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IMF to disburse $27 mln to Moldova under extended credit facility

IMF to disburse $27 mln to Moldova under extended credit facility IMF and Moldova

CHISINAU (Moldova), August 11 (SeeNews) - The International Monetary Fund (IMF) said it will disburse $27 million (26.4 million euro) to Moldova under an extended credit facility in order to help the country cope with the impact of the war in Ukraine and surging international energy and food prices.

The staff-level agreement is subject to endorsement by the IMF’s executive board, which is scheduled to consider this review in September, the global lender said in a press release on Wednesday.

This would bring total disbursements under the extended program to about $245 million, the IMF said, adding that increased financial support is key to help Moldovan authorities cope with these exogenous shocks while providing additional resources to meet urgent socio-economic needs. The fallout from Russia’s invasion of Ukraine, including the surge in food and energy prices, trade disruptions, the influx of refugees, and confidence effects continue to weigh on the outlook for the Moldovan economy.

"Implementation of the program remains strong despite severe and intertwined shocks. The authorities met all performance criteria, and program-supported structural reforms in areas of anti-corruption, the rule of law, fiscal sector governance, and financial sector oversight are progressing apace," IMF chief negotiator for Moldova Ruben Atoyan said.

Atoyan note that the war in Ukraine, however, continues to affect the Moldovan economy significantly, as real GDP is expected to stagnate in 2022.

"Downside risks continue to beset the economic outlook. Sharper-than-anticipated increases in energy prices, disruption in energy supplies, escalation of international food prices, the rising cost of living, and proximity of the war in Ukraine could further derail activity and hurt confidence, aggravating policy tradeoffs. Resolute implementation of a comprehensive package of reforms and continued support from the IMF and other partners would anchor confidence," Atoyan noted.

An IMF mission led by Atoyan conducted discussions during July 20-August 10 in Chisinau and IMF headquarters for the first review of Moldova’s program under the IMF’s Extended Credit Facility (ECF) and Extended Fund Facility (EFF) arrangements.

In May, the IMF agreed to boost funding for Moldova by $267 million after the government requested it to review its funding agreement so that the arrangement reflects the new economic context. The extra funding represents an augmentation of the ECF and EFF arrangements made in December.

($ = 0.9775 euro)