Front Matter Page

©1999 International Monetary Fund

September 1999

IMF Staff Country Report No. 99/110

Republic of Moldova: Recent Economic Developments

This Recent Economic Developments report on the Republic of Moldova was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with this member country. As such, the views expressed in this document are those of the staff team and do not necessarily reflect the views of the Government of the Republic of Moldova or the Executive Board of the IMF.

International Monetary Fund

Washington, D.C.

Front Matter Page

INTERNATIONAL MONETARY FUND

REPUBLIC OF MOLDOVA

Recent Economic Developments

Prepared by Richard Haas (Head), Paul Mathieu, Mark Horton (all EU2), Luiz de Mello (FAD), and Jean-Pierre Chauffour (PDR)

Approved by European II Department

July 30, 1999

Contents

• Basic Data

• I. Introduction and Background

• II. Recent Macroeconomic Developments

  • A. Real Sector Developments

  • B. Fiscal Sector

  • C. Money and Banking

  • D. External Sector

  • E. Structural Policies

• III. Fiscal Federalism in Moldova

  • A. Introduction

  • B. The Current System

  • C. The New System

  • D. Additional Improvements of the New System

• IV. Fiscal Barter and Netting Operations

  • A. Introduction

  • B. Netting Operations in 1996-1998

  • C. How Netting Operations Work

  • D. Netting Operations: The Problems

  • E. Barter Operations of the Social Fund

  • F. Legal Basis for Netting Operations

  • G. Conclusions

• V. Progress in Restructuring Agriculture Production and Land Reform

  • A. Introduction

  • B. Initial Conditions

  • C. Mechanism for Break-up of the Farms Under the National Land Program

  • D. Rural Savings and Credit Associations

  • E. Agriculture Debt Issues

  • F. Outstanding Issues and Prospects

• VI. Foreign Investment in Moldova

• VII. Selected Bibliography

• Text Tables

• 1. Gross Domestic Product

• 2. Employment by Sector

• 3. General Government Budget

• 4. Social Fund Operations

• 5. Monetary Indicators

• 6. Quarterly Balance of Payments

• 7. Direction of Trade

• 8. Financing of Current Account Deficit and Amortization

• 9. Import Tariff Developments

• 10. External Debt Indicators

• 11. Fiscal Decentralization Indicators

• 12. Sub-National Government’s Budget

• 13. New Revenue-Sharing System

• 14. Sub-National Government Expenditure Estimates by Category

• 15. Sub-National Government Revenue Estimates

• 16. Netting Operations of the Consolidated Government

• 17. Netting Operations of the State Budget, Revenue Recording for 1996-99

• 18. Netting Operations of the Local Budgets

• 19. Netting Operations of the State Budget, 1997-98 Expenditure Recording

• 20. Netting Operations of the State Budget, 1997-98 Monthly Expenditure Recording

• 21. Arrears of the General Government

• 22. Tax Arrears

• 23. Contributions to the Social Fund

• 24. Pension Payments in Cash and in-Kind

• 25. Estimate of Debts of Moldovan State and Collective Farms

• 26. Direct Foreign Investment in Moldova

• Figures

• 1. Output Indicators

• 2. Prices

• 3. General Government

• 4. Fiscal Indicators

• 5. Money and Inflation

• 6. Velocity, the Multiplier, and Monetization

• 7. Interest Rates

• 8. Structure of Broad Money, New Loans, and Deposits

• 9. Savings-Investment Balance and the Current Account

• 10. External Debt Indicators

• 11. Competitiveness Indicators

• Appendix Tables

• 27. Gross Domestic Product by Expenditure

• 28. GDP by Sector

• 29. Agricultural Production by Product

• 30. Animal Husbandry

• 31. Agricultural and Industrial Production Indices

• 32. Industrial Production by Industry

• 33. Unemployment, Unpaid Leave, and Part-Time Employment

• 34. Nominal Wages in Different Sectors

• 35. Prices

• 36. General Government Budget

• 37. General Government Revenues

• 38. General Government Expenditures

• 39. Accounts of the National Bank of Moldova

• 40. Monetary Survey

• 41. Balance of Payments

• 42. Composition of Trade

• 43. Summary of Tax Structure and Recent Changes

• 44. Main Expenditure Policy Measures in 1998-99