The IMF plans to approve the report on the completion of the first review under the current financing program for Moldova on September 21.
Finance Minister Dumitru Budianschi stated this while presenting the draft amendments to the Law on the State Budget for 2022 in the Parliament. He noted that this is one of the reasons explaining the need for early adoption of the amendments to the State Budget-2022, agreed earlier with the experts of the International Monetary Fund. As InfoMarket agency earlier reported, the IMF mission reached a staff-level agreement with the Moldovan on completing the first review of the program, and, if approved by the Executive Board of the Fund in September, Moldova will receive $27 million. The IMF mission headed by Ruben Atoyan had discussions with the Moldovan authorities in Chisinau on July 20 - August 10 from the IMF head office, in the context of the first review of Moldova's current program financed by the IMF. Based on preliminary conclusions following the discussions, the IMF staff will prepare a report that will be presented to the Fund's Executive Board for discussions and approval. The IMF said the effects of Russia's invasion of Ukraine, including rising food and energy prices, trade disruptions, refugee inflows and declining public confidence, continue to weigh on Moldova's economic prospects. Increased funding from the IMF and other donors plays a key role in helping the authorities cope with external shocks. Ruben Atoyan said the IMF mission reached a staff-level agreement with the Moldovan authorities on the policy measures needed to complete the first review under the program. After the Executive Board meeting, Moldova will be able to receive about $27 million, which will bring the total amount of allocated funds within the program to $245 million. Ruben Atoyan said that the program with the Fund is successfully implemented, despite the interwoven strong shocks. According to him, the authorities have fulfilled all the criteria of the program implementation. The structural reforms supported by the program in the fields of anti-corruption, rule of law, fiscal management and supervision of the financial sector are advancing at a fast pace. The authorities appointed a new head of the Anti-Corruption Prosecutor's Office, an important milestone in the program, in June this year, well ahead of schedule. The Head of the IMF Mission stressed that, at the same time, the war in Ukraine continues to have a significant negative impact on the Moldovan economy. Real GDP is expected to stagnate in 2022. In addition to the deterioration of the global economic outlook, supply disruptions and rising production costs, the economy is also affected by the adverse effects of the drought on agricultural production. Inflation accelerated sharply due to higher energy and food prices, and the MDL depreciated. Fiscal performance remained steady in the first half of 2022, reflecting a favorable combination of higher budget revenues and grants, as well as poor execution of approved budget expenditures. The head of the IMF mission noted that the draft amendments to the 2022 state budget law, agreed with IMF experts, provides for additional funds to protect the vulnerable from rising energy and food prices. According to him, in the future, a concerted effort is needed to address the problem of persistent under-implementation of approved budget expenditures, in order to improve the efficiency of spending and strengthen the credibility of the budget. Given the risks of a possible worsening of the situation, the authorities' decisive actions will be crucial in ensuring support for the budget from external partners. Ruben Atoyan pointed out that there are still risks of deterioration of economic situation. Higher-than-expected energy prices, disruptions in energy supplies, a rise in global food prices, higher costs of living and the closeness of war may further undermine economic activity and public confidence, which may necessitate compromises on policy measures. "The decisive implementation of a comprehensive reform package and the continued support of the IMF and other partners should build confidence," he said. // 26.08.2022 - InfoMarket.
