IMF Staff Completes Review Visit to Moldova

IMF News, March 27, 2018

Source details

Press Release No. 18/108 dated March 27, 2018.
An IMF staff team led by Ben Kelmanson visited Chisinau from March 15-27, 2018.
IMF staff and the Moldovan authorities reached staff-level agreement on the third review under a three-year Extended Credit Facility and Extended Fund Facility (ECF/EFF) arrangement.
Agreement is subject to approval by IMF management and the Executive Board; consideration by the Executive Board could happen as early as May, following the authorities’ implementation of a number of prior actions.
Completion of the review will make available SDR 24.0 million (about US$34.9 million).

Economic growth was strong in 2017, supported by robust domestic demand and a favorable external environment.
Growth is projected to remain solid in 2018, at 3.8 percent.
The authorities have made progress in strengthening economic policies to preserve stability and strengthen the foundation for the medium term.

Staff highlighted progress in addressing vulnerabilities in the banking sector.
Sustained and determined efforts to rehabilitate the financial system are required, including:
- strengthening the governance and financial condition of banks;
- enhancing regulatory and supervisory frameworks.
These measures are described as vital to maintaining financial stability, sustaining growth, and job creation.

Monetary policy continues to focus on price stability within a flexible exchange rate regime.
Inflation peaked in late 2017 and is expected to slow further in 2018.
Recommendation: In the near term, the NBM should keep monetary policy on hold, without excessively responding to transitory changes to food and regulated prices.

Implementation of the 2017 budget and the authorities’ fiscal policy commitments for 2018 are in line with program objectives and support growth-friendly measures.
Continued efforts are recommended to focus on:
- improving public investment and social spending;
- tax and customs reforms;
- improving the efficiency of spending.

The authorities emphasized their commitment to recover stolen assets.
On the basis of the recently concluded Kroll investigation, the authorities are working on a strategy and action plan to recover such assets.
Authorities are taking measures to improve medium-term prospects by:
- strengthening economic governance;
- addressing the shadow economy;
- reducing regulatory and administrative burdens;
- promoting greater transparency, predictability, and good governance in the energy sector.

Source: IMF press release, Press Release No. 18/108, March 27, 2018.