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The IMF has approved financial support of $175.2 million for the Republic of Moldova in the context of economic recovery.

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Republica Moldova

The IMF has approved financial support of $175.2 million for the Republic of Moldova in the context of economic recovery.

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The Executive Board of the International Monetary Fund (IMF) has approved significant financial support for the Republic of Moldova, amounting to approximately $175.2 million.

This decision follows the completion of the fifth review of Moldova’s economic support program, backed by the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF), as well as the first review of the program funded by the Resilience and Sustainability Facility (RSF).

Although the majority of the Board members voted in favor of this allocation, sources within the IMF indicated that the representative of the Russian Federation expressed strong opposition.

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The funds will be used to support the national budget and facilitate the recovery of the economy, which has been affected by multiple shocks. Including other support tranches, the total amount granted under the current programs will reach approximately $636.5 million.

In the statement issued by the IMF, Moldovan authorities were praised for their continuous efforts in managing unforeseen situations and maintaining economic policy flexibility. However, economic growth has remained below expectations due to the negative impact of the conflict in Ukraine, registering only a 0.7% growth in 2023. Forecasts indicate continued economic recovery, albeit at a more moderate pace than previously anticipated.

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The IMF reiterated the importance of continuing structural reforms and strengthening energy security, alongside promoting sustainable investments and progress in Moldova’s European integration process.

Kenji Okamura, IMF Deputy Director, emphasized that Moldova must maintain the pace of reforms to enhance the country’s prosperity despite ongoing challenges. He highlighted the need for fiscal policy to remain focused on protecting the most vulnerable social groups and supporting economic growth, while gradual fiscal consolidation is essential for managing public debt in a context of constrained external financing.

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In the short term, the IMF stresses the importance of maintaining macroeconomic stability through prudent monetary policies and ongoing reforms to strengthen governance and combat corruption.

Finally, the IMF welcomed the progress made so far under the RSF program, urging Moldovan authorities to continue reforms to enhance the country’s resilience to climate change and strengthen trust in state institutions.

This decision by the IMF represents crucial support for Moldova in facing current economic challenges and underscores the organization’s ongoing commitment to promoting stability and sustainable economic growth in the region.

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