Press Release No. 06/31

Press Release No. 06/31

The following statement was issued by an International Monetary Fund (IMF) staff mission in Chisinau on February 10, 2006:

"An IMF mission headed by Thomas Richardson visited Chisinau during February 1-10, 2006 to conclude Article IV discussions and continue discussions on policies for a macroeconomic program that can be supported by the Poverty Reduction and Growth Facility (PRGF).

"The program negotiations resulted in a preliminary agreement between the Government of Moldova and the IMF staff. The agreement contains a framework of economic and financial policies for 2006, and aims at ensuring continued impetus to the Government's structural reform agenda. The preliminary agreement reached today must be reviewed and approved by IMF management. Naturally, the final decision on IMF support for the Government's program will be taken by the IMF Executive Board, and is contingent on adhering to the agreed macroeconomic policies.

"If approved, the Republic of Moldova will benefit from a three-year program worth 117 million USD under PRGF. A new loan from the IMF would be on concessional terms (at an interest rate of 0.5 percent, and with a maturity of 10 years, after 5½ years of grace), and would be provided to the National Bank of Moldova to bolster Moldova's foreign reserves, thus providing a cushion against external shocks.

"We welcome the government's commitment to sound macroeconomic and financial polices and continued implementation of structural reforms as outlined in the EGPRSP and the EU-Moldova Action Plan. The macroeconomic program aims to achieve macroeconomic stability and growth and provides a platform for the government to address the country's pressing development needs. The mission notes that forceful and sustained implementation of structural reforms to improve the business climate and stimulate both domestic and foreign investment will be crucial in achieving these objectives, as will the maintenance of financial stability."