Moldova to receive $162.6 million from IMF

Chisinau, Dec. 18 /MOLDPRES/- The IMF Executive Board concluded the sixth reviews under the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF), for the Republic of Moldova. This allows for a total disbursement of SDR 122.2 million (about $162.6 million) under both programs, usable for budget support. This brings Moldova’s total disbursements under the ongoing program arrangements to about $810.2 million.

“The economic recovery is taking hold with growth projected at 2.6 percent this year and 3 percent next year. The fiscal deficit is projected to decline from 5.2 percent of GDP in 2023 to 4.4 percent in 2024 and 4.0 percent in 2025 reflecting stronger-than-expected revenues, driven by buoyant wage and import growth and contained spending. Inflation has remained broadly within the National Bank of Moldova’s (NBM) 5 ± 1.5 percent target corridor since October 2023.

The outlook remains subject to significant uncertainty, with large downside risks, mainly related to the war in Ukraine and renewed energy shocks. By contrast, faster progress on structural reforms, including under the EU Growth Plan for Moldova, and steady progress on the EU accession path represent upside risks.

“While quantitative performance of the program has been strong, implementation of structural reforms has been uneven. The authorities completed conditionality related to financial inclusion, the insurance sector, and state-owned enterprises, and submitted legal amendments to Parliament to strengthen NBM’s autonomy and governance. Agreed actions to establish the Anti-Corruption Court (ACC) and ensure appropriate staffing of the Anti-Corruption Prosecutor’s Office (APO) are pending. The switch from providing in-bill energy subsidies to targeted cash transfers took place in time for the current heating season and the government approved a disaster risk management program. Two other RSF reform measures are in progress but will require more time to complete.

Following the Executive Board discussion, Mr. Kenji Okamura, Deputy Managing Director and Acting Chair, made the following statement:

“While economic recovery picked up in 2024 and is expected to continue in 2025, risks remain tilted to the downside. The authorities should pursue prudent policies and maintain buffers and robust contingency plans, including in the energy sector, while fostering growth-friendly investment and reforms, which will be also supported by the EU accession process.

Fiscal policy should remain on a gradual consolidation path to create space for addressing shocks and for growth-enhancing investment, while continuing to protect the most vulnerable. Policies should also focus on improving budget planning and capital investment execution and raising revenues.

Continued progress on anti-corruption reforms is needed to further increase trust in Moldova’s institutions and foster socio-economic development. To this end, adoption of the law establishing a new ACC and ensuring appropriate staffing of the APO are key priorities.