## IMF Executive Board Concludes Second Reviews Under the Extended Credit Facility and Extended Fund Facility Arrangements for the Republic of Moldova

_IMF News, January 9, 2023_

## Source details

**Canonical URL:** [IMF Executive Board Concludes Second Reviews Under the Extended Credit Facility and Extended Fund Facility Arrangements for the Republic of Moldova](https://www.imf.org/en/news/articles/2023/01/09/pr2301-imf-executive-board-concludes-second-reviews-under-ecf-and-eff-for-moldova)

## Other formats

- [Markdown version](/en/news/articles/2023/01/09/pr2301-imf-executive-board-concludes-second-reviews-under-ecf-and-eff-for-moldova/index.md)
- [Structured JSON version](/en/news/articles/2023/01/09/pr2301-imf-executive-board-concludes-second-reviews-under-ecf-and-eff-for-moldova/index.json)
- [Bundle manifest](/en/news/articles/2023/01/09/pr2301-imf-executive-board-concludes-second-reviews-under-ecf-and-eff-for-moldova/bundle-manifest.json)

## Bibliographic details
- Published: January 9, 2023

---

### Key outcomes and financing
- The Executive Board completed the second review under the 40-month Extended Credit Facility (ECF) and Extended Fund Facility (EFF) arrangements for the Republic of Moldova.
- Immediate disbursement: SDR 20.65 million (about US$27 million), usable for budget support.
- Total disbursements under the blended ECF/EFF arrangements after this review: SDR 206.6 million (about US$275 million).
- Original/augmented access under the arrangements: total access increased to SDR 594.26 million (as noted in the arrangements’ augmentation).

### Macro outlook and risks
- 2022 GDP projection: economy is projected to contract by 1.5 percent in 2022.
- 2023 GDP projection: modest recovery of 1.5 percent in 2023.
- Inflation: estimated to have peaked but remains high at 31.4 percent in November (year-on-year).
- Fiscal position: fiscal deficit is projected to widen to 6 percent of GDP next year, reflecting policies to counter the cost-of-living and energy crises.
- External sector: current account deficit continues to be driven by higher costs of energy imports.
- Risk assessment: risks to the outlook are high and firmly tilted to the downside, including risks of further escalation of Russia’s war against Ukraine.
- Shock drivers: spillovers from Russia’s invasion of Ukraine continue to weigh heavily on Moldova, with disruptions of energy supply putting additional pressure on the economy.

### Program implementation and reforms
- Program performance: Moldova’s program implementation remains strong despite the difficult environment.
- Completed structural commitments: public investment management, SOE sector reforms, and financial sector governance.
- Strengthening of reform agenda: proposal of six new structural benchmarks to guide implementation of reform priorities.
- External financing: the Fund-supported program has helped catalyze significant external financing to help Moldova bridge immediate financing needs.

### Policy priorities and recommendations (authorities’ near-term focus and Fund guidance)
- Near-term policy priorities:
  - Safeguarding energy security.
  - Protecting the most vulnerable from the cost-of-living crisis.
  - Preserving macro-financial stability.
- Fiscal policy guidance:
  - Maintain strong policy momentum to secure additional grant and concessional financing from donors, needed to withstand the shocks, reduce reliance on expensive short-term domestic financing, and preserve fiscal sustainability.
  - Improve spending efficiency, foster budget credibility, and mobilize domestic revenue.
- SOE sector and governance:
  - Accelerate SOE sector reform to improve efficiency and contain fiscal risks.
  - Continue broader governance, judicial and anti-corruption reforms to support growth.
- Monetary policy and central bank governance:
  - Revised inflation outlook warrants carefully calibrated easing of monetary policy stance, but exceptionally high uncertainty calls for continued vigilance.
  - Adoption of the law aiming to strengthen the institutional autonomy and governance of the National Bank of Moldova (NBM) is welcome.
  - Safeguarding the independence of the NBM is essential to reinforce its credibility and strengthen policy effectiveness.

### Assessment of program role and outlook
- The program has helped the authorities respond to multiple shocks in an agile and comprehensive way.
- Continued progress on governance reforms helps foster resilience and creates a solid foundation for strong and inclusive growth.
- Continued reform implementation and maintenance of an appropriate policy mix are critical to withstand downside risks while pursuing longer-term developmental objectives.

*Press Release No. 23/01 — IMF Communications Department, January 9, 2023.*

---

## Content in this bundle

- **Pr2301 Rom**
  - [Pr2301 Rom (Markdown version)](/-/media/files/news/press-release/2023/pr2301-rom.pdf.md){rel="alternate" type="text/markdown"}
  - [Pr2301 Rom (PDF)](/-/media/files/news/press-release/2023/pr2301-rom.pdf){rel="external" type="application/pdf"}

---

## References

- [Kenji Okamura](https://www.imf.org/en/About/senior-officials/Bios/kenji-okamura)
- [Republic of Moldova and the IMF](http://www.imf.org/external/country/MDA/index.htm)
- [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Press Release](https://www.imf.org/en/News/Articles/2021/12/21/PR21393-Moldova)
- [Press Release](https://www.imf.org/en/News/Articles/2022/05/11/pr22149-moldova-imf-board-concludes-adhoc-review-under-ecf-and-augmentation-under-ecf-and-eff)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2023/01/09/pr2301-imf-executive-board-concludes-second-reviews-under-ecf-and-eff-for-moldova_