On June 29, 2018, the Executive Board of the International Monetary Fund
(IMF) completed the Third Reviews under the Extended Credit Facility (ECF)
and Extended Fund Facility (EFF) Arrangements for the Republic of Moldova
and approved the request for modification of performance criteria.
Completion of the review makes available SDR 24 million (about US$33.8
million). The ECF/EFF arrangements in a total amount of SDR 129.4 million
(about US$178.7 million, or 75 percent of the Republic of Moldova’s quota)
were approved on November 7, 2016 (see
Press Release No 16/491
for details).
Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing
Director and Acting Chair, made the following statement:
“Moldova’s strong commitment to the Fund-supported program has contributed
to a further strengthening of the economy. It is critical that prudent
policies are maintained and reforms continue to advance to complete the
repair of the financial sector, ensure transparency and stability in the
energy sector, and maintain macroeconomic stability. A strong effort is
also required to further improve governance.
“Significant progress is being made in cleaning up the financial sector,
notably by securing transparency in systemic banks and amending the
framework to remove unfit shareholders. Further efforts are required to
complete identification of beneficial owners and remove unfit shareholders;
to improve banks’ risk management; and to address related party issues,
including credible time bound plans to unwind excessive exposures. In
addition, there is a need to facilitate the orderly exit of the second
largest bank from temporary administration. Moreover, micro credit
institutions should be prohibited from accepting deposit-like funds, and
there is a need to ensure strong governance, ownership transparency, and
financial strength in the insurance sector.
“On fiscal issues, the 2018 budget amendment accommodates priority
infrastructure needs and other social assistance, consistent with program
objectives. Priority spending should be protected, the wage bill should be
contained relative to GDP, and budget overruns ahead of the elections
should be avoided. The 2019 Budget and medium-term framework should remain
in line with program commitments. Tax policy decisions should sustain the
agreed revenue path, and the progressivity of the system, while budget
slippages associated with unifying the public wage scale should be
prevented. More efforts are needed to facilitate the elimination of
arrears.
“Monetary policy should continue to focus on maintaining price stability
under a flexible exchange rate regime. It should remain data dependent and
the operational capacity of the authorities should continue to be improved.
Intervention in the foreign exchange market should be limited to smoothing
excess volatility.
“While there has been delay in the recovery of stolen assets, a
high-level strategy was published and it should be implemented in a
determined manner.
The AML/CFT frameworks and regulations should be to realigned with
international standards. In the energy sector, it is important to ensure
viability, transparency and predictability, by setting electricity tariffs
in line with the new methodology and program commitments.”
