Chicu: The New IMF Financing Program Is Unprecedented for Moldova

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The Republic of Moldova signed an agreement with the International Monetary Fund on a new three-year program. This program, unprecedented for our country, was signed amid the global pandemic crisis and the economic crisis caused by the pandemic, Prime Minister Ion Chicu said at a briefing yesterday, July28, reports. According to forecasts, the real gross domestic product in the Republic of Moldova will decrease by 4.5% in 2020, and then in 2021 it will narrow the gap within 4%. These are the IMF estimates that were presented at the talks. “We expect inflation to remain within the target range of the National Bank of Moldova of about 5%. We expect that the program will contribute to economic recovery, facilitate external financing and establish a solid ground for sustainable and long-term comprehensive economic growth,” the Prime Minister said. Ion Chicu stressed that in terms of the financial component and the planned range of reforms, this program is the largest and most ambitious ever signed by Moldova and the IMF. The financial component of the program is estimated at about $ 558 million, 85% of which will be directed to budget support and only a small amount will go to replenish the NBM’s foreign exchange reserves. “The program is also unprecedented in terms of the areas covered by the reforms, the main chapters of which are: fiscal, financial sector supervision, NBM governance, market regulation, improving the business environment, energy sector, rule of law, combating money laundering and terrorist financing”, he noted. The head of the Cabinet of Ministers stressed that any program with the IMF requires a lot of work on the part of the government, as well as a responsible attitude on the part of political forces. “Therefore, on behalf of my colleagues in the government, the National Bank, and other government agencies, I call on responsible political parties to provide maximum support for the implementation of this ambitious reform program,” the Prime Minister concluded. The agreement between the government, NBM and IMF is to be approved by the Fund’s Board of Directors this fall, and there are also some preliminary actions to be taken by the government, parliament and NBM. From July 7 to 24, 2020, the IMF mission, led by Ruben Atoyan, held discussions with the Moldovan authorities remotely from the IMF headquarters in Washington on the new economic program supported by the IMF. The IMF mission and the Moldovan authorities have reached an expert-level agreement on a three-year economic reform program, which the IMF will support through the Enhanced Credit Facility (ECF) and the Extended Funding Facility (EFF). Within the framework of the program, the Republic of Moldova will gain access to financing in the amount of about $ 558 million.