## IMF Executive Board Approves Moldova’s Requests for Arrangements Under Extended Fund Facility and Extended Credit Facility

_IMF News, December 21, 2021_

## Source details

**Canonical URL:** [IMF Executive Board Approves Moldova’s Requests for Arrangements Under Extended Fund Facility and Extended Credit Facility](https://www.imf.org/en/news/articles/2021/12/21/pr21393-moldova)

## Other formats

- [Markdown version](/en/news/articles/2021/12/21/pr21393-moldova/index.md)
- [Structured JSON version](/en/news/articles/2021/12/21/pr21393-moldova/index.json)
- [Bundle manifest](/en/news/articles/2021/12/21/pr21393-moldova/bundle-manifest.json)

## Bibliographic details
- Published: December 21, 2021

---

### Program approval and financing
- The Executive Board approved Moldova’s requests for arrangements under the Extended Credit Facility (ECF) and Extended Fund Facility (EFF).
- Program duration: 40-month program.
- Immediate disbursement enabled: about US$79.8 million (SDR 57.2 million).
- Total envisaged disbursements under the 40-month ECF/EFF arrangements: about US$558.3 million (SDR 400.0 million).
- The Executive Board also concluded the 2021 Article IV Consultation with Moldova.

### Program objectives and key policy challenge
- Three main objectives of the IMF-supported programs:
  - sustain the post-pandemic recovery;
  - address pressing developmental needs;
  - strengthen Moldova’s governance and institutional frameworks.
- Key policy challenge: design a prudent policy mix to mitigate the impact of the pandemic and pursue developmental objectives without endangering debt sustainability.

### Assessment of recent shocks and policy response
- Recent shocks cited: COVID-19 pandemic, drought in 2020, and the ongoing surge in global energy prices.
- These shocks have:
  - slowed economic activity;
  - intensified downside risks;
  - complicated policymaking.
- Emergency financial assistance from international partners helped cushion the pandemic’s economic impact.
- Under-execution of approved COVID-related crisis measures highlights longstanding capacity constraints.

### Financial sector and central bank priorities
- Commendation for progress in rehabilitating the banking sector and bolstering macro-financial stability.
- Recent reforms by the National Bank of Moldova (NBM), supported by the IMF, were vital during the crisis.
- Recommended priorities for authorities:
  - continue improving the NBM’s policy credibility and effectiveness;
  - bolster financial sector supervision, financial crisis management, and macroprudential frameworks;
  - strengthen the NBM’s governance, transparency, and accountability.
- safeguarding the NBM’s independence is described as a critical precondition for its effectiveness and credibility.
- Additional financial sector measures needed:
  - address significant vulnerabilities in the non-bank financial sector;
  - strengthen the AML/CFT regime;
  - make decisive progress on asset recovery.

### Fiscal policy, development priorities, and external engagement
- As recovery takes hold, the policy mix should evolve to address urgent developmental objectives while preserving debt sustainability.
- Developmental priorities include addressing significant infrastructure gaps and accelerating income convergence with European peers.
- Fiscal policy recommendations:
  - improve domestic revenue mobilization;
  - increase public spending efficiency;
  - decisively address fiscal risks emanating from state-owned enterprises;
  - continue efforts to improve budget quality and transparency.
- Continued engagement with developmental partners is needed to leverage expertise and secure needed concessional financing.

### Governance and structural reforms
- The authorities’ reform agenda focuses on longstanding and widespread governance weaknesses and institutional vulnerabilities.
- If appropriately sequenced and resolutely implemented, the proposed measures are expected to yield large medium-term gains, including:
  - unlocking Moldova’s untapped economic potential;
  - accelerating income convergence with European peers.
- Expected channels for gains from reforms:
  - strengthen the rule of law and reduce corruption;
  - embrace the independence of key institutions;
  - improve the business environment, foster competition and innovation, and unlock private investment;
  - curb brain drain, accelerate human capital accumulation, and increase productivity.

*Source: IMF Press Release No. 21/393, December 21, 2021.*

---

## Content in this bundle

- **PR 21/393**
  - [PR 21/393 (Markdown version)](/-/media/files/news/press-release/2021/pr21393-rom-moldova.pdf.md){rel="alternate" type="text/markdown"}
  - [PR 21/393 (PDF)](/-/media/files/news/press-release/2021/pr21393-rom-moldova.pdf){rel="external" type="application/pdf"}

---

## References

- [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/)
- [ECF](https://www.imf.org/en/About/Factsheets/Sheets/2016/08/02/21/04/Extended-Credit-Facility)
- [EFF](https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/20/56/Extended-Fund-Facility)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2021/12/21/pr21393-moldova_