Press Release: IMF Approves in Principle Loan of US$142 Million for Poverty Reduction and Growth in Moldova
IMF News, December 15, 2000
Source details
- Canonical URL
- Press Release: IMF Approves in Principle Loan of US$142 Million for Poverty Reduction and Growth in Moldova
Other formats
Bibliographic details
- Published: December 15, 2000
Approval and procedural conditions
- The Executive Board approved in principle a three-year loan under the Poverty Reduction and Growth Facility (PRGF) in an amount equivalent to SDR 110.88 million (about US$142 million).
- A final decision by the IMF Executive Board is pending discussion of Moldova's interim Poverty Reduction Strategy Paper (PRSP) by the World Bank Executive Board, expected to take place on December 19, 2000.
- The first disbursement of SDR 9.24 million (about US$12 million) under the new program will become available when the final decision is made by the IMF Executive Board.
Objectives of the program
- Support the government's economic program to achieve sustainable economic growth and poverty reduction, and address Moldova's large stock of external debt.
- Emphasize poverty reduction as a central objective, anchored in an interim PRSP prepared in collaboration with IMF and World Bank staffs.
Key policy pillars and structural reforms
- Fiscal and monetary framework:
- Fiscal policy: achieve and maintain a primary budget surplus of at least 2 percent of GDP (excluding foreign-financed projects) over the coming years to stabilize and subsequently reduce the debt burden, increase revenue collection, and pay down wage and pension arrears.
- Monetary policy: reduce inflation and reconstitute international reserves to the equivalent of over three month's of imports.
- Structural reforms to improve the business climate and stimulate investment:
- Privatization of wineries and the state-owned telecommunications company.
- Restructuring or liquidation of companies with large arrears to the budget.
- Development of the overall legal framework for a market economy.
- Social and poverty-reduction measures:
- Greater social protection by increasing the efficiency and equity of the social safety net and ensuring its fiscal sustainability.
- Human development focus: increasing access to and improving the quality of basic public services, such as primary health care and education.
- Emphasis on an inclusive participatory process in developing the full PRSP.
Macroeconomic projections and program targets
- Real GDP growth (percent change):
- 1999: -4.4
- 2000: 0.0
- 2001: 5.0 (projected)
- 2002: 6.0 (projected)
- 2003: 7.0 (projected)
- Inflation (CPI, percent change, year-on-year):
- 1999: 39.3
- 2000: 31.3
- 2001: 13.5 (targeted)
- 2002: 10.0 (targeted)
- Inflation (end-of-period):
- 1999: 43.8
- 2000: 19.4
- International reserves (equivalent months of imports of GNFS and levels in millions of U.S. dollars):
- Gross international reserves (U.S. dollars, millions):
- 1999: 181
- 2000: 206
- 2001: 257 (programmed)
- 2002: 286
- 2003: 369
- In months of imports of GNFS:
- 1999: 2.9
- 2000: 2.6
- 2001: 3.5 (program target)
- External sector and trade (in millions of U.S. dollars):
- Exports of goods:
- 1997: 890
- 1998: 644
- 1999: 469
- 2000: 495
- 2001: 571 (projected)
- 2002: 654
- 2003: 760
- Imports of goods:
- 1997: 1,237
- 1998: 1,032
- 1999: 597
- 2000: 763
- 2001: 822 (projected)
- 2002: 901
- 2003: 1,021
- Current account balance (U.S. dollars, millions):
- 1997: -274
- 1998: -323
- 1999: -34
- 2000: -110
- 2001: -111 (projected)
- 2002: -108
- 2003: -116
- Current account balance (percent of GDP):
- 1997: -12.5
- 1998: -16.7
- 1999: -7.8
- 2000: -6.9
- 2001: -6.1 (projected)
- 2002: -5.8
- Public and publicly guaranteed debt (levels and percent of GDP):
- Public and publicly guaranteed debt (U.S. dollars, millions):
- 1997: 1,080
- 1998: 1,089
- 1999: 936
- 2000: 1,039
- 2001: 1,190 (projected)
- 2002: 1,181
- 2003: 1,211
- Public and publicly guaranteed debt (percent of GDP):
- 1997: 49.3
- 1998: 56.4
- 1999: 71.8
- 2000: 73.9
- 2001: 74.2 (projected)
- 2002: 66.5
- 2003: 60.6
Program context and recent economic history
- Moldova was adversely affected by the Russian crisis of 1998, a drought, and a rise in energy prices, which contributed to output declines in 1999 and 2000.
- Early indications at the time of the program suggested the output decline was bottoming out and that growth appeared within reach, led by strong export growth as Moldova regained export markets lost after the Russian crisis.
- Program financing and terms:
- PRGF loans carry an annual interest rate of 0.5%, and are repayable over 10 years with a 5½-year grace period in principal payments.
Institutional and membership details
- The Republic of Moldova became a member of the IMF on August 12, 1992.
- Moldova's IMF quota is SDR 123.20 million (about US$159 million).
- Moldova's outstanding use of IMF credit at the time totals SDR 86.56 million (US$112 million).
Source: Press Release No. 00/72, December 15, 2000.