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International Monetary Fund. European Dept.
This paper presents 2019 Article IV Consultation with the Republic of Moldova and its Sixth Reviews Under the Extended Credit Facility and Extended Fund Facility Arrangements. Moldova’s economic growth remained solid in the first three quarters of 2019, with output expanding nearly 5 percent, supported by strong domestic demand. The three-year program has been broadly successful in achieving its objectives. Comprehensive reforms have rehabilitated the banking system and strengthened financial sector governance, entrenching macrofinancial stability. Prudent and well-coordinated policies are needed to safeguard the progress achieved. Decisive governance and institutional reforms are necessary for faster, sustainable, and inclusive growth. Safeguarding central bank independence is a priority. The inflation-targeting (IT) regime remains appropriate, but additional efforts are needed to improve policy credibility, promote exchange rate flexibility, and disincentivize foreign currency intermediation. Widespread governance and institutional vulnerabilities are major impediments to accelerating income convergence. Addressing these could have significant growth dividends through faster capital accumulation, reduced labor and human capital headwinds from emigration, and higher productivity.
International Monetary Fund. European Dept.

Fourth and Fifth Reviews Under the Extended Credit Facility and Extended Fund Facility Arrangements, Completion of the Inflation Consultation, and Request for Extension of the Arrangements and Rephasing of Access-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Moldova

Hui Jin, La-Bhus Fah Jirasavetakul, and Baoping Shang
This paper, using Moldova as an example, presents a systematic approach to assess the efficiency and equity of public education spending, identify sources of inefficiencies and inequality, and formulate potential reform options. The analytical framework combines international benchmarking with country-specific analysis—such as microeconomic analysis based on household survey data—and can provide important insights into diagnosing and reforming education systems. The analysis finds significant scope to improve both efficiency and equity of the education sector in Moldova. Potential reform measures include further consolidating the oversized school network, reducing overstaffing, and better targeting government subsidies. The current remuneration policy could also be improved to attract high quality teachers and incentivize performance.
International Monetary Fund. European Dept.

Article IV Consultation and Second Reviews under the Extended Fund Facility and Extended Credit Facility Arrangements-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Moldova

International Monetary Fund. European Dept.
This 2017 Article IV Consultation highlights that growth in Moldova is expected to be about 3 percent in 2018. Inflation is forecast to return to target in 2018, following a pickup in 2017. The banking sector has been stable, the fiscal performance has improved and Moldova’s external position has strengthened. The outlook, however, is still subject to substantial risks. The program is broadly on track, but continued reform efforts are needed to accelerate growth and improve living standards. Important progress has been made toward cleansing the financial sector, though with delay, including by strengthening supervisory and regulatory frameworks and increasing management and ownership transparency.
International Monetary Fund. European Dept.
This paper highlights the case of Moldova including public investment, efficiency, and growth. The scale up of public investment in Moldova should account for absorption capacity constraints and high reliance on external financing, to ensure a positive impact on growth. It should also be accompanied by efforts to build capacity and strengthen institutions. Public investment in Moldova relies significantly on external loans and grants to finance capital spending. The share of foreign financing varies across sectors, with agriculture and health relying significantly on donor support and education financed mostly domestically. Critical infrastructure needs in Moldova broadly correspond to the priority sectors identified in the National Development Strategy Moldova 2020: energy, transport, agriculture, health, and education. In general, infrastructure in Moldova ranks better regarding coverage than quality. Moldova has a relatively high index of public investment efficiency; nonetheless there are a number of dimensions to improve investment process.
International Monetary Fund. European Dept.

Article IV Consultation and Second Reviews under the Extended Fund Facility and Extended Credit Facility Arrangements-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Moldova