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Dec 21, 2017 12:30 EEST
December 21 (SeeNews) - The International Monetary Fund (IMF) decided to make available to Moldova $22 million (18.5 million euro) under the current three-year funding arrangement, the global lender said.
IMF's executive board concluded the Article IV consultation and the second review under the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) arrangements on Wednesday, it said in a press release.
Moldova already received a total of $57.5 million in two tranches under the current three-year credit facility of $183.1 million, approved in November 2016.
IMF's executive directors welcomed the macroeconomic and financial stability experienced in Moldova over the past two years, and the progress achieved under the programme, but cautioned that recent gains are not yet irreversible and downside risks to the medium‑term outlook remain.
In this regard, Moldova must preserve its fiscal sustainability by strengthening the effectiveness of monetary policy and implementing reforms to decisively repair the financial system. Also, it must improve governance and the business climate. These are critical to attract foreign and domestic investment and raise potential growth and living standards, the IMF emphasized.
“The 2018 budget and medium-term fiscal framework allow for growth-friendly priority public investment and social spending, while safeguarding debt sustainability," IMF's deputy managing director and acting chair Mitsuhiro Furusawa said. "Looking forward, firm control over current spending and the wage bill will be important to prevent the latter from increasing in percent of GDP and unduly constraining priority spending. Efforts should also be made to improve public investment efficiency, take a measured approach to scaling up, and eliminate arrears at the local level."
In October, the IMF lowered its forecast for Moldova's 2017 economic growth to 4.0% from 4.5% predicted in April, while maintaining its projection for 2018 growth at 3.7%. In 2016, Moldova's economy grew by an estimated 4.3%.
Moldova's inflation is seen slowing down to 5.3% in 2018 from 6.5% projected for this year, the IMF also said.
The country's annual consumer price inflation decelerated to 7.3% in November from 7.9% in October, according to the latest data available from Moldova's statistical office, BNS.
Moldova's central bank now projects 6.5% inflation in 2017 and 4% in 2018.
The IMF expects Moldova's current account deficit to increase to 4.0% of GDP in 2017 from an estimated 3.8% of GDP in 2016, the global lender said in its World Economic Outlook report released in October.
Moldova has built its 2017 budget bill on a projection of 3.0% economic growth, to 142.8 billion lei ($7.15 billion/6.74 billion euro). Budget deficit is forecast at 4.15 billion lei, equivalent to 2.9% of 2017 GDP.
In the first nine months of 2017, Moldova's GDP expanded by a real 3.8% year-on-year, reaching 109.4 billion lei.
Moldova’s GDP grew by 4.1% in 2016, supported by growth in agriculture output and in household consumption.
(1 euro=20.2255 lei)
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