The International Monetary Fund on Wednesday gave the green light to allocate $27 million to the Republic of Moldova, hailing the progress made by Chisinau authorities in fiscal management and the fight against corruption, Barrons and Agerpres reported.

The amount is part of a larger package of $800 million that the Republic of Moldova can access over 40 months if it meets certain milestones in the agreement with the IMF.

Taking into account the funds that were allocated on Wednesday, the total support that the Republic of Moldova has received so far from the IMF is 242 million dollars.

Pressure on Moldova’s public finances has increased since Russia invaded Ukraine, leading to a wave of refugees and spin-offs such as exploding natural gas and food prices.

According to the IMF, the consequences of the war in Ukraine continue to affect the prospects of the Republic of Moldova.

In the medium term, the economy is expected to stagnate and inflation will remain high due to rising food and energy prices. In addition, a significant increase in the current account and budget deficit is expected this year.

Recommendations of the IMF for the Republic of Moldova

“Despite these challenges, the authorities remain committed to the IMF-backed program, which aims to support the vulnerable, continue reforms and create the conditions for sustainable and inclusive growth. The authorities have successfully fulfilled their obligations regarding fiscal management, supervision of the financial sector and strengthening of anti-corruption legislation,” said Kenji Okamura, Deputy Director General of the International Monetary Fund (IMF).

The IMF recommends that the authorities in Chisinau maintain an appropriate mix of policy measures, taking into account inflationary pressures, budget constraints and risks to the baseline scenario.

In addition, concerted efforts are needed to improve the efficiency of spending and promote reforms in energy and state-owned enterprises.

Another recommendation aims to protect the independence of the National Bank of Moldova, and therefore the adoption of legislation by the end of October to strengthen the institutional autonomy of the National Bank of Moldova is vital.

At the end of June, the Republic of Moldova, a small state with 2.6 million inhabitants, located between Ukraine and Romania, received the status of a candidate for joining the European Union.