IMF Executive Board Concludes 2023 Article IV Consultation and Fourth Reviews Under the Extended Credit Facility and Extended Fund Facility Arrangements and Approves Request for Arrangement Under the Resilience and Sustainability Facility

IMF News, December 7, 2023

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IMF Executive Board Concludes 2023 Article IV Consultation and Fourth Reviews Under the Extended Credit Facility and Extended Fund Facility Arrangements and Approves Request for Arrangement Under the Resilience and Sustainability Facility

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• Published: December 7, 2023

Program approvals, disbursements, and timelines

• Immediate disbursement: SDR 70.95 million (about US$95 million), usable for budget support.
• Total disbursements under the blended ECF/EFF arrangements: SDR 348.5 million (about US$ 466 million).
• ECF/EFF arrangements extended by 6 months until October 19, 2025.
• New RSF arrangement approved: SDR 129.375 million (about US$173 million).
• RSF objectives: strengthen resilience against climate shocks, support energy sector reforms, enhance domestic financial sector preparedness, and mobilize sustainable finance.

Economic outlook, recent developments, and reform momentum

• Main near-term issues: persistent spillovers from Russia’s war in Ukraine; energy shocks; elevated uncertainty and downside risks.
• Energy sector: contingency plans alleviated the effects of the energy crisis; progress in diversifying energy sources; protection for vulnerable populations during winter months enhanced.
• Inflation: decelerated rapidly due to timely monetary responses and declining food and fuel prices.
• Growth outlook: a modest recovery is expected in 2023, supported by agriculture, increased consumption, and investment.
• Reform focus: fiscal governance, financial sector oversight, rule of law, anti-corruption institutions and frameworks, state-owned enterprise reforms, and measures to strengthen the labor market and financial inclusion.
• Long-term objective: support sustainable development and convergence toward EU income levels while preserving fiscal sustainability.

Policy recommendations and priorities

• Fiscal policy:
  • Near term: remain focused on mitigating crisis impacts, supporting the recovery, supporting the most vulnerable, and safeguarding energy security.
  • Medium term: pursue fiscal consolidation while addressing development needs to preserve fiscal and debt sustainability.
  • Authorities’ plans welcomed to enhance revenue mobilization and improve expenditure quality and efficiency.
  • Recommended: enhance public financial management and address recurrent budget under‑execution.
• Monetary policy:
  • Stance appropriate; should remain data‑driven and forward‑looking.
  • Recommended: further progress to strengthen the independence of the National Bank of Moldova to preserve policy credibility and effectiveness.
  • Recommended: continue reducing high reserve requirements to support bank liquidity and credit intermediation.
• Financial sector and governance:
  • Maintain financial sector stability, enhance oversight, and improve financial inclusion.
  • Maintain momentum on strengthening the rule of law, addressing high‑level corruption, and improving state‑owned enterprise efficiency to contain fiscal risks and improve the business environment.
• RSF-specific: support investments for climate resilience, catalyze financing for adaptation and mitigation, support energy reforms, and enhance domestic financial preparedness to mobilize sustainable finance.

Executive Board assessment

• Directors commended strong program ownership and performance under the ECF/EFF despite complex environment.
• Directors considered the RSF arrangement supportive of climate resilience efforts.
• Directors cautioned that Moldova faces significant headwinds from multiple crises and large downside risks, including spillovers from Russia’s war in Ukraine and energy shocks.
• Directors encouraged continued focus on mitigating shocks, aiding the recovery, supporting sustainable green growth, and EU accession efforts.

Key statistics (selected figures from Table 1)

• Real GDP growth (percent): 2018: 4.1; 2019: 3.6; 2020: -8.3; 2021: 13.9; 2022: -5.0; 2023 (Est.): 2.0; 2024 (Proj.): 3.9; 2025 (Proj.): 4.8; 2026 (Proj.): 5.0.
• Nominal GDP (billions of Moldovan lei): 2023 (Est.): 312.0; 2024 (Proj.): 342.0; 2025 (Proj.): 378.1; 2026 (Proj.): 418.8; 2027 (Proj.): 463.9; 2028 (Proj.): 513.9.
• Nominal GDP (billions of U.S. dollars): 2023 (Est.): 16.3; 2024 (Proj.): 17.8; 2025 (Proj.): 19.5; 2026 (Proj.): 21.6; 2027 (Proj.): 23.4.
• Average monthly wage (Moldovan lei): 2018: 6,443; 2019: 7,356; 2020: 8,104; 2021: 8,619; 2022: 9,328; 2023 (Est.): 10,775; 2024 (Proj.): 11,750; 2025 (Proj.): 12,925; 2026 (Proj.): 14,225.
• Unemployment rate (annual average, percent): 2018: 3.1; 2019: 3.3; 2020: 4.6; 2021: 4.9.
• Current account balance (percent of GDP): 2018: -10.8; 2019: -7.8; 2020: -12.4; 2021: -17.2; 2022: -12.2; 2023 (Est.): -11.4; 2024 (Proj.): -10.4; 2025 (Proj.): -9.7; 2026 (Proj.): -9.6.
• Gross official reserves (levels): 2018: 2,995; 2019: 3,060; 2020: 3,784; 2021: 3,902; 2022: 4,474; 2023 (Est.): 4,714; 2024 (Proj.): 5,140; 2025 (Proj.): 5,224; 2026 (Proj.): 5,407; 2027 (Proj.): 5,613; 2028 (Proj.): 5,887.
• Stock of public and publicly guaranteed debt (percent of GDP): 2018: 30.4; 2019: 28.1; 2020: 35.6; 2021: 34.6; 2022: 36.4; 2023 (Est.): 37.1; 2024 (Proj.): 38.2; 2025 (Proj.): 37.6; 2026 (Proj.): 36.9; 2027 (Proj.): 35.0; 2028 (Proj.): 33.0.

Press Release No. 23/428

Content in this bundle

• pr23428-rom-moldova
  • pr23428-rom-moldova (Markdown version)
  • pr23428-rom-moldova (PDF)
• Microsoft Word - Moldova - December 2023 - Press Release - Article IV_4th Review ECF EFF_RSF RUSSIAN
  • Microsoft Word - Moldova - December 2023 - Press Release - Article IV_4th Review ECF EFF_RSF RUSSIAN (Markdown version)
  • Microsoft Word - Moldova - December 2023 - Press Release - Article IV_4th Review ECF EFF_RSF RUSSIAN (PDF)

References

• Kenji Okamura
• PRESS CENTER
• Republic of Moldova and the IMF
• IMF Policy Advice -- A Factsheet
• IMF-World Bank Debt Sustainability Framework for Low-Income Countries -- A Factsheet
• Special Drawing Rights (SDRs) -- A Factsheet
• Press Releases
• [Press

Release](https://www.imf.org/en/News/Articles/2021/12/21/PR21393-Moldova)

• [Press

Release](https://www.imf.org/en/News/Articles/2022/05/11/pr22149-moldova-imf-board-concludes-adhoc-review-under-ecf-and-augmentation-under-ecf-and-eff)

• https://www.imf.org/en/home