IMF Staff Concludes Visit to Moldova
May 3, 2024
End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.
- The IMF team had constructive and productive discussions with the Moldovan authorities on economic performance and policies underpinning the fifth reviews under the Extended Credit Facility and Extended Fund Facility (ECF/EFF) arrangements and the first review under the Resilience and Sustainability Facility (RSF) arrangement.
- Program performance has been sound and broadly on track, although some structural reforms have been delayed.
- Economic recovery is taking longer than anticipated, in a context of persistent challenges and spillovers from Russia’s war in Ukraine.
An IMF mission, led by Clara Mira, conducted discussions in Chisinau during April 22-May 3 for the fifth reviews of Moldova’s programs under the ECF/EFF arrangement and the first review under the RSF arrangement. At the end of discussions, Ms. Mira issued the following statement:
“The recovery of the Moldovan economy has been slower than expected, as spillovers and headwinds from Russia’s war in Ukraine continue. Real GDP grew by 0.7 percent in 2023, below the IMF’s 2 percent forecast at time of the last review. This was due primarily to a weaker recovery of domestic demand, particularly private consumption and investment.
“Recovery should continue in 2024, with growth of 2.6 percent, again less than previously projected. Risks include possible renewed energy shocks or a new wave of refugees. Faster-than-anticipated growth in trade partners, faster progress towards EU accession, and acceleration of structural reforms are upside risks.
“The 2024 budget strengthens social safety nets, further sustains energy security, and supports growth-enhancing investment and reforms. With inflation within the NBM’s target band since November, the current monetary policy stance is appropriate. Exchange rate flexibility and preserving sufficient foreign exchange buffers will be critical to address shocks. Monetary policy should remain focused on preserving price stability.
“Program performance has been sound and broadly on track, although with some delays in structural reforms. The authorities met all end-December quantitative performance criteria. End-December structural benchmarks on strengthening tax administration and completing a triage of state-owned enterprises were met. The Law on Climate Action was adopted. However, agreed reforms to strengthen the institutional autonomy and governance of the NBM (December) and to establish an anti-corruption adjudication infrastructure, including a credible process for the selection of judges (March) are being delayed, although work is ongoing.
“We would like to thank the authorities for the constructive discussions. The team will continue its discussions in the context of the Fifth ECF/EFF and First RSF Reviews with the goal of reaching a staff-level agreement in the near term. We reaffirm our commitment to support Moldova.
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