Russia’s invasion of Ukraine continues to strongly influence Moldova, and energy supply interruptions put additional pressure on the Moldovan economy, is said in the IMF statement on the occasion of the second evaluation of the 40-month program for Moldova, supported through the Extended Credit Facility (ECF) and the Extended Financing Facility (EFF).
Following the evaluation, the Republic of Moldova obtained immediate access to 20.65 million SDRs (special drawing rights), the equivalent of approximately 27 million US dollars, an amount intended for budgetary support. The total amount disbursed under the ECF/EFF program will reach SDR 206.6 million (about US$ 275 million).
The outlook still remains fraught with challenges. The country’s economy is forecast to contract by 1.5% in 2022, followed by a modest recovery of 1.5% in 2023 – also under the influence of the prolonged impact of Russia’s war against Ukraine and the worsening outlook of Moldova’s main trading partners .
It finds that inflation peaked at 31.4% (annualized) in November and remains high. As for the fiscal deficit, the index will reach 6% of GDP, reflecting policies to counter the cost of living and energy crisis, while the current account deficit continues to be driven by higher energy import costs.
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There is a worsening outlook, including further escalation of Russia’s war against Ukraine. However, the implementation of the program in Moldova is proceeding with vigor despite the difficult environment, with the completion of important program commitments in the areas of fiscal and financial governance and reforms of the state-owned enterprise (SOE) sector.
“Despite these challenges, the authorities remain firmly committed to the program supported by the Fund, which aims to support vulnerable people, while advancing governance reforms and addressing development needs to create conditions for sustainable and inclusive growth,” he stated at the end of the discussions in the Executive Council, Kenji Okamura, Deputy Director General and Interim President of the forum in question.