Republic of Moldova: Staff Concluding Statement of the 2025 Article IV Mission
IMF News, December 17, 2025
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- Published: December 17, 2025
Mission overview
- IMF mission led by Alina Iancu conducted discussions for the 2025 Article IV consultation with Moldova during December 4-17.
- The Moldova authorities consented to publication. The views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.
- Based on preliminary findings, staff will prepare a report for the IMF Executive Board (subject to management approval).
Growth, inflation, and external sector — key findings
- Real GDP growth:
- 2024: 0.1 percent
- 2025 (projected): 2.7 percent — recovery driven by a better-than-expected harvest and strong consumption and investment.
- 2026 (proj.): 2.3 percent
- 2027 (proj.): 3.5 percent
- 2028 (proj.): 3.7 percent — reflecting higher public and private investment and productivity-enhancing structural reforms under the EU Growth Plan.
- Inflation:
- 2024 (average): 4.7 percent
- 2025 (average, projected): 7.7 percent
- 2025 (eop, projected): 7.0 percent
- 2026 (eop, projected): 6.5 percent
- 2027 (eop, projected): 4.9 percent
- Staff expect inflation to return to the National Bank of Moldova’s (NBM) target range of 5 ± 1.5 percent by end-year.
- External current account:
- 2024: -16.0 percent of GDP
- 2025 (proj.): -20.1 percent of GDP — widened due to strong demand for imported goods, electricity imports, and weak exports of goods indicating eroding competitiveness.
- 2026 (proj.): -22.0 percent of GDP
- 2027 (proj.): -21.1 percent of GDP
- 2028 (proj.): -19.8 percent of GDP
- Outlook characterized by significant uncertainty:
- Downside risks: heightened spillovers from the war in Ukraine, other geopolitical developments, delays in Growth Plan reform implementation, and misallocation of related funding.
- Upside risks: accelerated implementation of reforms and more favorable geopolitical developments.
Fiscal policy, public financial management, and revenue mobilization
- Fiscal balance and public debt:
- Fiscal balance: 2024: -4.1 percent of GDP; 2025 (proj.): -4.5 percent of GDP; 2026 (proj.): -5.2 percent of GDP; 2027 (proj.): -4.8 percent of GDP.
- Public debt: 2024: 38.8 percent of GDP; 2025 (proj.): 38.1 percent of GDP; 2026 (proj.): 40.4 percent of GDP; 2027 (proj.): 42.3 percent of GDP; 2028 (proj.): 43.5 percent of GDP.
- 2025 developments:
- Fiscal policy was supportive; deficit rose from 4.1 percent of GDP in 2024 to 4.5 percent in 2025, largely due to increases in current spending (untargeted support to households and wage increases) despite substantial grants.
- Capital spending was less than planned due to continued capital under-execution.
- 2026 budget risks:
- Ambitious increase in capital spending combined with lower grants projected to increase deficit to 5.2 percent of GDP, placing upward pressure on the debt trajectory.
- Increased allocation for capital projects (energy and transport infrastructure) could support transition from consumption to investment-based growth, conditional on stronger absorption capacity and execution.
- Policy recommendations — public finance and PFM:
- Strengthen public financial management and spending efficiency through a credible and transparent fiscal framework involving rigorous budget planning and consistent execution, compliance with fiscal rules, and independent oversight from a fiscal council.
- Cover significant costs of civil service reform (simplification of compensation system and wage adjustments) by raising additional revenues to avoid further widening the deficit.
- Phase out the electricity price compensation this year and adjust the Energy Vulnerability Reduction Fund to better target the most vulnerable households.
- Revenue mobilization and tax policy recommendations:
- Moldova raises less tax revenue than peers; tax system is complex and distortive.
- Initial tax reforms should focus on simplification and removal of ineffective tax incentives (e.g., reduced VAT rates and exemptions that impede production efficiency and are weakly targeted).
- Broaden the tax base with improved revenue administration—more reliance on risk-based audits and modern compliance management—to raise additional revenues and protect compliant taxpayers.
- Reforms should initially raise enough revenue to at least cover the costs of the public administration reform; in the medium term, more revenue will be needed for fiscal sustainability.
- Review progressivity of income and wealth taxes to accommodate an increased total tax burden.
Monetary policy, banking sector, and financial stability
- Monetary policy stance:
- No scope for further monetary policy easing given current conditions; NBM should monitor price developments and stand ready to adjust policy instruments.
- NBM actions in 2025: raised policy rate early in the year to contain second-round effects from the energy shock; lowered the policy rate by 150 bps since August; reduced reserve requirements in November.
- Reserve requirements remain high: 20 percent on deposits in Moldovan lei and 29 percent on deposits in foreign currency; gradual normalization should continue once inflation risks have clearly subsided.
- Maintain exchange rate flexibility while preserving sufficient foreign exchange buffers.
- Banking system and macroprudential measures:
- Banking system sound: banks are adequately capitalized, liquid, and profitable.
- Strong credit growth: 2024 credit to the economy growth: 25.1 percent; 2025 (proj.): 22.2 percent; 2026 (proj.): 19.7 percent — warrants close monitoring.
- House prices rose by 24 percent between end-2024 and mid-2025.
- NBM tightened the countercyclical capital buffer as a precautionary measure.
- Recommendations: strengthen borrower-based measures and align the “Prima Casa” support program with borrower-based framework to help contain risks.
- Financial Sector Assessment Program (FSAP) findings and recommendations:
- FSAP (IMF-World Bank), now underway, finds the banking system can withstand pressures under severe shocks.
- Recognizes NBM progress on financial sector supervision and crisis management over the last ten years; welcomes more efficient, risk-based, and forward-looking supervision and stronger regulatory framework.
- FSAP recommends further strengthening risk-based supervision, the framework for major acquisitions for banks, and better identification of operational risk.
- Recommends enhancing resolution and emergency liquidity assistance frameworks, including establishing appropriate backstops.
- Safeguarding NBM independence and governance is critical; pending legal amendments in parliament would address remaining gaps.
- Despite improvements in the AML/CFT regime, significant risks remain and AML supervision could be strengthened.
- Given these risks and legacies from past crises, relaxing tight prudential thresholds for changes in bank ownership remains undesirable.
- Capital market development:
- Prioritize government debt markets: strengthen the primary government securities market with a more predictable and market-based auction system to build a reliable benchmark yield curve and attract a more diversified investor base.
Structural reforms, energy security, and governance
- Energy sector:
- Moldova has significantly strengthened energy resilience and enhanced readiness for the upcoming heating season.
- Priorities: advance electricity interconnections and cross-border integration; expand electricity generation, storage capacity, and system-balancing capabilities; scale up energy-efficiency programs.
- Governance, anticorruption, and public administration:
- Resuming governance reforms is critical for improving the business environment, implementing the EU Growth Plan, enhancing public services, and safeguarding public resources.
- Progress on anticorruption reforms has been uneven; uncertainty about the Anticorruption Prosecutor’s Office and continued capacity constraints and staff shortages.
- Recommendations: enhance oversight of conflict-of-interest issues, continue reforming asset declaration, and the new government should make decisive progress in these areas.
- Ongoing civil service reform is welcome but will entail significant costs that should be funded by additional revenues.
- Labor market and competitiveness:
- Growth has lagged EU accession peers; high emigration pressures the labor force and hampers growth.
- Rising unit labor cost and low productivity growth have eroded competitiveness.
- Recommendations: active labor market policies and training to support labor participation and reduce skill mismatches; improvements in infrastructure and the investment environment to diversify and upgrade exports.
Risks and scenarios
- Downside risks dominate:
- Heightened spillovers from the war in Ukraine and other geopolitical developments.
- Delays in implementation of reforms under the EU Growth Plan and misallocation of related funding.
- Upside scenarios:
- Accelerated implementation of reforms and more favorable geopolitical developments could improve the outlook.
- External adjustment:
- External current account deficit will remain elevated in the near term and decline only gradually over the medium term with lower demand for imports.
Selected economic indicators (as presented)
- Output
- Real GDP growth (%): 2024: 0.1; 2025 (Proj.): 2.7; 2026 (Proj.): 2.3; 2027 (Proj.): 3.5; 2028 (Proj.): 3.7
- Employment
- Unemployment rate (%): 2024: 4.0; 2025 (Proj.): 3.8
- Prices
- Inflation (%, average): 2024: 4.7; 2025 (Proj.): 7.7; 2026 (Proj.): 5.0
- Inflation (%, eop): 2024: 7.0; 2025 (Proj.): 6.5; 2026 (Proj.): 4.9
- General government finances
- Revenue (% GDP): 2024: 33.9; 2025 (Proj.): 35.4; 2026 (Proj.): 35.6; 2027 (Proj.): 35.7; 2028 (Proj.): 35.5
- Expenditure (% GDP): 2024: 38.0; 2025 (Proj.): 39.9; 2026 (Proj.): 40.8; 2027 (Proj.): 40.3
- Current expenditure (% GDP): 2024: 34.8; 2025 (Proj.): 36.5; 2026 (Proj.): 36.8; 2027 (Proj.): 36.6
- Capital expenditure (% GDP): 2024: 3.1; 2025 (Proj.): 3.4; 2026 (Proj.): 3.9; 2027 (Proj.): 4.2
- Fiscal balance (% GDP): 2024: -4.1; 2025 (Proj.): -4.5; 2026 (Proj.): -5.2; 2027 (Proj.): -4.8
- Public debt (% GDP): 2024: 38.8; 2025 (Proj.): 38.1; 2026 (Proj.): 40.4; 2027 (Proj.): 42.3; 2028 (Proj.): 43.5
- Money and credit
- Broad money (% change): 2024: 13.7; 2025 (Proj.): 9.6; 2026 (Proj.): 7.5
- Credit to the economy (% change): 2024: 25.1; 2025 (Proj.): 22.2; 2026 (Proj.): 19.7
- Balance of payments
- Current account (% GDP): 2024: -16.0; 2025 (Proj.): -20.1; 2026 (Proj.): -22.0; 2027 (Proj.): -21.1; 2028 (Proj.): -19.8
- FDI (% GDP): 2024: 1.3; 2025 (Proj.): 2.1; 2026 (Proj.): 2.4; 2027 (Proj.): 2.5
- Reserves (months imports): 2024: 5.4; 2025 (Proj.): 5.3; 2026 (Proj.): 5.2
- External debt (% GDP): 2024: 57.5; 2025 (Proj.): 59.4; 2026 (Proj.): 62.1; 2027 (Proj.): 66.0; 2028 (Proj.): 69.0
Republic of Moldova: Staff Concluding Statement of the 2025 Article IV Mission, IMF Communications Department, December 17, 2025.
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- Press Release-English