The International Monetary Fund announced on Wednesday that it has reached expert-level agreement with the Republic of Moldova on the policies needed to complete the second evaluation of the program supported by the Extended Lending Facility and the Extended Financing Facility, according to an International Monetary Fund press release. international financial institution.

Between October 31 and November 29, 2022, the mission of the International Monetary Fund (IMF) led by Ruben Atoyan held negotiations in Chisinau and then remotely with the authorities of the Republic of Moldova in the context of the second evaluation supported by the program through the Extended Credit Program (ECF) and the Extended Credit Program funding (EFF).

“This agreement must be approved by the Board of Executive Directors of the IMF at the request of the authorities of the Republic of Moldova, the relevant meeting is scheduled for January 2023. Completion of the second evaluation of the program will allow the Republic of Moldova to access 20.65 million Special Drawing Rights (about $27 million). Thus, the total amount of payments made within the framework of the program will be about 287 million dollars,” Ruben Atoyan said at the end of the discussions with the authorities of the Republic. Moldova.

According to the forecasts of IMF experts, the real GDP of the Republic of Moldova will decrease by 1.5% in 2022, taking into account that the increase in prices erodes the disposable income of the population and the negative impact on confidence affects investments. Annual inflation hit 34.6% in October, reflecting the impact of still high energy and food prices, but the IMF expects inflation to ease in the coming months. Under these conditions, the Chisinau authorities are faced with a difficult political choice, especially regarding priorities, in the context of a complex global situation and constant internal risks.

The budgetary and fiscal policy provided for by the State Budget draft for 2023 and agreed with IMF experts will be aimed at mitigating the negative economic and social consequences of the Russian Federation’s invasion of Ukraine and related energy shock. In the approved budget, priority will be given to measures in response to the rising cost of living and measures to ensure energy security. Internal revenue mobilization, cost efficiency, and consolidation of management and budget transparency will contribute to strengthening budget and fiscal discipline and ensuring debt sustainability. Achieving concessional financing and grants from external development partners will require consistent policies and a sustained push for reform.

IMF experts warn of significant risks of deterioration of the situation. High energy prices, disruptions to natural gas and electricity supplies, an escalation of Russia’s war against Ukraine, and rising costs of living could worsen economic prospects, undermine trust and challenge social cohesion, further exacerbating an already difficult political decision-making situation. On the other hand, the rapid implementation of reforms provided for in the program and constant support from external partners can contribute to increasing Moldova’s investment attractiveness and advancing its European integration program.

Source: Agerpres