IMF Reaches Staff-Level Agreement with Moldova on First Review under an ECF/EFF Arrangement

IMF News, February 28, 2017

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Canonical URL: IMF Reaches Staff-Level Agreement with Moldova on First Review under an ECF/EFF Arrangement

IMF staff and the Moldovan authorities reached a staff-level agreement on the first review under an economic reform program supported by a three-year Extended Credit Facility and Extended Fund Facility (ECF/EFF) arrangement.
The staff-level agreement is subject to approval by IMF Management and the Executive Board.
Consideration by the Executive Board is expected in April, following the authorities’ implementation of a number of prior actions.
Completion of the review will make available SDR 15.7 million (about US$21.2 million).

An IMF mission led by Ben Kelmanson held discussions with the Moldovan authorities in Chisinau from February 14-28, 2017.
The end-of-mission statement reflects preliminary findings of the mission; the views are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

The economy is projected to grow by 4.5 percent in 2017, higher than earlier expected.
Growth has started to return as efforts to restore financial stability advance.

The authorities have made progress in tackling long-standing vulnerabilities in the financial sector and advancing structural reforms.
These efforts have helped to restore financial stability.
Continuing efforts to rehabilitate the financial system, including strengthening the governance and financial condition of banks, and enhancing regulatory and supervisory frameworks, are described as vital to sustain growth and job creation.

Monetary policy continues to be focused on maintaining price stability in the context of a flexible exchange rate regime.
The National Bank of Moldova (NBM) should continue to improve its inflation targeting framework by strengthening operational procedures, forecasting abilities, and policy communications.
The NBM should stand ready to tighten monetary policy if inflation rises more quickly than projected.

The 2017 budget and the medium-term budget framework are consistent with program targets and support growth-friendly measures.
Key actions ahead include:
- strengthening revenues,
- improving the efficiency of spending,
- effective public administration reform.
Resources made available from these efforts should be directed toward capital expenditure and targeted social spending.
Fiscal structural reforms should aim to further strengthening the fiscal framework.

The authorities continue to work on eliminating accumulated debt by energy companies and improving tariff-setting methodology, to ensure transparency and cost-recovery.
The authorities are currently assessing their poverty reduction strategy with the objective of updating it and aligning it with the UN Sustainable Development Goals.

IMF Communications Department — Press Release No. 17/66 (February 28, 2017).

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