciați în general situația în Europa la ora actuală?

The global economy and also Europe in particular have been through two major shocks. Before the Russian invasion of Ukraine globally we were dealing with the pandemic, fighting the pandemic and implementing policies in order to get through the pandemic and leave the economy protected and protect people's livelihoods. I would say these efforts globally and in Europe, and also in Moldova were very successful. So we saw last year in Europe a strong rebound from the pandemic. We saw that already in Moldova in 2021, a bit earlier than the rest of the Europe, but we got out of the pandemic well, given all of the circumstances. And then we saw the travesty of the war in Ukraine and that had a huge impact on the European economy, on Moldova, but also globally, because it increased commodity prices, it decreased the purchasing power of people, it endangered livelihoods, it increased inflation. So, it had a very negative impact on the global economy and so, it had a very negative impact on the European economy and also on Moldova. And when we're looking at growth forecasts, you see actually global growth slowing down this year. We see quite a substantial reduction of growth in Europe this year. What we see in Moldova is that Moldova is coming out of this crisis next year, probably a bit earlier than the rest of Europe. As Moldova was also affected by inflation and the effects of inflation earlier than the rest of Europe, the central bank took policy action earlier than the central banks in the rest of Europe, in order to stop inflation and to tame inflation. And we see now headline inflation coming down in Moldova already. And we saw already that the National Bank of Moldova could ease its monetary policy stance because of the successful fight with inflation. Inflation is not over. We need to sustain that effort. And why do we focus so much on inflation and why does this remain a big issue for Europe? Because inflation hurts the poor most, and therefore inflation needs to be brought under control. I should also say that for Europe and for Moldova policy settings were very successful in terms of dealing with the Russian gas reduction and Russian gas shutoff. Initially we were very concerned about it detrimental impact on all of the economies. Action was taken early in terms of reestablishing the supply routes, increasing and improving the infrastructure, but also decreasing demand of gas and electricity Europe-wide and that was also undertaken in Moldova at the same time. At the same time, what policymakers also did was was to try to protect the most vulnerable households in the economy in order to lessen the impact of higher energy prices on them. And that was also successfully done in order to set us all up for recovery. Times have been painful, times have been tough for everybody. But looking back, it could have been a lot worse if not for the actions of many governments and many policymakers. And Moldova did the right thing in terms of addressing this crisis and protecting the vulnerable households, dealing with the issue of energy supplies and trying to secure energy supplies. The fight is not over because the next window, 23-24, is coming, but overall Europe is in a good shape. Gas storage levels can be restored. They have been on a high level, helped also by a mild winter. So, Europe is going to be set up good and well for the next winter, but we need to watch it very carefully. At the same time, now we need to watch inflation and central banks need to be vigilant and they need to be very agile in terms of adjusting their monetary policy depending on how inflation is developing. But inflation needs to be brought under control.

Să vorbim acuma mai concret despre programul pe care îl are cu FMI. Cum ași evalua Dumneavoastră eforturile făcute de Republica Moldova de a efectua reformele convenite cu FMI și sprijinite de FMI. A reușit țara să se miște suficient de repede?

So, Moldova has a very ambitious reform program in place that is supported by us. We have made substantial progress in this program. I should also say that there are two ways of focusing on this. Last year we were really focusing and supporting the government in the crisis response, before on the pandemic, then on the energy security side. And of course that required a lot of energy and also a lot of focus of the authorities on the particular crisis measures. I think we were very successful together in helping Moldova and protecting Moldova's population. And at the same time, the long-term structural reforms, which are so important for improving the development of Moldova to help increase the living standards of the people in Moldova, they have moved forward. We were focusing with the government on state-owned enterprise reform, importantly also on anti-corruption efforts, on the fiscal and financial governance. All of those were undertaken mostly in time and were implemented successfully. I should say we have in place of a strong partnership with Moldova in order to help move these reforms forward. What do we want to achieve with all of these reforms? We want to set up an environment and a framework for the private sector to be really the driving engine of growth. And why do we care about growth? Because growth improves and increases living standards. So, by moving forward with these reforms they will help private sector, they will help providing the certainty and the trust the private sector needs to plan forward and do long term investments, and these over time will also help improve the living standard of the population. And I'm happy that we have this very successful program in place with Moldova and that we have this partnership where we're seeing eye to eye on these issues and where we are trying to reach the program goals together.

Înainte de această vizită a Dumneavoastră la Chișinău au existat solicitări ca Fondul Monetar Internațional să sporească sprijinul pentru Republica Moldova. Ce ne puteți spune despre asta? Ar putea crește finanțarea din cadrul programului sau prin alte mecanisme? Ce ne puteți spune?

Let me step back a bit on this. First, when I'm looking over the last two and a half years, in April of 2020 we provided 235 million dollars to Moldova in terms of the emergency response on the pandemic. Subsequently, in September of 2021, we made available 236 million dollars in liquidity through our SDR allocation, and then of course now we have a four-year program in place which has a total financing envelope of 800 million dollars. I think these financial commitments are very important for the development effort and for the crisis management efforts. The government has been making good use of these funds and that is a sizable contribution to the financing needs of Moldova. The second part is also very important: that when we are coming in with a program that helps frame the whole effort of donors. And so we are catalytic in getting other donors to step in. And just in 2022, over 400 million dollars were disbursed by other donors supporting the Moldovan government and people in moving forward on the development agenda. That's not the end of it. We are discussing, following a request by the President, this time a new facility with Moldova focusing really on tackling all of the issues related to climate change. Climate change is a big issue globally and it's also a very big issue for Moldova, just because of the effects climate change could have on the economy, in particular also on agriculture. So, we will start discussion on this new facility that would support Moldova financially, but also through a policy framework, to help in the climate adaptation, to help in emergency crisis response, but also in terms of making sure that investments, green investment are done within the right framework, under the right public financial management arrangements, in order to make sure that money for green investments will be spent efficiently. And again, this is extremely important that the government does its part and that's the part we are directly supporting in terms of setting this framework to deal with adaptation, deal with crisis measures because in the end a large part of – everywhere – of investment undertaken for the green transition and for tackling the issues of climate change will need to come from the private sector, much more than we are going to see from public investment. And for the private sector, we need to have in place the framework that enables the private sector to do these investments, and that means certainty in terms of how the future will look like, that means that they can trust in the rule of law and that means there is stability in which they can operate. And together with the Moldovan Government, we are now looking at this particular facility in order to do this as an addition to the current program we have in place with Moldova.

Domnule Kammer, Vă mulțumim!

Thank you very much.