{
  "title": "Press Release: IMF Approves Stand-By Credit for the Republic of Moldova",
  "publication": "IMF News, March 22, 1995",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9515",
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  "summary": "The International Monetary Fund (IMF) approved a 12-month stand-by credit for the Republic of Moldova of up to SDR 58.5 million (about $90 million).",
  "publishDate": "1995-03-22",
  "sections": [
    {
      "heading": "Approval and Program Financing",
      "content": "- The International Monetary Fund (IMF) approved a 12-month stand-by credit for the Republic of Moldova of up to SDR 58.5 million (about $90 million).\n- The credit is in support of the Government's economic program for 1995."
    },
    {
      "heading": "Background and Recent Developments",
      "content": "- Key prior actions:\n  - Introduction of Moldova's national currency in November 1993.\n  - Support from IMF stand-by and systemic transformation facility (STF) credits and additional multilateral and bilateral financing.\n- Outcomes under IMF-supported programs in 1994:\n  - Broadly stable exchange rate.\n  - Reduction in inflationary pressures.\n  - Lower interest rates during 1994.\n- Ongoing challenges in 1994:\n  - Continued output decline due to the collapse of central planning, drought, and other weather-induced damage to the agricultural sector.\n  - Weak financial discipline in the state enterprise sector despite an ambitious auction schedule.\n  - Severe balance of payments pressure resulting from the move to world prices for imported energy and weather-related disasters.\n- IMF membership and quotas:\n  - Moldova became a member of the IMF on August 12, 1992.\n  - Its quota is SDR 90.0 million (about $138 million).\n  - Its outstanding use of IMF credit currently totals SDR 122 million (about $188 million).\n  - Note: SDR amount changed from 112 million to 122 million."
    },
    {
      "heading": "The 1995 Program: Objectives and Macroeconomic Targets",
      "content": "- Overall objectives:\n  - Consolidate financial stabilization.\n  - Implement structural transformation measures to restore economic growth and improve living standards.\n- Specific program targets for 1995:\n  - Economic growth of 1.5 percent, led by a recovery in the agricultural sector with the return of normal weather conditions.\n  - Reduction in the annual rate of inflation to about 10 percent from 116 percent in 1994.\n  - Containment of the deficit in the current account of the balance of payments.\n- Fiscal policy:\n  - Aim to sharply reduce the budgetary deficit to the equivalent of 3.5 percent of GDP from 8.1 percent of GDP in 1994.\n  - Measures to achieve this:\n    - Adjustments to tax rates.\n    - Strengthening of tax administration and arrears collection.\n    - Overall expenditure reductions while maintaining outlays in high-priority areas such as health care and education.\n- Monetary policy:\n  - Will remain tight to support the inflation and balance of payments objectives.\n  - Will rely increasingly on indirect, market-based instruments of monetary control."
    },
    {
      "heading": "Structural Reform Policies and Measures",
      "content": "- Privatization:\n  - Accelerated privatization program under which 1,500 enterprises will be sold in 1995/96 at market prices.\n- Legal and institutional reforms:\n  - Review of key legislation to meet market economy requirements, including establishing the legal basis for bankruptcy proceedings against insolvent state enterprises.\n- Financial sector reforms:\n  - Development of indirect, market-based monetary controls following the introduction of treasury bill auctions and other market instruments.\n  - Measures to strengthen the capital base of the banking system.\n  - Facilitation of entry of new foreign and domestic banks.\n- Main objective:\n  - Establish an environment conducive to private investment by reducing direct government intervention and enhancing the role of market forces in resource allocation."
    },
    {
      "heading": "The Challenge Ahead",
      "content": "- Emphasis:\n  - Structural reforms are crucial for the ultimate success of Moldova's transition to financial stabilization and a market economy.\n- Risks and lessons:\n  - Delays in early 1994 were costly in terms of eroding public support for financial stabilization and growth restoration.\n  - The acceleration of structural reforms in late 1994 needs to be sustained in 1995 and over the medium term for economic transformation to succeed."
    },
    {
      "heading": "Selected Economic Indicators (as presented)",
      "content": "- Real GDP (percent change):\n  - 1992: –29.1\n  - 1993: –8.7\n  - 1994: –22.2\n  - 1995: 1.5\n- Consumer price inflation (end of period):\n  - 1992: 2,198.0\n  - 1993: 837.0\n  - 1994: 116.0\n  - 1995: 9.4\n- External current account balance (deficit –) (millions of dollars):\n  - 1992: –38.9\n  - 1993: –181.8\n  - 1994: –177.0\n  - 1995: –181.1\n- Government budget balance (deficit –) (percent of GDP):\n  - 1992: –23.4\n  - 1993: –6.8\n  - 1994: –8.1\n  - 1995: –3.5\n- Sources: Moldovan authorities; and IMF staff estimates.\n- Note: Preliminary. Program.\n\nInternational Monetary Fund\n\n---\n\n\n References\n\n- Republic of Moldova and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9515"
    }
  ],
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    "Published: March 22, 1995",
    "The International Monetary Fund (IMF) approved a 12-month stand-by credit for the Republic of Moldova of up to SDR 58.5 million (about $90 million).",
    "The credit is in support of the Government's economic program for 1995.",
    "Key prior actions:",
    "Outcomes under IMF-supported programs in 1994:",
    "Ongoing challenges in 1994:",
    "IMF membership and quotas:",
    "Overall objectives:",
    "Specific program targets for 1995:",
    "Fiscal policy:",
    "Monetary policy:",
    "Privatization:",
    "Legal and institutional reforms:",
    "Financial sector reforms:",
    "Main objective:",
    "Emphasis:",
    "Risks and lessons:",
    "Real GDP (percent change):",
    "Consumer price inflation (end of period):",
    "External current account balance (deficit –) (millions of dollars):",
    "Government budget balance (deficit –) (percent of GDP):",
    "Sources: Moldovan authorities; and IMF staff estimates.",
    "Note: *Preliminary. **Program.",
    "[Republic of Moldova and the IMF](http://www.imf.org/external/country/MDA/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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