IMF Staff Concludes Visit to Moldova

IMF News, May 3, 2024

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IMF mission led by Clara Mira conducted discussions in Chisinau during April 22-May 3 for the fifth reviews of Moldova’s programs under the Extended Credit Facility and Extended Fund Facility (ECF/EFF) arrangements and the first review under the Resilience and Sustainability Facility (RSF) arrangement.
End-of-Mission press release clarifies that the statement conveys preliminary findings of IMF staff and does not necessarily represent the views of the IMF’s Executive Board.
The team will continue discussions with the goal of reaching a staff-level agreement in the near term.

Real GDP grew by 0.7 percent in 2023, below the IMF’s 2 percent forecast at time of the last review.
Recovery should continue in 2024, with growth of 2.6 percent, again less than previously projected.
Recovery has been slower than expected, primarily due to a weaker recovery of domestic demand, particularly private consumption and investment.
Persistent challenges and spillovers from Russia’s war in Ukraine continue to affect the economy.
Risks to the outlook:
- Downside: possible renewed energy shocks or a new wave of refugees.
- Upside: faster-than-anticipated growth in trade partners, faster progress towards EU accession, and acceleration of structural reforms.

“Program performance has been sound and broadly on track, although some structural reforms have been delayed.”
The authorities met all end-December quantitative performance criteria.
End-December structural benchmarks on strengthening tax administration and completing a triage of state-owned enterprises were met.
The Law on Climate Action was adopted.
Delayed reforms (work ongoing):
- Strengthening the institutional autonomy and governance of the NBM (December).
- Establishing an anti-corruption adjudication infrastructure, including a credible process for the selection of judges (March).

With inflation within the NBM’s target band since November, the current monetary policy stance is appropriate.
Exchange rate flexibility and preserving sufficient foreign exchange buffers will be critical to address shocks.
Monetary policy should remain focused on preserving price stability.
The 2024 budget is described as strengthening social safety nets, further sustaining energy security, and supporting growth-enhancing investment and reforms.

Based on the preliminary findings, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.
The IMF team reaffirmed its commitment to support Moldova.

Press Release No. 24/134 — May 3, 2024

Press Release-English
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