The International Monetary Fund (IMF) said on Friday it has made significant progress in discussions regarding on a financial assistance programme for Moldova.

“We have made significant progress in the negotiations of a new IMF program and our discussions with the authorities are well advanced. There are only a few issues that remain to be closed and our discussions will continue from Washington in the coming days,” Ivanna Vladkova-Hollar, who led the mission, said in a statement  broadcast live by news service privesc.eu. “Once we reach a staff level agreement, I will issue a press statement to that effect from Washington announcing that agreement,” she added.

The IMF and Moldova reached an agreement on a number of critical areas including on reforms to enhance the governance and transparency of the banking sector, to ensure the sustainability of the energy sector and to achieve medium term fiscal policy objectives, Hollar added.

For his part, prime minister Pavel Filip said that the country achieved everything it had hoped for during the 10-day IMF mission that ended on Friday. “If until now I was saying that I am optimistic that we will have an agreement with the IMF, now I can say I am convinced of it,” he added.

A working mission of the IMF visited Moldova between May 23 and 27, without a mandate to negotiate a financial assistance programme. Discussions focused on the authorities’ strategy for financial sector reforms and ensuring the long-term safety and soundness of Moldova’s banks, the fund said at the time.

In April, the IMF said it expects Moldova’s economy to expand by 0.5% in 2016, revising down an earlier projection for 1.5% growth this year. For 2017, the fund sees the country’s GDP growth at 2.5%, it said in its latest World Economic Outlook report. Moldova’s inflation is seen slowing to 7.4% in 2017 from an estimated 9.8% this year. Moldova’s annual inflation cooled to one-year low of 7.4% in June from 7.9% in May, according to the latest available statistics office data.

The central bank, BNM, projected in May that inflation will decelerate gradually and return to its 3.5%-6.5% target range in the third quarter. It also projected an inflation of 7% in 2016 and 4.8% in 2017, lowering its previous forecast from February, which envisaged inflation of 10.1% for 2016 and 6.6% for 2017.

On July 4, BNM, decided to lower its key rate to 10% from 13%, striving to keep inflation rate close to its 5.0% target. Also in May, Romanian president Klaus Iohannis approved the disbursement of a 150 million euro ($167 million) loan to Moldova for salaries and pensions, but the actual transfer of the loan’s first tranche still depends on an agreement with the IMF.

Moldova has been trying to cope with a major banking crisis since about $1 billion (862 million euro) went missing from three local banks in November 2014. The banks – Banca de Economii, Banca Sociala and Unibank were liquidated.

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15 July 2016