Republic of Moldova: Recent Economic Developments

International Monetary Fund

doi:10.5089/9781451824957.002.A006

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Republic of Moldova: Recent Economic Developments

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Publication Date:: 25 Jan 2001

eISBN:: 9781451824957

Language:: English

Keywords:: ISCR; CR; Moldova; public spending; debt; government spending; current account determination; capital mobility; current account disequilibrium; current account response; Currencies; National income; current account dynamics

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This paper analyzes the recent economic developments in Moldova by reviewing the real, fiscal, and external sectors developments; money banking; and structural policies. The study provides a statistical analysis on the composition of fiscal adjustments in the country, and describes the recent trends in social spending and social indicators in Moldova and in other transition economies in the 1990s, the methodology for estimating efficiency in public spending on education and health care, and assesses the current account determination in the country.

Abstract

VI. Current Account Determination in Moldova⁵⁵

A. Introduction

130. Since independence in 1989, Moldova’s current account balance has fluctuated widely (Figure 19). The sharp deterioration in the country’s external position in 1992-1993 was due primarily to a terms-of-trade shock, as prices on energy imports from Russia and Ukraine soared. The current account worsened again between 1995 and 1997 reflecting a rapid growth of imports, mainly consumer goods; widening fiscal deficits; and an accumulation of foreign arrears. Export performance was weak throughout the period due to poor harvests, structural imbalances in the agricultural sector, and the inability to expand into new markets. In August 1998 Moldova was hard hit by the financial crisis in Russia, its main trading partner, that led to a severe decrease in both exports and imports. In 1999, the country experienced a dramatic external adjustment as the fall in imports more than offset the fall in exports as a result of a drop in income and a major fiscal contraction.

Figure 19.

Moldova: Current Account Balance, 1993-2000

(In percent of GDP)

Citation: IMF Staff Country Reports 2001, 022; 10.5089/9781451824957.002.A006

Sources: Moldovan authorities; and Fund staff estimates.

131. Moldova has progressively liberalized its trade and exchange regimes over the past decade. Export licensing had been limited and then completely abolished in mid-1997, import quotas were eliminated by 1996, and the tariff system was simplified with the average tariff substantially reduced. Moldova continues negotiations for accession to the WTO and has free trade agreements with all the CIS countries and Romania. The leu was introduced as Moldova’s national currency in November 1993 and enjoyed remarkable stability until August 1998. In early November 1998, the National Bank of Moldova (NBM) had to abandon the regime of managed float in favor of the fully floating exchange rate. The leu depreciated dramatically following the Russian crisis and ensuing political instability in Russia and at home. Moldova accepted the obligations of Article VIII (sections 2, 3, and 4) of the Fund’s Articles of Agreement in June 1995. Since then, Moldova’s exchange system has remained free of any restrictions on current account transactions, while capital account transactions require licenses and/or registrations from the NBM.

132. Debt instruments have been the most important sources of current account financing. Moldova’s current account deficits have been financed mainly through the accumulation of foreign debt, including borrowing from multilaterals, arrears to energy suppliers, issuance of Eurobonds, sales of treasury bills to nonresidents, and other commercial borrowing. Foreign direct investment has been modest; portfolio investment has been negligible. Large capital outflows (short-term capital flight, as well as debt amortization) took place in the aftermath of the Russian crisis. 1999 was marked by an impressive reversal in Moldova’s current account position.

133. The observed volatility of Moldova’s current account reflects the country’s access to foreign sources of finance. As in other developing and transition economies, excessive volatility of the current account as compared to that of the national cash flow (national income net of private investment and government spending) would indicate imperfect capital mobility. In order to estimate the relationship between current account imbalances and capital flows in Moldova over time, we focus on the recent consumption-smoothing literature on international capital mobility and current account determination (Ghosh, 1995; Glick and Rogoff, 1995; Ostry, 1996).

134. This chapter is organized as follows. Section II briefly reviews the literature on current account determination. Section III describes the methodology used in this chapter. Section IV presents the data. Section V reports the empirical results and Section VI concludes.

B. Brief Literature Review

135. The international capital mobility literature offers several options to test the capital mobility hypothesis. They are:

The traditional approach pioneered by Feldstein and Horioka (1980) consists of regressing the investment ratio on the savings ratio for a sample of countries. A positive, close-to-one coefficient of the savings rate is suggestive of imperfect capital mobility. Several economists have challenged Feldstein and Horioka’s interpretation, on the grounds that the high correlation of national savings and investment may be the result of a number of plausible macroeconomic factors (see Golub, 1990; Obstfeld, 1986; Hussein, 1998).
Alternatively, the capital mobility hypothesis can be tested in terms of deviations from international parity conditions: covered interest parity (CIP), uncovered interest parity (UIP), and real interest parity (RIP) (Moosa, 1996). The argument is that, if capital is perfectly mobile, then its rate of return should be equal across countries. Satisfactory testing of this argument nevertheless depends upon finding perfectly substitutable assets located in different countries (Mishkin, 1984; Frankel and MacArthur, 1988; Taylor, 1987), which is not easy.
A more recent approach, and the one followed here, consists of assessing capital mobility in terms of consumption smoothing in response to shocks to domestic expenditure variables. Ghosh (1995) tests whether capital has been sufficiently mobile in five industrialized countries (United States, Japan, Germany, United Kingdom, and Canada), by comparing the variance of actual and optimal consumption-smoothing current account balances. Deviations from the optimal value indicate imperfect capital mobility. Ghosh finds that capital flows have been more volatile than expected changes in the national cash flow in his sample of industrial countries, except for the United States, and attributes excessive volatility to capital market barriers that prevent optimal international risk-sharing. Evidence for developing and emerging economies is provided by Hussein and de Mello (1999).

C. The Methodology

136. This chapter follows a two-stage approach. First, we estimate the degree of capital mobility in Moldova using a VAR representation of the current account dynamics and test a number of restrictions consistent with the hypothesis of perfect capital mobility. Second, we estimate how the current account balance responds to exogenous shocks in the national cash flow (national income net of private investment and government spending), and its components. This is because capital flows tend to be more volatile and current account imbalances tend to be larger in developing economies than in developed economies, which suggests that there may be less scope for optimal consumption smoothing and international risk-pooling in the former countries.

The VAR Model

137. Testing the capital mobility hypothesis consists of comparing actual current account balances against the benchmark values obtained under frictionless capital mobility and optimal consumption smoothing. Deviations of actual current account balances from benchmark values are indicative of friction in international capital markets: the larger the deviation, the more imperfect capital mobility.

138. In more formal terms, and following recent methodological developments in testing for capital mobility (Campbell and Shiller, 1987), the following VAR can be estimated:

$\begin{matrix} (1) & Z (t) = Π Z (t - 1) + v (t), \end{matrix}$

where Z(t) = [Δy(t) Δi(t) Δg(t) CA(t)]′; Π is the transition matrix of the VAR; y is GDP; i, g, and CA are interest, government spending and the current account (all in percentages of GDP); and v(t) is a white-noise term.

The transition matrix in equation (1) can be decomposed as Π = αβ′, where α=[α_y α_i, α_g α_CA] represents the speed of adjustment to equilibrium and β = [β_y β_i β_g β_CA]′ is the matrix of long-run coefficients. In this framework, the hypothesis of capital mobility can be tested following two approaches:⁵⁶

The restricted multivariate approach. The hypothesis that capital flows respond to consumption-smoothing behavior requires the changes in the national cash flow (and/or its components) to be endogenous to the current account balance. This can be tested by imposing the following restriction on the VAR coefficients: α = [1 −1 −1 0].⁵⁷
The bivariate approach. Alternatively, following Campbell and Shiller (1987), the VAR can be estimated using ${\bar{Z} (t) = [Δ A B (t) C A (t)]}^{'}$ , where ΔAB(t) = Δ(y–i–g)(t), and imposing the following exogeneity restriction on the loading parameters: α = [0 1].⁵⁸

The Variance Decomposition Analysis

139. Variance decomposition analysis is used to estimate the impact of exogenous shocks to the national cash flow (or its components) on the current account balance, and the dynamic responses of the system to those exogenous shocks. This is important because developing and transition economies tend to be more shock-prone than their more developed counterparts, and current account disequilibria may reflect the responsiveness of the current account balance to exogenous shocks in the national cash flow, or in one or more of its components (national income, private investment, and net government spending).

140. Variance decomposition analysis is conducted using the following reduced-form, common-trend representation of the VAR system in equation (1):

\begin{matrix} (2) & Δ Z (t) = A (L) v (t), \end{matrix}

where A(L) is a square matrix of lag polynomials.

141. The technique consists of orthogonalizing the multivariate VAR residuals, by (Cholesky) decomposing them into as many orthogonal time series as endogenous variables in vector Z(t). In this case, the dynamic responses of the current account balances to exogenous shocks to the national cash flow or its components can be simulated. The policymaker can evaluate which components of the national cash flow have a stronger dynamic impact on the current account balance and therefore assess the vulnerability of the current account to external and domestic shocks.

D. The Data

Data Sources

142. The data sources for this study include information provided by Moldovan authorities and IMF staff estimates. National income data for Moldova are not readily available. In this case, we use GDP as a proxy for national income. The GDP data include staff estimates of the shadow economy in Moldova. The quality of private investment data for Moldova is poor. Therefore, a fixed investment time series is used. The data are available from the National Accounts, but include both private and public investment.⁵⁹ The time series for GDP, investment, and government spending were converted to US dollars at the market exchange rate (Figure 20).

Figure 20.

Moldova: GDP, Fixed Investment, and Government Spending, 1993-2000

(In percent of GDP)

Citation: IMF Staff Country Reports 2001, 022; 10.5089/9781451824957.002.A006

Sources: Moldovan authorities; and Fund staff estimates.

The Unit Root Properties of the Data

143. The preliminary step in our analysis is to test the degree of integration of the relevant variables. For this purpose, we use the Augmented Dickey-Fuller (ADF) procedure, where the degree of augmentation is determined by the minimum number of lags to produce white-noise error terms. Because of the structural breaks in the series, we also test for unit roots using the Phillips-Perron (PP) methodology. The tests are summarized in Table 26.

Table 26.

Moldova: Unit Root Tests, 1993-2000

Sources: Data provided by the authorities; and IMF staff estimations. ***, **, and * denote rejection of the unit root hypothesis at the 1 percent, 5 percent, and 10 percent levels, respectively.

Table 26.

Moldova: Unit Root Tests, 1993-2000

	ADF Statistic				PP Statistic
	Level		First difference		Level		First difference
Current account balance	−2.89	*	−		−4.29	***	−
GDP	−1.09		−3.63	**	−2.16		−8.33	***
Fixed investment	−2.48		−6.42	***	−2.87	*	−7.70	***
Government spending	−0.92		−3.52	**	−1.25		−5.90	***
National cash flow	−1.47		−3.35	**	−1.93		−5.97	***

Sources: Data provided by the authorities; and IMF staff estimations. ***, **, and * denote rejection of the unit root hypothesis at the 1 percent, 5 percent, and 10 percent levels, respectively.

Table 26.

Moldova: Unit Root Tests, 1993-2000

	ADF Statistic				PP Statistic
	Level		First difference		Level		First difference
Current account balance	−2.89	*	−		−4.29	***	−
GDP	−1.09		−3.63	**	−2.16		−8.33	***
Fixed investment	−2.48		−6.42	***	−2.87	*	−7.70	***
Government spending	−0.92		−3.52	**	−1.25		−5.90	***
National cash flow	−1.47		−3.35	**	−1.93		−5.97	***

Sources: Data provided by the authorities; and IMF staff estimations. ***, **, and * denote rejection of the unit root hypothesis at the 1 percent, 5 percent, and 10 percent levels, respectively.

144. In view of strong seasonally of the data, in what follows all the series were seasonally adjusted. The results indicate that the non-stationarity hypothesis is rejected for the level of the current account balance. For the national cash flow and its components (government spending, investment, and GDP) the null hypothesis of a unit root is rejected when the variables are defined in first differences.

E. The Results

The VAR Analysis

145. The exogeneity test shows that the national cash flow components are weakly exogenous with respect to the current account balance. However, the national cash flow itself fails the exogeneity requirement⁶⁰ and hence the single-equation analysis would be misleading in that case. Therefore, the analysis has to be restricted to the multivariate case.⁶¹ The results of the VAR analysis are summarized in Table 27.

Table 27.

Moldova: VAR Analysis, 1993-2000

(current account equation)

Sources: Data provided by the authorities; and IMF staff estimations. (***), (**), and (*) denote statistical significance of the coefficients at the 1 percent, 5 percent, and 10 percent levels, respectively. p-values in parentheses.

Table 27.

Moldova: VAR Analysis, 1993-2000

(current account equation)

	VAR coefficient on the 1^st lag		VAR coefficient on the 2^nd lag
Current account balance	1.11(0.001)	***	−0.47(0.04)	**
Change in GDP	−0.27 (0.06)	*	0.41 (0.03)	**
Change in fixed investment	−0.57(0.18)		−0.86(0.05)	**
Change in government spending	−0.30(0.17)		−0.10(0.63)
Exogeneity Test	χ² (3) = 18.89 (0.0003)***

Table 27.

Moldova: VAR Analysis, 1993-2000

(current account equation)

	VAR coefficient on the 1^st lag		VAR coefficient on the 2^nd lag
Current account balance	1.11(0.001)	***	−0.47(0.04)	**
Change in GDP	−0.27 (0.06)	*	0.41 (0.03)	**
Change in fixed investment	−0.57(0.18)		−0.86(0.05)	**
Change in government spending	−0.30(0.17)		−0.10(0.63)
Exogeneity Test	χ² (3) = 18.89 (0.0003)***

146. The components of the national cash flow (income, investment, and public spending) are found to be important determinants of current account variations over time. Fixed investment and government spending have the correct (negative) sign, consistent with partial foreign financing of investment projects and government expenditure. However, the sign on the change in GDP is negative on the first lag and positive on the second lag, the latter consistent with the cash flow argument. The negative sign on the first lag of the GDP variable is suggestive of a one-off deterioration of the current account balance reflecting, for instance, the surge in imports when economic activity accelerates. Subsequently, the current account balance is likely to improve in response to, for example, a reaction of exports, a switch in consumption demand away from imported goods, or an improvement in the budget.

147. Impulse response functions (Figure 21) show adjustment of the current account (CASA) in response to a one-standard deviation exogenous shock to national income (LYSA), government spending (LGSA), and investment (LISA).

Figure 21.

Moldova: VAR Impulse Response Functions

Citation: IMF Staff Country Reports 2001, 022; 10.5089/9781451824957.002.A006

148. The current account balance is responsive to exogenous shocks to national income. The dotted lines in Figure 21 are confidence intervals. These shocks tend to deteriorate the current account balance in the first quarter after the shock, as discussed above. The current account balance subsequently improves in the second quarter in the aftermath of the shock. Although the responses of the current account balance to exogenous shocks to government spending and investment are correctly signed, their statistical significance is borderline.

Variance Decomposition Analysis

149. The results show that the current account responds strongly to innovations in national income. In line with the impulse responses estimated above, Table 28 reports the results of the variance decomposition analysis of the responses of the current account balance to exogenous shocks. Nearly half of the dynamic response of the current account is accounted for by changes in GDP after 8 quarters in the aftermath of the exogenous shock, followed by innovations in government spending (6.0 percent) and investment (3.7 percent). The forecast error is nevertheless large, suggesting that the results of these simulations should be interpreted with caution.

Table 28.

Moldova: Variance Decomposition Analysis, 1993-2000

Sources: Data provided by the authorities, and IMF staff estimations

Table 28.

Moldova: Variance Decomposition Analysis, 1993-2000

	Period 1	Period 2	Period 4	Period 8
Current account	100.0	50.5	42.2	43.5
Change in GDP	0.0	43.0	48.9	46.8
Change in fixed investment	0.0	2.9	2.9	3.7
Change in government spending	0.0	3.6	6.0	6.0
Standard error	15.8	25.4	29.2	30.2

Sources: Data provided by the authorities, and IMF staff estimations

Table 28.

Moldova: Variance Decomposition Analysis, 1993-2000

	Period 1	Period 2	Period 4	Period 8
Current account	100.0	50.5	42.2	43.5
Change in GDP	0.0	43.0	48.9	46.8
Change in fixed investment	0.0	2.9	2.9	3.7
Change in government spending	0.0	3.6	6.0	6.0
Standard error	15.8	25.4	29.2	30.2

Sources: Data provided by the authorities, and IMF staff estimations

F. Conclusions

150. Recent developments in the literature favor the estimation of current account equations in a VAR set-up. The empirical results presented above show that evidence of capital mobility and consumption smoothing in Moldova is mixed. While components of the national cash flow are weakly exogenous with respect to the current account balance, the aggregate cash flow is not. This finding suggests that while the current account is responsive to shocks in national income, investment, and public spending, a significant offsetting adjustment occurs among these variables, so that the impact of changes in the aggregate cash flow on the current account is suppressed.

151. The empirical findings point out that the current account balance in Moldova is strongly responsive to changes in the national income. The current account deteriorates when economic activity picks up but tends to improve subsequently. The dynamic responses of the current account to shocks in national income tend to last two quarters. The current account response to shocks in investment and government spending is much weaker. The current account tends to deteriorate as more foreign financing goes into domestic investment projects and public expenses.

152. The results reported in this chapter may be influenced by a high share of concessional borrowing in Moldova.⁶² Capital mobility and consumption smoothing could be substantially restricted if Moldova had to rely on non-consessional financing of its current account. Some caution is also recommended in the interpretation of the results due to data inadequacies. These are common weaknesses of empirical analyses for transition economies and the time series available for the relevant variables are typically not long enough for more sophisticated hypothesis testing.

153. The results described above have a number of policy implications. The dynamic pattern of the current account response to changes in national income suggests that economic growth in Moldova is overly vulnerable to external constraints, as income growth at the first instance tends to give rise to debt accumulation. Over the longer term, therefore, the ongoing efforts to create a pro-growth economic environment in Moldova should focus on reducing the country’s vulnerability to external shocks. To this end, structural reform in the export-oriented sectors should be intensified, including privatization and restructuring in agriculture and agro-processing. Hard budget constraints should also be enforced throughout the economy in order to contain the responsiveness of imports and ensure allocation of resources to their most productive uses.

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Table 29.

Moldova: Gross Domestic Product by Expenditure 1994-2000 ^1/

(In millions of lei; at current prices)

Sources: Moldovan Department for Statistical and Sociological Research; and Fund staff estimates.

^{^1/}Excludes Transnistria.

Table 29.

Moldova: Gross Domestic Product by Expenditure 1994-2000 ^1/

(In millions of lei; at current prices)

		1994	1995	1996	1997	1998	1999	2000
							Prel.	Jan.-Jun.
Gross Domestic Product, official		4,737	6,480	7,798	8,917	9,122	12,204	6,463
Final consumption expenditure		3,573	5,371	7,356	8,680	9,203	10,715	7,271
	Private	2,486	3,616	5,243	6,017	6,876	8,391	5,904
	Public	1,087	1,755	2,113	2,663	2,327	2,324	1,367
Gross capital formation		1,365	1,612	1,891	2,124	2,360	2,695	1,011
	Fixed capital	914	1,034	1,540	1,774	2,011	2,296	692
	Stockbuilding	451	578	351	350	340	399	319
Net exports		−201	−503	−1,449	−1,887	−2,441	−1,206	−1,819
Additional staff adjustment for shadow economy 2/		768	1,065	1,030	996	1,244	1,509	…
Gross Domestic Product, adjusted		5,505	7,545	8,828	10,118	10,366	13,713	…
		(Percent change from previous period)
Memorandum items:
	Real GDP	−31	−1	−6	2	−7	−4	2
	Implicit GDP deflator	274	39	24	13	10	38	23

Sources: Moldovan Department for Statistical and Sociological Research; and Fund staff estimates.

^{^1/}Excludes Transnistria.

Table 29.

Moldova: Gross Domestic Product by Expenditure 1994-2000 ^1/

(In millions of lei; at current prices)

		1994	1995	1996	1997	1998	1999	2000
							Prel.	Jan.-Jun.
Gross Domestic Product, official		4,737	6,480	7,798	8,917	9,122	12,204	6,463
Final consumption expenditure		3,573	5,371	7,356	8,680	9,203	10,715	7,271
	Private	2,486	3,616	5,243	6,017	6,876	8,391	5,904
	Public	1,087	1,755	2,113	2,663	2,327	2,324	1,367
Gross capital formation		1,365	1,612	1,891	2,124	2,360	2,695	1,011
	Fixed capital	914	1,034	1,540	1,774	2,011	2,296	692
	Stockbuilding	451	578	351	350	340	399	319
Net exports		−201	−503	−1,449	−1,887	−2,441	−1,206	−1,819
Additional staff adjustment for shadow economy 2/		768	1,065	1,030	996	1,244	1,509	…
Gross Domestic Product, adjusted		5,505	7,545	8,828	10,118	10,366	13,713	…
		(Percent change from previous period)
Memorandum items:
	Real GDP	−31	−1	−6	2	−7	−4	2
	Implicit GDP deflator	274	39	24	13	10	38	23

Sources: Moldovan Department for Statistical and Sociological Research; and Fund staff estimates.

^{^1/}Excludes Transnistria.

Table 30.

Moldova: Gross Domestic Product by Sector, 1994-2000 ^1/

(In millions of lei at current prices)

Sources: Moldovan Department for Statistical and Sociological Research; and Fund staff estimates.

^{^1/}Excludes Transnistria and additional staff adjustment for shadow economy (see table 34).

Table 30.

Moldova: Gross Domestic Product by Sector, 1994-2000 ^1/

(In millions of lei at current prices)

			1993	1994	1995	1996	1997	1998	1999	2000
									Jan.-Jun.
									Prel.
Value added			1,803.5	4,425.2	5,744.1	6,825.9	7,664.7	7,718.7	10,857.8	5,552.0
	Agriculture and fishing		568.7	1,292.8	1,896.8	2,143.1	2,315.2	2,350.6	2,727.1	886.0
	Processing industry		629.1	1,367.3	1,485.6	1,651.8	1,654.2	1,293.1	1,602.2	907.0
	Gas, electricity and water		79.0	117.7	133.0	146.9	149.0	228.8	369.2	194.0
	Construction		60.6	213.4	228.2	297.8	421.9	288.6	373.3	398.0
	Repairs, personal services, and trade		144.1	367.1	517.8	649.4	731.3	941.5	1,615.7	1,022.0
	Transport, warehouses, and communication		67.8	296.5	333.2	438.0	575.2	670.6	1,054.7	626.0
	Other			770.4	1,149.5	1,498.9	1,817.9	1,945.5	3,115.6	1,519.0
	Of which:
		Financial services	87.7	244.2	237.9	515.1	530.6	676.5	857.2	…
		Education	79.2	219.1	330.7	447.9	562.0	561.9	937.8	…
		Public health and social assistance	81.5	153.1	229.9	234.4	295.7	333.5	488.8	…
		Other	5.8	154.0	351.0	301.5	429.6	373.6	831.8	…
	Net taxes			311.6	735.6	971.7	1,252.2	1,403.4	1,345.9	911.0
	Of which:
		plus: Taxes on production and imports	159.0	485.4	823.1	1,075.1	1,366.0	1,603.4	1,617.6	…
		less: Subsidies	−141.4	−173.8	−87.5	−103.4	−113.8	−200.0	−271.7	…
GDP (unadjusted)			1,821.1	4,736.8	6,479.7	7,797.6	8,916.9	9,122.1	12,203.7	6,463.0

Sources: Moldovan Department for Statistical and Sociological Research; and Fund staff estimates.

^{^1/}Excludes Transnistria and additional staff adjustment for shadow economy (see table 34).

Table 30.

Moldova: Gross Domestic Product by Sector, 1994-2000 ^1/

(In millions of lei at current prices)

			1993	1994	1995	1996	1997	1998	1999	2000
									Jan.-Jun.
									Prel.
Value added			1,803.5	4,425.2	5,744.1	6,825.9	7,664.7	7,718.7	10,857.8	5,552.0
	Agriculture and fishing		568.7	1,292.8	1,896.8	2,143.1	2,315.2	2,350.6	2,727.1	886.0
	Processing industry		629.1	1,367.3	1,485.6	1,651.8	1,654.2	1,293.1	1,602.2	907.0
	Gas, electricity and water		79.0	117.7	133.0	146.9	149.0	228.8	369.2	194.0
	Construction		60.6	213.4	228.2	297.8	421.9	288.6	373.3	398.0
	Repairs, personal services, and trade		144.1	367.1	517.8	649.4	731.3	941.5	1,615.7	1,022.0
	Transport, warehouses, and communication		67.8	296.5	333.2	438.0	575.2	670.6	1,054.7	626.0
	Other			770.4	1,149.5	1,498.9	1,817.9	1,945.5	3,115.6	1,519.0
	Of which:
		Financial services	87.7	244.2	237.9	515.1	530.6	676.5	857.2	…
		Education	79.2	219.1	330.7	447.9	562.0	561.9	937.8	…
		Public health and social assistance	81.5	153.1	229.9	234.4	295.7	333.5	488.8	…
		Other	5.8	154.0	351.0	301.5	429.6	373.6	831.8	…
	Net taxes			311.6	735.6	971.7	1,252.2	1,403.4	1,345.9	911.0
	Of which:
		plus: Taxes on production and imports	159.0	485.4	823.1	1,075.1	1,366.0	1,603.4	1,617.6	…
		less: Subsidies	−141.4	−173.8	−87.5	−103.4	−113.8	−200.0	−271.7	…
GDP (unadjusted)			1,821.1	4,736.8	6,479.7	7,797.6	8,916.9	9,122.1	12,203.7	6,463.0

Sources: Moldovan Department for Statistical and Sociological Research; and Fund staff estimates.

^{^1/}Excludes Transnistria and additional staff adjustment for shadow economy (see table 34).

Table 31.

Moldova: Agricultural Production by Product, 1994-99 ^1/

(In thousands of metric tons)

Sources: Moldovan Department for Statistical and Sociological Research.

^{^1/}Clean weight.

^{^2/}Excludes Transnistria.

Table 31.

Moldova: Agricultural Production by Product, 1994-99 ^1/

(In thousands of metric tons)

		1994	1995	1996	1996^2/	1997^2/	1998^2/	1999^2/
Grain ^1/		1,684	2,612	1,978	1,793	3,122	2,428	2,142
	Wheat (winter)	659	1,277	784	674	1,153	952	798
	Rye	3	5	8	6	6	4	4
	Com	629	979	1,037	989	1,717	1,239	1,140
	Barley (winter)	130	206	85	72	145	93	81
	Oats	7	9	4	3	8	9	5
Oilseeds		153	235	318	279	178	205	300
	Sunflower seeds	149	232	316	277	175	199	286
	Soybeans	4	3	2	2	3	6	14
Sugarbeets		1,527	2,084	1,917	1,807	1,749	1,452	1,009
Potatoes		475	401	383	343	391	372	329
Pulses		70	56	32	29	58	71	58
Vegetables		599	607	394	319	355	501	489
Grapes		670	876	789	767	301	343	465
Other (fruits and berries)		665	610	573	521	947	367	136
Tobacco		42	27	19	19	24	24	22

Sources: Moldovan Department for Statistical and Sociological Research.

^{^1/}Clean weight.

^{^2/}Excludes Transnistria.

Table 31.

Moldova: Agricultural Production by Product, 1994-99 ^1/

(In thousands of metric tons)

		1994	1995	1996	1996^2/	1997^2/	1998^2/	1999^2/
Grain ^1/		1,684	2,612	1,978	1,793	3,122	2,428	2,142
	Wheat (winter)	659	1,277	784	674	1,153	952	798
	Rye	3	5	8	6	6	4	4
	Com	629	979	1,037	989	1,717	1,239	1,140
	Barley (winter)	130	206	85	72	145	93	81
	Oats	7	9	4	3	8	9	5
Oilseeds		153	235	318	279	178	205	300
	Sunflower seeds	149	232	316	277	175	199	286
	Soybeans	4	3	2	2	3	6	14
Sugarbeets		1,527	2,084	1,917	1,807	1,749	1,452	1,009
Potatoes		475	401	383	343	391	372	329
Pulses		70	56	32	29	58	71	58
Vegetables		599	607	394	319	355	501	489
Grapes		670	876	789	767	301	343	465
Other (fruits and berries)		665	610	573	521	947	367	136
Tobacco		42	27	19	19	24	24	22

Sources: Moldovan Department for Statistical and Sociological Research.

^{^1/}Clean weight.

^{^2/}Excludes Transnistria.

Table 32.

Moldova: Animal Husbandry, 1994-99

Sources: Moldovan Department for Statistical and Sociological Research.

^{^1/}Excluding Transnistria.

^{^2/}Slaughter weight.

^{^3/}Productivity measures exclude production on garden plots.

Table 32.

Moldova: Animal Husbandry, 1994-99

			1994	1995	1996^1/	1997^1/	1998^1/	1999^1/
			(In thousands)
Livestock inventory
	Cows		399	381	319	291	286	275
	Pigs		1,061	1,015	866	724	860	683
	Sheep		1,411	1,320	1,248	1,115	1,026	930
	Goats		96	103	96	94	95	100
	Horses		59	61	59	61	64	67
	Poultry		14,415	14,740	11,423	11,613	12,088	12,575
			(In thousands of metric tons)
Production
	Meat^2/		153	137	115	112	103	104
		Beef	62	47	35	31	24	23
		Pork	61	60	57	59	58	61
		Lamb	5	5	4	4	4	3
		Poultry	24	24	18	17	16	16
		Other	1	1	1	1	1	1
	Milk		909	837	682	617	610	589
	Eggs (millions)		515	563	526	512	539	555
	Wool		2,851	2,924	2,808	2,711	2,433	2,278
Productivity measures^3/
	Eggs per laying hen		152	181	202	217	223	222
	Milk per cow (kilograms)		2,245	1,984	2,002	1,687	2,001	2,036

Sources: Moldovan Department for Statistical and Sociological Research.

^{^1/}Excluding Transnistria.

^{^2/}Slaughter weight.

^{^3/}Productivity measures exclude production on garden plots.

Table 32.

Moldova: Animal Husbandry, 1994-99

			1994	1995	1996^1/	1997^1/	1998^1/	1999^1/
			(In thousands)
Livestock inventory
	Cows		399	381	319	291	286	275
	Pigs		1,061	1,015	866	724	860	683
	Sheep		1,411	1,320	1,248	1,115	1,026	930
	Goats		96	103	96	94	95	100
	Horses		59	61	59	61	64	67
	Poultry		14,415	14,740	11,423	11,613	12,088	12,575
			(In thousands of metric tons)
Production
	Meat^2/		153	137	115	112	103	104
		Beef	62	47	35	31	24	23
		Pork	61	60	57	59	58	61
		Lamb	5	5	4	4	4	3
		Poultry	24	24	18	17	16	16
		Other	1	1	1	1	1	1
	Milk		909	837	682	617	610	589
	Eggs (millions)		515	563	526	512	539	555
	Wool		2,851	2,924	2,808	2,711	2,433	2,278
Productivity measures^3/
	Eggs per laying hen		152	181	202	217	223	222
	Milk per cow (kilograms)		2,245	1,984	2,002	1,687	2,001	2,036

Sources: Moldovan Department for Statistical and Sociological Research.

^{^1/}Excluding Transnistria.

^{^2/}Slaughter weight.

^{^3/}Productivity measures exclude production on garden plots.

Table 33.

Moldova: Agricultural and Industrial Production Indices, 1994-99

(Percent change from same period of the previous year; period averages)

Sources: Moldovan Department for Statistical and Sociological Research.

^{^1/}Seasonally adjusted.

^{^2/}Preliminary data.

Table 33.

Moldova: Agricultural and Industrial Production Indices, 1994-99

(Percent change from same period of the previous year; period averages)

		Agricultural production^1/	Industrial production
1994		−24.6	−27.7
1995		1.9	−3.9
1996		−11.9	−6.5
1997		11.4	0.0
1998		−11.6	−15.0
1999		−8.0	−11.6
1994	I	−6.0	−28.0
	II	−6.0	−32.5
	II	−14.0	−33.4
	IV	−24.6	−26.5
1995	I	−11.0	−25.6
	II	−9.0	−13.8
	II	−8.0	2.1
	IV	1.9	6.1
1996	I	−2.0	4.5
	II	−3.0	13.5
	II	−13.0	−18.2
	IV	−11.9	−17.0
1997	I	−9.0	−14.9
	II	−11.0	−8.3
	III	7.8	6.1
	IV	11.4	3.8
1998	I	−4.0	2.3
	II	−2.0	−1.3
	III	−3.0	−23.1
	IV	−11.0	−30.8
1999^2/
	I	0.8	−29.9
	II	−2.0	−27.3
	III	−7.0	1.9
	IV	−8.0	0.6

Sources: Moldovan Department for Statistical and Sociological Research.

^{^1/}Seasonally adjusted.

^{^2/}Preliminary data.

Table 33.

Moldova: Agricultural and Industrial Production Indices, 1994-99

(Percent change from same period of the previous year; period averages)

		Agricultural production^1/	Industrial production
1994		−24.6	−27.7
1995		1.9	−3.9
1996		−11.9	−6.5
1997		11.4	0.0
1998		−11.6	−15.0
1999		−8.0	−11.6
1994	I	−6.0	−28.0
	II	−6.0	−32.5
	II	−14.0	−33.4
	IV	−24.6	−26.5
1995	I	−11.0	−25.6
	II	−9.0	−13.8
	II	−8.0	2.1
	IV	1.9	6.1
1996	I	−2.0	4.5
	II	−3.0	13.5
	II	−13.0	−18.2
	IV	−11.9	−17.0
1997	I	−9.0	−14.9
	II	−11.0	−8.3
	III	7.8	6.1
	IV	11.4	3.8
1998	I	−4.0	2.3
	II	−2.0	−1.3
	III	−3.0	−23.1
	IV	−11.0	−30.8
1999^2/
	I	0.8	−29.9
	II	−2.0	−27.3
	III	−7.0	1.9
	IV	−8.0	0.6

Sources: Moldovan Department for Statistical and Sociological Research.

^{^1/}Seasonally adjusted.

^{^2/}Preliminary data.

Table 34.

Moldova: Industrial Production by Industry, 1994-99^1/

(Percent change from the previous year)

Sources: Moldovan Department for Statistical and Sociological Research.

^{^1/}Excluding Transnistria.

Table 34.

Moldova: Industrial Production by Industry, 1994-99^1/

(Percent change from the previous year)

			1994	1995	1996	1997	1998	1999
All industries			−27.7	−3.9	−6.5	0.0	−15.0	−11.6
	Heavy industry		−27.2	−10.6	−4.1	−8.1	−10.6	−14.5
		Fuel and energy	−17.5	−6.4	5.6	−0.7	−9.4	−9.9
		Machinery and metalworking	−36.3	−10.6	−19.8	−20.3	−12.7	−20.8
		Petrochemical	−35.6	−63.6	5.6	−27.7	−15.5	−8.8
		Forestry/wood	−31.3	−13.8	−21.2	−5.1	−20.5	−19.8
		Construction materials	−21.8	−4.8	26.8	14.8	−21.1	−15.7
		Other	−15.5	−11.4	−5.6	−12.5	6.2	−14.1
Light industry			−48.5	−31.1	−0.2	−4.8	−16.6	10.6
		Textiles	−41.8	−48.8	−0.1	−20.3	−22.9	18.4
		Clothing	−45.7	−10.2	6.2	−4.8	8.0	17.4
		Leather and shoes	−62.0	−12.2	−9.0	10.9	−34.8	−12.9
Food industry			−24.4	4.4	−8.1	−0.7	−18.9	−14.3
		Food processing	−21.7	7.3	−90	4.4	−18.0	−12.2
		Meat and dairy	−38.2	−13.8	−5.6	−18.8	−19.9	−0.4
		Fish	−32.9	−20.4	137.0	−4.6	−14.0	−18.6
		Other	−23.0	2.9	5.2	−10.6	−24.1	−52.8

Sources: Moldovan Department for Statistical and Sociological Research.

^{^1/}Excluding Transnistria.

Table 34.

Moldova: Industrial Production by Industry, 1994-99^1/

(Percent change from the previous year)

			1994	1995	1996	1997	1998	1999
All industries			−27.7	−3.9	−6.5	0.0	−15.0	−11.6
	Heavy industry		−27.2	−10.6	−4.1	−8.1	−10.6	−14.5
		Fuel and energy	−17.5	−6.4	5.6	−0.7	−9.4	−9.9
		Machinery and metalworking	−36.3	−10.6	−19.8	−20.3	−12.7	−20.8
		Petrochemical	−35.6	−63.6	5.6	−27.7	−15.5	−8.8
		Forestry/wood	−31.3	−13.8	−21.2	−5.1	−20.5	−19.8
		Construction materials	−21.8	−4.8	26.8	14.8	−21.1	−15.7
		Other	−15.5	−11.4	−5.6	−12.5	6.2	−14.1
Light industry			−48.5	−31.1	−0.2	−4.8	−16.6	10.6
		Textiles	−41.8	−48.8	−0.1	−20.3	−22.9	18.4
		Clothing	−45.7	−10.2	6.2	−4.8	8.0	17.4
		Leather and shoes	−62.0	−12.2	−9.0	10.9	−34.8	−12.9
Food industry			−24.4	4.4	−8.1	−0.7	−18.9	−14.3
		Food processing	−21.7	7.3	−90	4.4	−18.0	−12.2
		Meat and dairy	−38.2	−13.8	−5.6	−18.8	−19.9	−0.4
		Fish	−32.9	−20.4	137.0	−4.6	−14.0	−18.6
		Other	−23.0	2.9	5.2	−10.6	−24.1	−52.8

Sources: Moldovan Department for Statistical and Sociological Research.

^{^1/}Excluding Transnistria.

Table 35.

Moldova: Unemployment, Unpaid Leave, and Part-time Employment, 1994-99

(In thousands; excludes Transnistria)

Sources: Moldovan Department for Statistical and Sociological Research.

Table 35.

Moldova: Unemployment, Unpaid Leave, and Part-time Employment, 1994-99

(In thousands; excludes Transnistria)

End of Period		Unemployed	Of which receiving benefit	Vacancies	Official Unemployment rate (Percent)	Workers on unpaid leave	Workers on Part-time Employment
1994		20.6	6.3	6.5	1.1	220.3	34.4
1995		24.5	8.0	5.5	1.4	224.0	43.5
1996		23.4	7.0	6.6	1.5	197.8	35.5
1997		28.0	7.5	7.5	1.5	171.3	34.8
1998		32.0	8.1	6.4	2.0	146.4	41.0
1999
1996	I	27.1	7.7	6.5	1.5	124.4	39.7
	II	26.1	7.3	7.2	1.5	142.0	35.1
	III	26.3	7.7	7.0	1.6	165.7	36.3
	IV	23.4	7.0	6.6	1.5	197.8	35.5
1997	I	22.9	6.5	6.2	1.3	117.3	42.4
	II	22.8	5.7	6.2	1.5	131.8	37.4
	III	27.1	6.9	8.0	…	155.3	40.0
	IV	28.0	7.5	7.5	1.5	171.3	34.8
1998	I	39.1	7.7	6.4	…	82.1	30.8
	II	33.7	7.2	7.4	…	97.7	38.0
	III	33.8	7.8	6.6	…	120.9	43.1
	IV	32.0	8.1	6.4	…	146.4	41.0
1999	I	40.1	8.3	5.5	…	100.6	33.4
	II	38.6	8.7	6.4	…	116.6	32.3
	III	40.4	10.6	7.3	…	127.4	35.6
	IV	34.9	11.4	6.7	…	139.1	28.0

Sources: Moldovan Department for Statistical and Sociological Research.

Table 35.

Moldova: Unemployment, Unpaid Leave, and Part-time Employment, 1994-99

(In thousands; excludes Transnistria)

End of Period		Unemployed	Of which receiving benefit	Vacancies	Official Unemployment rate (Percent)	Workers on unpaid leave	Workers on Part-time Employment
1994		20.6	6.3	6.5	1.1	220.3	34.4
1995		24.5	8.0	5.5	1.4	224.0	43.5
1996		23.4	7.0	6.6	1.5	197.8	35.5
1997		28.0	7.5	7.5	1.5	171.3	34.8
1998		32.0	8.1	6.4	2.0	146.4	41.0
1999
1996	I	27.1	7.7	6.5	1.5	124.4	39.7
	II	26.1	7.3	7.2	1.5	142.0	35.1
	III	26.3	7.7	7.0	1.6	165.7	36.3
	IV	23.4	7.0	6.6	1.5	197.8	35.5
1997	I	22.9	6.5	6.2	1.3	117.3	42.4
	II	22.8	5.7	6.2	1.5	131.8	37.4
	III	27.1	6.9	8.0	…	155.3	40.0
	IV	28.0	7.5	7.5	1.5	171.3	34.8
1998	I	39.1	7.7	6.4	…	82.1	30.8
	II	33.7	7.2	7.4	…	97.7	38.0
	III	33.8	7.8	6.6	…	120.9	43.1
	IV	32.0	8.1	6.4	…	146.4	41.0
1999	I	40.1	8.3	5.5	…	100.6	33.4
	II	38.6	8.7	6.4	…	116.6	32.3
	III	40.4	10.6	7.3	…	127.4	35.6
	IV	34.9	11.4	6.7	…	139.1	28.0

Sources: Moldovan Department for Statistical and Sociological Research.

Table 36.

Moldova: Nominal Wages in Different Sectors, 1994-99^1/

(In lei per month; period average)

Source: State Department of Statistics.

^{^1/}Excludes Transnistria.

^{^2/}1996 data includes fishery, forestry and hunting.

^{^3/}1996 data includes transport, warehouses, and communication.

Table 36.

Moldova: Nominal Wages in Different Sectors, 1994-99^1/

(In lei per month; period average)

		1994	1995	1996	1997	1998	1999
Total		108.4	143.2	187.1	219.8	250.4	304.6
	Agriculture^2/	82.4	106.7	121.5	135.2	140.6	172.8
	Forestry	90.0	120.3	…	…	…	…
	Industry	153.0	209.7	286.5	363.2	423.5	518.6
	Construction	149.7	187.5	247.7	326.5	362.4	426.2
	Transport^3/	137.7	191.2	258.3	323.5	376.5	455.3
	Telecommunications	145.8	190.7	…	…	…	…
	Hotels and restaurants	…	172.2	183.5	197.9	230.2	277.3
	Trade	105.1	143.2	211.5	253.1	265.7	319.0
	Material and technical supplies and sales	203.3	243.2	…	…	…	…
	Acquisitions	134.4	202.5	…	…	…	…
	Data processing service	137.7	189.4	…	…	…	…
	Real estate activity	…	240.8	246.8	285.3	336.3	436.1
	General commercial activity for insuring market functionin	244.6	352.5	…	…	…	…
	Geology, hydrometeorologic services and survey	110.3	167.3	…	…	…	…
	Communal husbandry	130.6	189.0	…	…	…	…
	Consumer services	92.8	132.8	…	…	…	…
	Health care, physical training and social assistance	102.9	127.4	161.1	175.9	183.5	186.7
	Education	83.8	108.8	156.7	170.9	183.0	193.0
	Culture and art	87.9	104.6	…	…	…	…
	Science	135.0	196.5	…	…	…	…
	Banking, credit and insurance	299.6	494.1	687.0	823.5	1,135.4	1,672.5
	Administration	156.3	230.2	295.5	327.2	392.0	438.8

Source: State Department of Statistics.

^{^1/}Excludes Transnistria.

^{^2/}1996 data includes fishery, forestry and hunting.

^{^3/}1996 data includes transport, warehouses, and communication.

Table 36.

Moldova: Nominal Wages in Different Sectors, 1994-99^1/

(In lei per month; period average)

		1994	1995	1996	1997	1998	1999
Total		108.4	143.2	187.1	219.8	250.4	304.6
	Agriculture^2/	82.4	106.7	121.5	135.2	140.6	172.8
	Forestry	90.0	120.3	…	…	…	…
	Industry	153.0	209.7	286.5	363.2	423.5	518.6
	Construction	149.7	187.5	247.7	326.5	362.4	426.2
	Transport^3/	137.7	191.2	258.3	323.5	376.5	455.3
	Telecommunications	145.8	190.7	…	…	…	…
	Hotels and restaurants	…	172.2	183.5	197.9	230.2	277.3
	Trade	105.1	143.2	211.5	253.1	265.7	319.0
	Material and technical supplies and sales	203.3	243.2	…	…	…	…
	Acquisitions	134.4	202.5	…	…	…	…
	Data processing service	137.7	189.4	…	…	…	…
	Real estate activity	…	240.8	246.8	285.3	336.3	436.1
	General commercial activity for insuring market functionin	244.6	352.5	…	…	…	…
	Geology, hydrometeorologic services and survey	110.3	167.3	…	…	…	…
	Communal husbandry	130.6	189.0	…	…	…	…
	Consumer services	92.8	132.8	…	…	…	…
	Health care, physical training and social assistance	102.9	127.4	161.1	175.9	183.5	186.7
	Education	83.8	108.8	156.7	170.9	183.0	193.0
	Culture and art	87.9	104.6	…	…	…	…
	Science	135.0	196.5	…	…	…	…
	Banking, credit and insurance	299.6	494.1	687.0	823.5	1,135.4	1,672.5
	Administration	156.3	230.2	295.5	327.2	392.0	438.8

Source: State Department of Statistics.

^{^1/}Excludes Transnistria.

^{^2/}1996 data includes fishery, forestry and hunting.

^{^3/}1996 data includes transport, warehouses, and communication.

Table 37.

Moldova: Inflation, 1997-2000

Sources: Department of Statistics; and Fund staff estimates.

Table 37.

Moldova: Inflation, 1997-2000

		Consumer Prices Index
		Overall		Goods		Services
		Index	Percent Change	Food	Nonfood
1997
	January	258.6	1.9	231.4	218.3	461.9
	February	262.2	1.4	234.9	219.6	473.0
	March	264.8	1.0	233.7	220.2	506.1
	April	267.0	0.8	234.4	220.9	520.8
	May	263.6	0.6	235.3	221.1	532.8
	June	273.9	2.0	231.8	221.3	612.7
	July	271.2	−1.0	225.1	222.4	619.4
	August	269.0	−0.8	221.9	223.5	610.8
	September	272.3	1.2	224.6	224.7	625.4
	October	274.7	0.9	228.2	225.8	624.8
	November	277.7	1.1	232.3	227.4	626.1
	December	281.9	1.5	238.3	228.5	629.2
1998
	January	285.6	1.3	243.8	229.9	630.4
	February	286.7	0.4	244.5	230.8	633.6
	March	286.4	−0.1	243.6	231.5	634.2
	April	288.4	0.7	246.7	231.7	636.1
	May	289.0	0.2	247.0	232.4	636.8
	June	285.8	−1.1	243.3	232.6	732.3
	July	281.8	−1.4	236.2	233.8	740.3
	August	280.1	−0.6	239.5	235.0	730.0
	September	280.7	0.2	242.4	236.2	747.5
	October	284.6	1.4	246.3	237.3	746.7
	November	309.1	8.6	250.7	239.0	748.2
	December	333.2	7.8	257.2	240.2	752.0
1999
	January	351.2	5.4	265.5	249.6	867.8
	February	356.5	1.5	269.4	253.8	876.5
	March	358.6	0.6	269.4	258.6	882.6
	April	365.8	2.0	275.4	264.6	892.3
	May	380.8	4.1	288.9	276.7	902.1
	June	408.2	7.2	319.2	288.4	909.3
	July	418.4	2.5	319.2	293.8	930.2
	August	421.3	0.7	318.2	298.5	954.4
	September	428.5	1.7	325.6	302.4	958.3
	October	437.5	2.1	334.7	307.6	965.0
	November	456.3	4.3	350.4	317.7	1,006.5
	December	479.1	5.0	370.7	325.3	1,065.8
2000
	January	493.0	2.9	385.9	330.2	1,075.4
	February	499.4	1.3	391.3	335.5	1,078.7
	March	499.9	0.1	389.4	339.9	1,081.9
	April	507.9	1.6	393.7	343.3	1,127.3
	May	515.0	1.4	400.4	345.7	1,145.4
	June	537.7	4.4	428.4	349.5	1,148.8
	July	541.4	0.7	432.2	351.6	1,151.1
	August	545.8	0.8	436.1	354.7	1,154.6
	September	553.4	1.4	443.1	357.6	1,170.7
	October	558.9	1.0	448.0	360.8	1,181.3
		(Percent changes)
Annual averages
1994		…	329.7	453.0	466.1	721.9
1995		…	30.2	29.6	25.3	40.3
1996		…	23.5	19.5	16.6	60.9
1997			11.8	7.0	7.5	36.5
1998		…	7.7	6.1	5.1	22.3
1999			39.0	26.0	22.3	34.0 #
End-of-period (December)
1994		…	116.1	105.1	85.6	219.9
1995		…	23.8	24.5	12.0	58.0
1996		…	15.1	11.6	14.7	29.9
1997		…	11.2	6.3	5.3	37.2
1998		…	18.3	7.9	5.1	19.5
1999			43.7	44.1	35.5	41.7

Sources: Department of Statistics; and Fund staff estimates.

Table 37.

Moldova: Inflation, 1997-2000

		Consumer Prices Index
		Overall		Goods		Services
		Index	Percent Change	Food	Nonfood
1997
	January	258.6	1.9	231.4	218.3	461.9
	February	262.2	1.4	234.9	219.6	473.0
	March	264.8	1.0	233.7	220.2	506.1
	April	267.0	0.8	234.4	220.9	520.8
	May	263.6	0.6	235.3	221.1	532.8
	June	273.9	2.0	231.8	221.3	612.7
	July	271.2	−1.0	225.1	222.4	619.4
	August	269.0	−0.8	221.9	223.5	610.8
	September	272.3	1.2	224.6	224.7	625.4
	October	274.7	0.9	228.2	225.8	624.8
	November	277.7	1.1	232.3	227.4	626.1
	December	281.9	1.5	238.3	228.5	629.2
1998
	January	285.6	1.3	243.8	229.9	630.4
	February	286.7	0.4	244.5	230.8	633.6
	March	286.4	−0.1	243.6	231.5	634.2
	April	288.4	0.7	246.7	231.7	636.1
	May	289.0	0.2	247.0	232.4	636.8
	June	285.8	−1.1	243.3	232.6	732.3
	July	281.8	−1.4	236.2	233.8	740.3
	August	280.1	−0.6	239.5	235.0	730.0
	September	280.7	0.2	242.4	236.2	747.5
	October	284.6	1.4	246.3	237.3	746.7
	November	309.1	8.6	250.7	239.0	748.2
	December	333.2	7.8	257.2	240.2	752.0
1999
	January	351.2	5.4	265.5	249.6	867.8
	February	356.5	1.5	269.4	253.8	876.5
	March	358.6	0.6	269.4	258.6	882.6
	April	365.8	2.0	275.4	264.6	892.3
	May	380.8	4.1	288.9	276.7	902.1
	June	408.2	7.2	319.2	288.4	909.3
	July	418.4	2.5	319.2	293.8	930.2
	August	421.3	0.7	318.2	298.5	954.4
	September	428.5	1.7	325.6	302.4	958.3
	October	437.5	2.1	334.7	307.6	965.0
	November	456.3	4.3	350.4	317.7	1,006.5
	December	479.1	5.0	370.7	325.3	1,065.8
2000
	January	493.0	2.9	385.9	330.2	1,075.4
	February	499.4	1.3	391.3	335.5	1,078.7
	March	499.9	0.1	389.4	339.9	1,081.9
	April	507.9	1.6	393.7	343.3	1,127.3
	May	515.0	1.4	400.4	345.7	1,145.4
	June	537.7	4.4	428.4	349.5	1,148.8
	July	541.4	0.7	432.2	351.6	1,151.1
	August	545.8	0.8	436.1	354.7	1,154.6
	September	553.4	1.4	443.1	357.6	1,170.7
	October	558.9	1.0	448.0	360.8	1,181.3
		(Percent changes)
Annual averages
1994		…	329.7	453.0	466.1	721.9
1995		…	30.2	29.6	25.3	40.3
1996		…	23.5	19.5	16.6	60.9
1997			11.8	7.0	7.5	36.5
1998		…	7.7	6.1	5.1	22.3
1999			39.0	26.0	22.3	34.0 #
End-of-period (December)
1994		…	116.1	105.1	85.6	219.9
1995		…	23.8	24.5	12.0	58.0
1996		…	15.1	11.6	14.7	29.9
1997		…	11.2	6.3	5.3	37.2
1998		…	18.3	7.9	5.1	19.5
1999			43.7	44.1	35.5	41.7

Sources: Department of Statistics; and Fund staff estimates.

Table 38.

Moldova: General Government Budget, 1994-2000^1/

(In millions of lei; unless otherwise indicated)

Sources: Data provided by authorities, and Fund staff estimates.

^{^1/}The accounts comprise the republican government, local governments, extrabudgetary funds and the Social Fund.

^{^2/}First two quarters

^{^3/}Includes land tax, real estate tax, natural resources tax, stats tax, and private tax.

^{^4/}Includes profit remittances from the National Bank of Moldova and privatization revenues.

^{^5/}Includes extrabudgetary funds on a net basis, administrative, military, indexation of deposits, environment, and unallocated.

^{^6/}Includes transfers from the State Budget.

^{^7/}Includes treasury securities.

Table 38.

Moldova: General Government Budget, 1994-2000^1/

(In millions of lei; unless otherwise indicated)

			1994	1995	1996	1997	1998	1999	2000^2/
Revenues			1,847	2,556	2,797	3,431	3,428	3,745	1,987
	Tax revenues		1,454	2,171	2,417	3.027	2,931	3,050	1,694
		Direct taxes	480	594	578	526	403	453	268
		Indirect	433	755	810	1,460	1,499	1,384	822
		Foreign trade taxes	30	51	95	127	109	231	122
		Social fund contributions	474	640	761	729	783	783	427
		Other taxes^3/	36	130	174	185	137	199	55
	Non-tax revenues and grants^4/		393	365	380	404	497	695	294
Expenditures and net lending			2,347	2,993	3,418	4,371	4,015	4,491	2,280
	Expenditures		2,212	2,927	3,546	4,341	3,985	4,535	2,290
		National economy	135	167	178	359	281	287	108
		Social sphere	953	1,113	1,530	1,662	1,336	1,340	674
		Interest	164	265	243	377	421	906	481
		Domestic	120	173	132	213	244	438	310
		Foreign	44	93	111	165	177	467	171
		Capital expenditures	110	135	149	234	206	103	62
		Other expenditures^5/	389	530	658	643	619	643	260
		Social fund expenditures^6/	452	648	766	1,057	912	889	542
		Project loan spending	0	0	0	9	211	368	161
	Net lending		111	71	−137	30	30	−44	−10
Fiscal balance (cash)			−501	−437	−621	−940	−588	−746	−292
	(excl. project loan spending)		−501	−437	−621	−931	−377	−378	−131
Change in arrears (+, increase)			110	145	364	−290	510	−17	−9
		Domestic expenditure	110	145	364	−287	418	16	−59
		Foreign interest	0	0	0	−3	92	−33	50
Fiscal balance (commitment)			−611	−582	−985	−650	−1,098	−729	−283
	(excl. project loan spending)		−611	−582	−985	−641	−887	−361	−122
Financing			501	437	621	940	588	746	292
	Net domestic		117	189	131	407	604	181	−102
		Net Central bank	107	112	−62	142	823	217	−151
		Net commercial banks^7/	9	69	42	189	−92	26	27
		Net nonbank^7/	…	9	151	76	−127	−62	22
	Net foreign		384	248	452	293	−93	426	6
		Drawings	384	422	505	606	211	937	161
		Amortization	0	−174	−53	−312	−639	−676	−183
		Change in principal arrears	0	0	0	0	62	180	−2,264
		Debt rescheduling/restructuring	0	0	0	0	273	−15	2,292
Privatization receipts					38	239	77	139	387
			(In percent of GDP)
Revenue			33.5	33.9	31.7	33.9	33.1	27.3	22.7
	Tax revenue		26.4	28.8	27.4	29.9	28.3	22.2	19.3
	Non-tax revenue and grants		7.1	5.1	4.3	4.0	4.8	5.1	3.4
Expenditure and net lending			42.6	39.7	38.7	43.2	38.7	32.7	26.0
	Expenditure		40.2	38.8	40.2	42.9	38.4	33.1	26.1
	Net lending		2.0	0.9	−1.5	0.3	0.3	−0.3	−0.1
Surplus/deficit (cash)			−9.1	−5.8	−7.0	−9.3	−5.7	−5.4	−3.3
	(excl. project loan spending)		−9.1	−5.8	−7.0	−9.2	−3.6	−2.8	−1.5
Surplus/deficit (commitment)			−11.1	−7.7	−11.2	−6.4	−10.6	−5.3	−3.2
	(excl. project loan spending)		−11.1	−7.7	−11.2	−6.3	−8.6	−2.6	−1.4
Memorandum items (in millions of lei):
	Stock of expenditure arrears		454	599	963	679	1,097	1,113	1,104
	Nominal GDP		5,505	7,545	8,828	10,119	10,366	13,713	8,763

Sources: Data provided by authorities, and Fund staff estimates.

^{^1/}The accounts comprise the republican government, local governments, extrabudgetary funds and the Social Fund.

^{^2/}First two quarters

^{^3/}Includes land tax, real estate tax, natural resources tax, stats tax, and private tax.

^{^4/}Includes profit remittances from the National Bank of Moldova and privatization revenues.

^{^5/}Includes extrabudgetary funds on a net basis, administrative, military, indexation of deposits, environment, and unallocated.

^{^6/}Includes transfers from the State Budget.

^{^7/}Includes treasury securities.

Table 38.

Moldova: General Government Budget, 1994-2000^1/

(In millions of lei; unless otherwise indicated)

			1994	1995	1996	1997	1998	1999	2000^2/
Revenues			1,847	2,556	2,797	3,431	3,428	3,745	1,987
	Tax revenues		1,454	2,171	2,417	3.027	2,931	3,050	1,694
		Direct taxes	480	594	578	526	403	453	268
		Indirect	433	755	810	1,460	1,499	1,384	822
		Foreign trade taxes	30	51	95	127	109	231	122
		Social fund contributions	474	640	761	729	783	783	427
		Other taxes^3/	36	130	174	185	137	199	55
	Non-tax revenues and grants^4/		393	365	380	404	497	695	294
Expenditures and net lending			2,347	2,993	3,418	4,371	4,015	4,491	2,280
	Expenditures		2,212	2,927	3,546	4,341	3,985	4,535	2,290
		National economy	135	167	178	359	281	287	108
		Social sphere	953	1,113	1,530	1,662	1,336	1,340	674
		Interest	164	265	243	377	421	906	481
		Domestic	120	173	132	213	244	438	310
		Foreign	44	93	111	165	177	467	171
		Capital expenditures	110	135	149	234	206	103	62
		Other expenditures^5/	389	530	658	643	619	643	260
		Social fund expenditures^6/	452	648	766	1,057	912	889	542
		Project loan spending	0	0	0	9	211	368	161
	Net lending		111	71	−137	30	30	−44	−10
Fiscal balance (cash)			−501	−437	−621	−940	−588	−746	−292
	(excl. project loan spending)		−501	−437	−621	−931	−377	−378	−131
Change in arrears (+, increase)			110	145	364	−290	510	−17	−9
		Domestic expenditure	110	145	364	−287	418	16	−59
		Foreign interest	0	0	0	−3	92	−33	50
Fiscal balance (commitment)			−611	−582	−985	−650	−1,098	−729	−283
	(excl. project loan spending)		−611	−582	−985	−641	−887	−361	−122
Financing			501	437	621	940	588	746	292
	Net domestic		117	189	131	407	604	181	−102
		Net Central bank	107	112	−62	142	823	217	−151
		Net commercial banks^7/	9	69	42	189	−92	26	27
		Net nonbank^7/	…	9	151	76	−127	−62	22
	Net foreign		384	248	452	293	−93	426	6
		Drawings	384	422	505	606	211	937	161
		Amortization	0	−174	−53	−312	−639	−676	−183
		Change in principal arrears	0	0	0	0	62	180	−2,264
		Debt rescheduling/restructuring	0	0	0	0	273	−15	2,292
Privatization receipts					38	239	77	139	387
			(In percent of GDP)
Revenue			33.5	33.9	31.7	33.9	33.1	27.3	22.7
	Tax revenue		26.4	28.8	27.4	29.9	28.3	22.2	19.3
	Non-tax revenue and grants		7.1	5.1	4.3	4.0	4.8	5.1	3.4
Expenditure and net lending			42.6	39.7	38.7	43.2	38.7	32.7	26.0
	Expenditure		40.2	38.8	40.2	42.9	38.4	33.1	26.1
	Net lending		2.0	0.9	−1.5	0.3	0.3	−0.3	−0.1
Surplus/deficit (cash)			−9.1	−5.8	−7.0	−9.3	−5.7	−5.4	−3.3
	(excl. project loan spending)		−9.1	−5.8	−7.0	−9.2	−3.6	−2.8	−1.5
Surplus/deficit (commitment)			−11.1	−7.7	−11.2	−6.4	−10.6	−5.3	−3.2
	(excl. project loan spending)		−11.1	−7.7	−11.2	−6.3	−8.6	−2.6	−1.4
Memorandum items (in millions of lei):
	Stock of expenditure arrears		454	599	963	679	1,097	1,113	1,104
	Nominal GDP		5,505	7,545	8,828	10,119	10,366	13,713	8,763

Sources: Data provided by authorities, and Fund staff estimates.

^{^1/}The accounts comprise the republican government, local governments, extrabudgetary funds and the Social Fund.

^{^2/}First two quarters

^{^3/}Includes land tax, real estate tax, natural resources tax, stats tax, and private tax.

^{^4/}Includes profit remittances from the National Bank of Moldova and privatization revenues.

^{^5/}Includes extrabudgetary funds on a net basis, administrative, military, indexation of deposits, environment, and unallocated.

^{^6/}Includes transfers from the State Budget.

^{^7/}Includes treasury securities.

Table 39.

Moldova: General Government Revenues, 1994-2000^1/

(In millions of lei; unless otherwise indicated)

Sources: Data provided by authorities, and Fund staff estimates.

^{^1/}Comprises the republican government, local governments, extrabudgetary funds and the Social Fund.

^{^2/}First two quarters of 2000.

^{^3/}Includes land tax, real estate tax, natural resources tax, state tax, and private tax.

Table 39.

Moldova: General Government Revenues, 1994-2000^1/

(In millions of lei; unless otherwise indicated)

				1994	1995	1996	1997	1998	1999	2000^2/
Total revenue				1,847	2,556	2,797	3,431	3,428	3,745	1,987
	Tax revenue			1,454	2,171	2,417	3,027	2,931	3,050	1,694
		Direct taxes		480	594	578	526	403	453	268
			Profit tax	351	392	359	244	179	233	154
			Personal income tax	130	201	219	282	224	220	114
		Indirect		433	755	810	1,460	1,499	1,384	822
			VAT	282	568	614	949	1,124	940	557
			Excises	151	186	197	511	375	444	264
		Foreign trade taxes		30	51	95	127	109	231	122
		Social fund contributions		474	640	761	729	783	783	427
		Other taxes^3/		36	130	174	185	137	199	55
	Non-tax revenues and grants			393	385	380	404	497	695	294
		Of which: Central Bank profits		0	190	106	131	187	160	131
				(In percent of GDP)
Total revenue				33.5	33.9	31.7	33.9	33.1	27.3	22.7
	Tax revenue			26.4	28.8	27.4	29.9	28.3	22.2	19.3
		Direct taxes		8.7	7.9	6.5	5.2	3.9	3.3	3.1
			Profit tax	6.4	5.2	4.1	2.4	1.7	1.7	1.8
			Personal income tax	2.4	2.7	2.5	2.8	2.2	1.6	1.3
		Indirect taxes		7.9	10.0	9.2	14.4	14.5	10.1	9.4
			VAT	5.1	7.5	7.0	9.4	10.8	6.9	6.4
			Excises	2.8	2.5	2.2	5.0	3.6	3.2	3.0
		Foreign trade taxes		0.5	0.7	1.1	1.3	1.1	1.7	1.4
		Social fund contributions		8.6	8.5	8.6	7.2	7.6	5.7	4.9
		Other taxes^3/		0.7	1.7	2.0	1.8	1.3	1.5	0.6
	Non-tax revenue and grants			7.1	5.1	4.3	4.0	4.8	5.1	3.4
		Of which: Central bank profits		0.0	2.5	1.2	1.3	1.8	1.2	1.5
Memorandum items (in millions of lei):
		Tax arrears		…	823	1,205	1,132	1,484	1,720	1,643
		Nominal GDP		5,505	7,545	8,828	10,119	10,366	13,713	8,763

Sources: Data provided by authorities, and Fund staff estimates.

^{^1/}Comprises the republican government, local governments, extrabudgetary funds and the Social Fund.

^{^2/}First two quarters of 2000.

^{^3/}Includes land tax, real estate tax, natural resources tax, state tax, and private tax.

Table 39.

Moldova: General Government Revenues, 1994-2000^1/

(In millions of lei; unless otherwise indicated)

				1994	1995	1996	1997	1998	1999	2000^2/
Total revenue				1,847	2,556	2,797	3,431	3,428	3,745	1,987
	Tax revenue			1,454	2,171	2,417	3,027	2,931	3,050	1,694
		Direct taxes		480	594	578	526	403	453	268
			Profit tax	351	392	359	244	179	233	154
			Personal income tax	130	201	219	282	224	220	114
		Indirect		433	755	810	1,460	1,499	1,384	822
			VAT	282	568	614	949	1,124	940	557
			Excises	151	186	197	511	375	444	264
		Foreign trade taxes		30	51	95	127	109	231	122
		Social fund contributions		474	640	761	729	783	783	427
		Other taxes^3/		36	130	174	185	137	199	55
	Non-tax revenues and grants			393	385	380	404	497	695	294
		Of which: Central Bank profits		0	190	106	131	187	160	131
				(In percent of GDP)
Total revenue				33.5	33.9	31.7	33.9	33.1	27.3	22.7
	Tax revenue			26.4	28.8	27.4	29.9	28.3	22.2	19.3
		Direct taxes		8.7	7.9	6.5	5.2	3.9	3.3	3.1
			Profit tax	6.4	5.2	4.1	2.4	1.7	1.7	1.8
			Personal income tax	2.4	2.7	2.5	2.8	2.2	1.6	1.3
		Indirect taxes		7.9	10.0	9.2	14.4	14.5	10.1	9.4
			VAT	5.1	7.5	7.0	9.4	10.8	6.9	6.4
			Excises	2.8	2.5	2.2	5.0	3.6	3.2	3.0
		Foreign trade taxes		0.5	0.7	1.1	1.3	1.1	1.7	1.4
		Social fund contributions		8.6	8.5	8.6	7.2	7.6	5.7	4.9
		Other taxes^3/		0.7	1.7	2.0	1.8	1.3	1.5	0.6
	Non-tax revenue and grants			7.1	5.1	4.3	4.0	4.8	5.1	3.4
		Of which: Central bank profits		0.0	2.5	1.2	1.3	1.8	1.2	1.5
Memorandum items (in millions of lei):
		Tax arrears		…	823	1,205	1,132	1,484	1,720	1,643
		Nominal GDP		5,505	7,545	8,828	10,119	10,366	13,713	8,763

Sources: Data provided by authorities, and Fund staff estimates.

^{^1/}Comprises the republican government, local governments, extrabudgetary funds and the Social Fund.

^{^2/}First two quarters of 2000.

^{^3/}Includes land tax, real estate tax, natural resources tax, state tax, and private tax.

Table 40.

Moldova: General Government Expenditures, 1994-2000^1/

(In millions of lei; unless otherwise indicated; cash basis)

Sources: Data provided by authorities, and Fund staff estimates.

^{^1/}Comprises the Republican government, local governments, extrabudgetary funds and the Social Fund.

^{^2/}First two quarters.

^{^3/}Includes extrabudgetary funds on a net basis, administrative, military, indexation of deposits, environment, and unallocated.

^{^4/}Includes transfers from the State Budget.

Table 40.

Moldova: General Government Expenditures, 1994-2000^1/

(In millions of lei; unless otherwise indicated; cash basis)

				1994	1995	1996	1997	1998	1999	2000^2/
Total expenditure and net lending				2,347	2,993	3,418	4,371	4,015	4491	2280
	Total expenditures			2,212	2,927	3,546	4,341	3,985	4535	2290
	Current expenditure
		National economy		135	167	178	359	281	287	108
		Environment		8	8	14	7	6	6	6
		Social sphere		953	1,113	1,530	1,662	1,336	1340	674
			Education	414	567	790	890	637	575	296
			Health care	292	366	521	537	393	335	174
		Other		246	180	220	235	306	430	202
	Interest			164	265	243	377	421	906	481
		Domestic		120	173	132	213	244	438	310
		Foreign		44	93	111	165	177	468	171
	Capital expenditures			162	135	149	234	206	103	62
	Other expenditures^3/			331	530	658	643	619	643	260
	Social fund expenditures^4/			452	648	766	1,057	912	889	542
	Project loan spending			0	0	0	9	211	368	161
Net lending				111	71	−137	30	30	−44	−10
				(In percent of GDP)
Total expenditure and net lending				42.6	39.7	38.7	43.2	38.7	32.7	26.0
	Total expenditures			40.2	38.8	40.2	42.9	38.4	33.1	26.1
	Current expenditure
		National economy		2.4	2.2	2.0	3.5	2.7	2.1	1.2
		Environment		0.2	0.1	0.2	0.1	0.1	0.0	0.1
		Social sphere		17.3	14.8	17.3	16.4	12.9	9.8	7.7
			Education	7.5	7.5	8.9	8.8	6.1	4.2	3.4
			Health care	5.3	4.9	5.9	5.3	3.8	2.4	2.0
		Other		4.5	2.4	2.5	2.3	2.9	3.1	2.3
	Interest			3.0	3.5	2.8	3.7	4.1	6.6	5.5
			Domestic	2.2	2.3	1.5	2.1	2.4	3.2	3.5
			Foreign	0.8	1.2	1.3	1.6	1.7	3.4	2.0
		Capital expenditures		2.0	1.8	1.7	2.3	2.0	0.8	0.7
		Other expenditures^3/		7.1	7.0	7.5	6.4	6.0	4.7	3.0
		Social fund expenditures^4/		8.2	8.6	8.7	10.4	8.8	6.5	6.2
		Project loan spending		0.0	0.0	0.0	0.1	2.0	2.7	1.8
	Net lending			2.0	0.9	−1.5	0.3	0.3	−0.3	−0.1
Memorandum items (in millions of lei):
		Stock of expenditure arrears		454	599	963	679	1,109	1,113	1,104
		Nominal GDP		5,505	7,545	8,828	10,119	10,366	13,713	8,763

Sources: Data provided by authorities, and Fund staff estimates.

^{^1/}Comprises the Republican government, local governments, extrabudgetary funds and the Social Fund.

^{^2/}First two quarters.

^{^3/}Includes extrabudgetary funds on a net basis, administrative, military, indexation of deposits, environment, and unallocated.

^{^4/}Includes transfers from the State Budget.

Table 40.

Moldova: General Government Expenditures, 1994-2000^1/

(In millions of lei; unless otherwise indicated; cash basis)

				1994	1995	1996	1997	1998	1999	2000^2/
Total expenditure and net lending				2,347	2,993	3,418	4,371	4,015	4491	2280
	Total expenditures			2,212	2,927	3,546	4,341	3,985	4535	2290
	Current expenditure
		National economy		135	167	178	359	281	287	108
		Environment		8	8	14	7	6	6	6
		Social sphere		953	1,113	1,530	1,662	1,336	1340	674
			Education	414	567	790	890	637	575	296
			Health care	292	366	521	537	393	335	174
		Other		246	180	220	235	306	430	202
	Interest			164	265	243	377	421	906	481
		Domestic		120	173	132	213	244	438	310
		Foreign		44	93	111	165	177	468	171
	Capital expenditures			162	135	149	234	206	103	62
	Other expenditures^3/			331	530	658	643	619	643	260
	Social fund expenditures^4/			452	648	766	1,057	912	889	542
	Project loan spending			0	0	0	9	211	368	161
Net lending				111	71	−137	30	30	−44	−10
				(In percent of GDP)
Total expenditure and net lending				42.6	39.7	38.7	43.2	38.7	32.7	26.0
	Total expenditures			40.2	38.8	40.2	42.9	38.4	33.1	26.1
	Current expenditure
		National economy		2.4	2.2	2.0	3.5	2.7	2.1	1.2
		Environment		0.2	0.1	0.2	0.1	0.1	0.0	0.1
		Social sphere		17.3	14.8	17.3	16.4	12.9	9.8	7.7
			Education	7.5	7.5	8.9	8.8	6.1	4.2	3.4
			Health care	5.3	4.9	5.9	5.3	3.8	2.4	2.0
		Other		4.5	2.4	2.5	2.3	2.9	3.1	2.3
	Interest			3.0	3.5	2.8	3.7	4.1	6.6	5.5
			Domestic	2.2	2.3	1.5	2.1	2.4	3.2	3.5
			Foreign	0.8	1.2	1.3	1.6	1.7	3.4	2.0
		Capital expenditures		2.0	1.8	1.7	2.3	2.0	0.8	0.7
		Other expenditures^3/		7.1	7.0	7.5	6.4	6.0	4.7	3.0
		Social fund expenditures^4/		8.2	8.6	8.7	10.4	8.8	6.5	6.2
		Project loan spending		0.0	0.0	0.0	0.1	2.0	2.7	1.8
	Net lending			2.0	0.9	−1.5	0.3	0.3	−0.3	−0.1
Memorandum items (in millions of lei):
		Stock of expenditure arrears		454	599	963	679	1,109	1,113	1,104
		Nominal GDP		5,505	7,545	8,828	10,119	10,366	13,713	8,763

Sources: Data provided by authorities, and Fund staff estimates.

^{^1/}Comprises the Republican government, local governments, extrabudgetary funds and the Social Fund.

^{^2/}First two quarters.

^{^3/}Includes extrabudgetary funds on a net basis, administrative, military, indexation of deposits, environment, and unallocated.

^{^4/}Includes transfers from the State Budget.

Table 41.

Moldova: Accounts of the National Bank of Moldova, 1996-2000

(In millions of lei; end-of-period at current exchange rates)

Source; National Bank of Moldova.

Table 41.

Moldova: Accounts of the National Bank of Moldova, 1996-2000

(In millions of lei; end-of-period at current exchange rates)

			1996	1997	1998				1999				2000
					Mar.	Jun.	Sep.	Dec.	Mar.	Jun.	Sep.	Dec.	Mar.	Jun.	Sep.
Net foreign assets			313.7	605.6	471.1	397.4	94.6	−304.1	−246.3	−194.3	167.7	40.3	348.2	454.8	533.4
	NFA (convertible)		308.1	599.7	475.0	401.1	98.2	−301.9	−244.3	−192.1	169.8	42.6	350.7	456.9	535.5
		Assets	1,458.2	1,704.2	1,531.7	1,364.1	1,054.1	1,177.2	1,632.5	1,806.8	2,352.8	2,204.9	2,526.1	2,532.7	2,457.6
		Liabilities	−1,150.1	−1,104.5	−1,056.7	−963.0	−955.9	−1,479.1	−1,876.8	−1,998.9	−2,183.0	−2,162.3	−2,175.4	−2,075.8	−1,922.1
	NFA (non convertible, net)		5.6	5.9	−3.9	−3.9	−3.6	−2.2	−2.0	−2.2	−2.1	−2.3	−2.5	−2.1	−2.1
Net domestic assets			540.3	517.0	557.0	583.9	755.0	1,363.9	1,338.0	1,443.9	1,250.8	1,458.3	1,199.1	1,160.6	1,232.1
	Domestic credit		732.4	786.9	787.7	842.8	1,026.5	1,570.5	1,504.5	1,599.7	1,413.7	1,680.6	1,471.1	1,511.2	1,537.1
		Net claims on general government	369.7	516.7	526.0	531.6	725.7	1,341.0	1,340.2	1,460.4	1,272.4	1,558.3	1,368.3	1,407.4	1,433.4
		Credit to banks	362.6	270.3	261.8	311.2	300.8	229.5	164.3	139.3	141.3	122.3	102.8	103.8	103.7
	Other items (net)		−192.1	−269.9	−230.7	−259.0	−271.4	−206.6	−166.5	−155.8	−162.9	−222.3	−272.0	−350.6	−305.0
Reserve money			854.0	1,122.6	1,028.1	981.3	849.6	1,059.8	1,091.7	1,249.6	1,418.5	1,498.6	1,547.3	1,615.4	1,765.5
	Currency in circulation		731.1	972.1	924.4	863.6	747.0	855.3	853.7	910.3	1,073.6	1,122.0	1,109.3	1,159.2	1,339.6
	Bank reserves		118.6	150.6	103.7	117.7	102.6	204.5	238.0	339.3	344.9	376.6	438.0	456.2	425.9
		Of which: Cash in vault	20.5	32.4	35.3	26.6	27.9	27.5	29.0	29.7	53.2	44.6	60.5	54.7	68.7
	Enterprise deposits		4.3	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0

Source; National Bank of Moldova.

Table 41.

Moldova: Accounts of the National Bank of Moldova, 1996-2000

(In millions of lei; end-of-period at current exchange rates)

			1996	1997	1998				1999				2000
					Mar.	Jun.	Sep.	Dec.	Mar.	Jun.	Sep.	Dec.	Mar.	Jun.	Sep.
Net foreign assets			313.7	605.6	471.1	397.4	94.6	−304.1	−246.3	−194.3	167.7	40.3	348.2	454.8	533.4
	NFA (convertible)		308.1	599.7	475.0	401.1	98.2	−301.9	−244.3	−192.1	169.8	42.6	350.7	456.9	535.5
		Assets	1,458.2	1,704.2	1,531.7	1,364.1	1,054.1	1,177.2	1,632.5	1,806.8	2,352.8	2,204.9	2,526.1	2,532.7	2,457.6
		Liabilities	−1,150.1	−1,104.5	−1,056.7	−963.0	−955.9	−1,479.1	−1,876.8	−1,998.9	−2,183.0	−2,162.3	−2,175.4	−2,075.8	−1,922.1
	NFA (non convertible, net)		5.6	5.9	−3.9	−3.9	−3.6	−2.2	−2.0	−2.2	−2.1	−2.3	−2.5	−2.1	−2.1
Net domestic assets			540.3	517.0	557.0	583.9	755.0	1,363.9	1,338.0	1,443.9	1,250.8	1,458.3	1,199.1	1,160.6	1,232.1
	Domestic credit		732.4	786.9	787.7	842.8	1,026.5	1,570.5	1,504.5	1,599.7	1,413.7	1,680.6	1,471.1	1,511.2	1,537.1
		Net claims on general government	369.7	516.7	526.0	531.6	725.7	1,341.0	1,340.2	1,460.4	1,272.4	1,558.3	1,368.3	1,407.4	1,433.4
		Credit to banks	362.6	270.3	261.8	311.2	300.8	229.5	164.3	139.3	141.3	122.3	102.8	103.8	103.7
	Other items (net)		−192.1	−269.9	−230.7	−259.0	−271.4	−206.6	−166.5	−155.8	−162.9	−222.3	−272.0	−350.6	−305.0
Reserve money			854.0	1,122.6	1,028.1	981.3	849.6	1,059.8	1,091.7	1,249.6	1,418.5	1,498.6	1,547.3	1,615.4	1,765.5
	Currency in circulation		731.1	972.1	924.4	863.6	747.0	855.3	853.7	910.3	1,073.6	1,122.0	1,109.3	1,159.2	1,339.6
	Bank reserves		118.6	150.6	103.7	117.7	102.6	204.5	238.0	339.3	344.9	376.6	438.0	456.2	425.9
		Of which: Cash in vault	20.5	32.4	35.3	26.6	27.9	27.5	29.0	29.7	53.2	44.6	60.5	54.7	68.7
	Enterprise deposits		4.3	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0

Source; National Bank of Moldova.

Table 42.

Moldova: Monetary Survey, 1996-2000

(In millions of lei, end-of-period; at current exchange rates)

Source; National Bank of Moldova.

Table 42.

Moldova: Monetary Survey, 1996-2000

(In millions of lei, end-of-period; at current exchange rates)

			1996	1997	1998				1999				2000
					Mar.	Jun.	Sep.	Dec.	Mar.	Jun.	Sep.	Dec.	Mar.	Jun.	Sep.
Net foreign assets			270.7	484.2	255.0	129.1	−171.0	−620.2	−421.8	−228.1	264.1	162.6	540.3	657.0	846.4
	NFA (convertible)		245.6	458.1	278.8	195.4	−136.3	−584.1	−417.1	−234.5	256.7	168.4	548.5	628.3	831.9
		Assets	1,632.6	1,815.0	1,640.1	1,518.9	1,254.4	1,446.3	2,011.9	2,364.5	2,998.7	2,824.1	3,275.1	3,199.7	3,240.7
		Liabilities	−1,387.0	−1,356.8	−1,361.3	−1,323.5	−1,390.7	−2,030.4	−2,429.0	−2,599.0	−2,742.0	−2,655.7	−2,726.6	−2,571.4	−2,408.8
	NFA (non-convertible)		25.2	26.1	−23.8	−66.3	−34.7	−36.1	−4.7	6.4	7.4	−5.8	−8.2	28.7	14.5
Net domestic assets			1,163.3	1,437.9	1,635.6	1,744.0	1,839.4	2,385.3	2,351.7	2,503.1	2,190.5	2,341.8	2,209.3	2,131.8	2,335.4
	Domestic credit		1,803.9	2,305.2	2,528.6	2,658.0	2,750.5	3,296.5	3,270.2	3,468.5	3,201.8	3,413.8	3,279.5	3,451.3	3,699.5
		Net claims on general government	468.8	804.3	845.5	878.8	986.4	1,535.7	1,585.7	1,690.9	1,538.3	1,778.6	1,528.3	1,655.5	1,715.2
		Credit to the economy	1,335.1	1,505.6	1,683.0	1,779.0	1,764.0	1,760.8	1,684.5	1,777.6	1,663.5	1,635.2	1,751.2	1,795.8	1,984.3
	Other items (net)		−640.5	−872.0	−893.0	−914.1	−911.0	−911.2	−918.5	−965.4	−1,011.3	−1,072.0	−1,070.2	−1,319.5	−1,364.1
Broad money (M3)			1,434.1	1,922.1	1,890.6	1,873.1	1,668.4	1,765.1	1,929.9	2,275.0	2,454.6	2,504.4	2,749.6	2,788.8	3,181.8
Domestic broad money (M2)			1,292.1	1,738.9	1,689.7	1,620.8	1,380.4	1,367.3	1,467.2	1,535.7	1,745.2	1,811.2	1,876.9	2,006.0	2,302.9
	Currency in circulation		731.1	972.1	924.4	863.6	747.0	855.3	853.7	910.3	1,073.6	1,122.0	1,109.3	1,159.2	1,339.6
	Deposits in domestic currency		561.1	766.8	765.3	757.2	633.4	501.4	537.0	550.4	671.7	687.0	766.5	846.0	962.0
	Demand deposits		267.5	325.8	311.8	284.3	228.1	202.4	206.7	222.1	345.7	340.0	378.4	411.0	463.7
	Time deposits		293.6	441.0	453.5	472.9	405.3	299.0	330.3	328.3	326.0	347.0	388.1	435.0	498.3
Foreign currency deposits			141.9	183.2	200.9	252.3	288.0	397.8	462.7	739.3	709.4	693.2	872.7	782.8	878.9

Source; National Bank of Moldova.

Table 42.

Moldova: Monetary Survey, 1996-2000

(In millions of lei, end-of-period; at current exchange rates)

			1996	1997	1998				1999				2000
					Mar.	Jun.	Sep.	Dec.	Mar.	Jun.	Sep.	Dec.	Mar.	Jun.	Sep.
Net foreign assets			270.7	484.2	255.0	129.1	−171.0	−620.2	−421.8	−228.1	264.1	162.6	540.3	657.0	846.4
	NFA (convertible)		245.6	458.1	278.8	195.4	−136.3	−584.1	−417.1	−234.5	256.7	168.4	548.5	628.3	831.9
		Assets	1,632.6	1,815.0	1,640.1	1,518.9	1,254.4	1,446.3	2,011.9	2,364.5	2,998.7	2,824.1	3,275.1	3,199.7	3,240.7
		Liabilities	−1,387.0	−1,356.8	−1,361.3	−1,323.5	−1,390.7	−2,030.4	−2,429.0	−2,599.0	−2,742.0	−2,655.7	−2,726.6	−2,571.4	−2,408.8
	NFA (non-convertible)		25.2	26.1	−23.8	−66.3	−34.7	−36.1	−4.7	6.4	7.4	−5.8	−8.2	28.7	14.5
Net domestic assets			1,163.3	1,437.9	1,635.6	1,744.0	1,839.4	2,385.3	2,351.7	2,503.1	2,190.5	2,341.8	2,209.3	2,131.8	2,335.4
	Domestic credit		1,803.9	2,305.2	2,528.6	2,658.0	2,750.5	3,296.5	3,270.2	3,468.5	3,201.8	3,413.8	3,279.5	3,451.3	3,699.5
		Net claims on general government	468.8	804.3	845.5	878.8	986.4	1,535.7	1,585.7	1,690.9	1,538.3	1,778.6	1,528.3	1,655.5	1,715.2
		Credit to the economy	1,335.1	1,505.6	1,683.0	1,779.0	1,764.0	1,760.8	1,684.5	1,777.6	1,663.5	1,635.2	1,751.2	1,795.8	1,984.3
	Other items (net)		−640.5	−872.0	−893.0	−914.1	−911.0	−911.2	−918.5	−965.4	−1,011.3	−1,072.0	−1,070.2	−1,319.5	−1,364.1
Broad money (M3)			1,434.1	1,922.1	1,890.6	1,873.1	1,668.4	1,765.1	1,929.9	2,275.0	2,454.6	2,504.4	2,749.6	2,788.8	3,181.8
Domestic broad money (M2)			1,292.1	1,738.9	1,689.7	1,620.8	1,380.4	1,367.3	1,467.2	1,535.7	1,745.2	1,811.2	1,876.9	2,006.0	2,302.9
	Currency in circulation		731.1	972.1	924.4	863.6	747.0	855.3	853.7	910.3	1,073.6	1,122.0	1,109.3	1,159.2	1,339.6
	Deposits in domestic currency		561.1	766.8	765.3	757.2	633.4	501.4	537.0	550.4	671.7	687.0	766.5	846.0	962.0
	Demand deposits		267.5	325.8	311.8	284.3	228.1	202.4	206.7	222.1	345.7	340.0	378.4	411.0	463.7
	Time deposits		293.6	441.0	453.5	472.9	405.3	299.0	330.3	328.3	326.0	347.0	388.1	435.0	498.3
Foreign currency deposits			141.9	183.2	200.9	252.3	288.0	397.8	462.7	739.3	709.4	693.2	872.7	782.8	878.9

Source; National Bank of Moldova.

Table 43.

Moldova: Balance of Payments, 1995-99

(In millions of U.S. dollars)

Sources: National Bank of Moldova; and Fund staff estimates.

^{^1/}Includes Eurobond issues.

^{^2/}Entries for 1997 reflect issuance of $140 million of securities to Gazprom in settlement of energy arrears.

Table 43.

Moldova: Balance of Payments, 1995-99

(In millions of U.S. dollars)

				1995	1996	1997	1998	1999
Current account				−115	−188	−274	−323	−34
	Trade balance			−55	−252	−347	−387	−128
		Exports of goods		739	823	890	644	469
		Imports of goods		−794	−1,075	−1,237	−1,032	−597
			Of which: energy products	−293	−328	−337	−245	−152
	Balance of services			−96	−64	−52	−73	−22
		Exports of services		126	114	134	119	136
		Imports of services		−222	−178	−186	18	29
	Income (net)			−29	55	47	41	34
	Current transfers (net)			65	73	77	98	82
Capital and financial account				71	170	324	3	−42
	Capital transfers and Direct investment^1/			73	23	71	88	149
	Portfolio investment^2/			0	54	237	−55	−140
	Medium and long-term loans			74	101	10	40	90
		Disbursements		132	133	100	84	197
			World Bank	50	0	38	32	90
			E.B.R.D.	5	34	23	15	22
			Other official	49	46	1	0	19
			Private creditors	27	53	38	37	66
		Amortization		−58	−32	−90	−43	−107
	Other capital flows			−75	−9	5	−70	−141
Errors and omissions				−10	17	17	9	−3
Overall balance				−54	−1	67	−311	−79
Financing				54	1	−67	311	79
	Use of IMF credit (net)			65	25	1	−64	5
	Change in gross official reserves			−78	−57	−52	227	−41
	Debt and energy arrears and rescheduling			67	33	−15	148	115
Memorandum items:
	Gross official reserves			257	314	366	140	181
		(In months of imports)		3.0	3.0	3.1	1.4	2.9

Sources: National Bank of Moldova; and Fund staff estimates.

^{^1/}Includes Eurobond issues.

^{^2/}Entries for 1997 reflect issuance of $140 million of securities to Gazprom in settlement of energy arrears.

Table 43.

Moldova: Balance of Payments, 1995-99

(In millions of U.S. dollars)

				1995	1996	1997	1998	1999
Current account				−115	−188	−274	−323	−34
	Trade balance			−55	−252	−347	−387	−128
		Exports of goods		739	823	890	644	469
		Imports of goods		−794	−1,075	−1,237	−1,032	−597
			Of which: energy products	−293	−328	−337	−245	−152
	Balance of services			−96	−64	−52	−73	−22
		Exports of services		126	114	134	119	136
		Imports of services		−222	−178	−186	18	29
	Income (net)			−29	55	47	41	34
	Current transfers (net)			65	73	77	98	82
Capital and financial account				71	170	324	3	−42
	Capital transfers and Direct investment^1/			73	23	71	88	149
	Portfolio investment^2/			0	54	237	−55	−140
	Medium and long-term loans			74	101	10	40	90
		Disbursements		132	133	100	84	197
			World Bank	50	0	38	32	90
			E.B.R.D.	5	34	23	15	22
			Other official	49	46	1	0	19
			Private creditors	27	53	38	37	66
		Amortization		−58	−32	−90	−43	−107
	Other capital flows			−75	−9	5	−70	−141
Errors and omissions				−10	17	17	9	−3
Overall balance				−54	−1	67	−311	−79
Financing				54	1	−67	311	79
	Use of IMF credit (net)			65	25	1	−64	5
	Change in gross official reserves			−78	−57	−52	227	−41
	Debt and energy arrears and rescheduling			67	33	−15	148	115
Memorandum items:
	Gross official reserves			257	314	366	140	181
		(In months of imports)		3.0	3.0	3.1	1.4	2.9

Sources: National Bank of Moldova; and Fund staff estimates.

^{^1/}Includes Eurobond issues.

^{^2/}Entries for 1997 reflect issuance of $140 million of securities to Gazprom in settlement of energy arrears.

Table 44.

Moldova: Composition of Trade, 1994-99

(In percent of total)

Sources: Moldovan Department for Statistical and Sociological Research.

Table 44.

Moldova: Composition of Trade, 1994-99

(In percent of total)

Product description	Exports						Imports
	1994	1995	1996	1997	1998	1999	1994	1995	1996	1997	1998	1999
Livestock and Animal products	8.0	9.1	7.6	8.6	5.4	6.3	0.4	1.0	1.5	1.9	1.7	1.1
Vegetable products	17.6	10.2	8.5	8.6	11.3	14.7	4.0	4.1	3.8	3.2	1.6	1.9
Animal and vegetable grease and oils	2.0	1.5	0.4	0.9	0.6	0.5	0.1	0.2	0.3	0.4	0.3	0.4
Foodstuffs: hard and soft drinks, vinegar, tobacco and its substitutes	40.1	51.3	57.1	54.8	55.4	42.5	3.1	4.1	7.7	7.6	5.5	3.2
Mineral products	2.6	1.1	0.3	0.4	0.4	0.4	55.6	46.5	37.0	35.3	31.8	38.2
Chemicals and related products	1.4	1.1	1.5	1.5	1.2	2.7	5.8	7.8	7.1	9.6	9i	8.0
India-rubber and plastic products made of them	0.6	0.6	0.7	0.6	0.5	0.4	1.7	2.5	3.3	3.1	3.2	3.5
Raw and tanned leather, furs and items made of them	1.6	2.0	1.5	1.4	1.7	2.8	0.5	0.5	0.3	0.3	0.2	0.5
Timber and timber products, cork	0.0	0.1	0.1	0.1	0.1	0.2	1.1	1.4	1.7	1.7	1.5	1.1
Paper, cardboard, and items made of them	1.4	1.1	1.1	0.4	0.4	0.4	2.2	3.5	4.3	4.1	4.5	3.8
Textiles and textile products	5.2	4.7	6.2	6.7	9.8	13.9	5.9	4.9	5.4	5.3	6.2	11.6
Footwear, hats, umbrellas, artificial flowers	0.5	0.4	0.5	0.6	0.4	0.7	0.5	0.3	0.3	0.3	0.3	0.4
Items made of stone, gypsum, cement, asbestos, ceramics, glass and other similar materials	1.0	2.1	3.4	1.4	1.5	2.2	1.5	2.6	2.5	3.9	3.4	2.3
Precious metals, items made of them, precious and semi-precious stones, jewellery, coins	0.2	0.3	0.1	0.1	0.0	0.0	0.1	0.3	0.3	0.2	0.1	0.2
Metals and items made of metals	3.3	4.3	1.7	1.0	1.4	3.5	3.1	4.0	4.7	4.4	4.0	4.3
Machinery, electric equipment and its parts, registration devices or sound and imade reproducing devices and accessories	9.6	6.2	5.3	5.2	6.5	5.9	9.8	12.4	14.5	12.9	19.1	12.1
Motor vehicles, aircrafts, vessels, and auxiliary transportation equipment	1.9	1.7	1.6	5.9	1.7	1.5	3.0	2.6	3.2	3.0	4.6	2.1
Optical, photographic, cinematographic measurement, control devices and instruments, surgical instruments, watches, musical instruments	0.3	0.2	0.5	0.4	0.5	0.5	0.6	0.8	1.5	1.7	1.6	3.9
Goods and various products	2.7	2.0	1.9	1.4	1.2	0.9	1.0	0.5	0.6	1.1	1.3	1.4
Works of art and antiques	0.0	0.0	0.0	0.0	0.0	0.0	00	0.0	0.0	0.0	00	0.0

Sources: Moldovan Department for Statistical and Sociological Research.

Table 44.

Moldova: Composition of Trade, 1994-99

(In percent of total)

Product description	Exports						Imports
	1994	1995	1996	1997	1998	1999	1994	1995	1996	1997	1998	1999
Livestock and Animal products	8.0	9.1	7.6	8.6	5.4	6.3	0.4	1.0	1.5	1.9	1.7	1.1
Vegetable products	17.6	10.2	8.5	8.6	11.3	14.7	4.0	4.1	3.8	3.2	1.6	1.9
Animal and vegetable grease and oils	2.0	1.5	0.4	0.9	0.6	0.5	0.1	0.2	0.3	0.4	0.3	0.4
Foodstuffs: hard and soft drinks, vinegar, tobacco and its substitutes	40.1	51.3	57.1	54.8	55.4	42.5	3.1	4.1	7.7	7.6	5.5	3.2
Mineral products	2.6	1.1	0.3	0.4	0.4	0.4	55.6	46.5	37.0	35.3	31.8	38.2
Chemicals and related products	1.4	1.1	1.5	1.5	1.2	2.7	5.8	7.8	7.1	9.6	9i	8.0
India-rubber and plastic products made of them	0.6	0.6	0.7	0.6	0.5	0.4	1.7	2.5	3.3	3.1	3.2	3.5
Raw and tanned leather, furs and items made of them	1.6	2.0	1.5	1.4	1.7	2.8	0.5	0.5	0.3	0.3	0.2	0.5
Timber and timber products, cork	0.0	0.1	0.1	0.1	0.1	0.2	1.1	1.4	1.7	1.7	1.5	1.1
Paper, cardboard, and items made of them	1.4	1.1	1.1	0.4	0.4	0.4	2.2	3.5	4.3	4.1	4.5	3.8
Textiles and textile products	5.2	4.7	6.2	6.7	9.8	13.9	5.9	4.9	5.4	5.3	6.2	11.6
Footwear, hats, umbrellas, artificial flowers	0.5	0.4	0.5	0.6	0.4	0.7	0.5	0.3	0.3	0.3	0.3	0.4
Items made of stone, gypsum, cement, asbestos, ceramics, glass and other similar materials	1.0	2.1	3.4	1.4	1.5	2.2	1.5	2.6	2.5	3.9	3.4	2.3
Precious metals, items made of them, precious and semi-precious stones, jewellery, coins	0.2	0.3	0.1	0.1	0.0	0.0	0.1	0.3	0.3	0.2	0.1	0.2
Metals and items made of metals	3.3	4.3	1.7	1.0	1.4	3.5	3.1	4.0	4.7	4.4	4.0	4.3
Machinery, electric equipment and its parts, registration devices or sound and imade reproducing devices and accessories	9.6	6.2	5.3	5.2	6.5	5.9	9.8	12.4	14.5	12.9	19.1	12.1
Motor vehicles, aircrafts, vessels, and auxiliary transportation equipment	1.9	1.7	1.6	5.9	1.7	1.5	3.0	2.6	3.2	3.0	4.6	2.1
Optical, photographic, cinematographic measurement, control devices and instruments, surgical instruments, watches, musical instruments	0.3	0.2	0.5	0.4	0.5	0.5	0.6	0.8	1.5	1.7	1.6	3.9
Goods and various products	2.7	2.0	1.9	1.4	1.2	0.9	1.0	0.5	0.6	1.1	1.3	1.4
Works of art and antiques	0.0	0.0	0.0	0.0	0.0	0.0	00	0.0	0.0	0.0	00	0.0

Sources: Moldovan Department for Statistical and Sociological Research.

Table 45.

Moldova: Summary of Tax Structure and Recent Changes

Table 45.

Moldova: Summary of Tax Structure and Recent Changes

Main Taxes	Description	Rates	Legislation
Corporate Income Tax	Base: Corporate earnings Revenue sharing arrangements (2000) 50 percent allocated to local budgets in Chisimau and Balti 100 percent in Gagauzia, and 50 percent in other rayons. Income tax of banks and insurance companies not shared with local budgets. In 2000, the Law on Local Public Finances changes the current revenue sharing arrangements. Main exemptions: Agricultural enterprises (1937). Charity fluids, religious organizations, orthopedic equipment producers. Tax benefits for small enterprises and foreign investors. Lower rate for agricultural enterprises, and Free Trade Zones (until 1998)	32 percent until 1997. Reduction to 28 percent in 1998.	Corporate Income Tax Law (No. 1214-XII of December 2, 1992). Law on Income Tax for Banks and Financial Institutions (No. 490-XIII of June 8, 1955). Annual Budget Laws. Chapters I and II of the Tax Code (1998).
Personal Income Tax	Base: Earnings (in cash and in kind). Revenue sharing: Local tax not shared with State budget. Main exemptions: Disabled, military, and registered unemployed.	1997 Budget Law: 10, 20, and 32 percent rates, 1998 Budget Law: 15, 20 and 32 percent rates. 1999 Budget Law: 10,15, and 28 percent rates in 1999-2000 Budget Law: 10, 15 and 28 percent rates in 2000 Annual thresholds were changed: minimum - 2520 lei, up to 10800 lei - 10%, from 10800- to 14400 lei- 15%, above 14400 lei - 28%	Individual Income Tax Law (No. 1218-XII of December 2, 1992). Annual Budget Laws. Chapters 1 and II of the Tax Code (1998).
VAT	Base: Goods and services produced domestically or imported Revenue sharing arrangements (2000): 10 percent allocated to local budgets in Chisinau and Balti, 100 percent in Gagauzia for 2000, and 20-30 percent in other rayons. VAT on imported goods not shared with local governments. Exemptions; Annual budget Law	20 percent (8 percent on necessity goods). 2000 Budget Law - 5% on gas and agriculture	Value Added Tax Law (No. 264-XIII of November 8, 1994). Chapter II of the Tax Code (1998). Chapter III of the Tax Code (1.07.98). Annual Budget Laws.
Excises	List of excisable goods in annual Budget Laws. Revenue sharing: State budget tax not shared with local budgets.	According to annual Budget Laws, Increase in rates for certain excisable goods in 1999.	Excise Tax Law (No. 347-XIII of December 2, 1994). Annual Budget Laws.
Foreign Trade Tax	Free trade agreement with CIS and Romania. Revenue sharing: State budget tax not shared with local budgets.	Tariff range of 0-50 percent in 1997. Tariff range of 0-40 percent in 1998. Maximum tariff of 15 percent in 1999. Minimum 5 percent tariff in 1999 (including Romania and the CIS). Special tax of 5 percent on import was eliminated in Budget Law for 2000	Annual Budget Laws.
Land Tax	Base: Collective, State-owned and private rural and urban parcels of land. Revenue sharing: Local tax not shared with State budget.	Varies according to location and use between 1 and 350 lei per hectare. Increase in rates in 1999.	Law on Taxes No. 1254 -XII of December 2, 1992 Annual Budget Laws.
Real Estate Tax	Base: real estate and fixed assets. Revenue sharing: Local tax not shared with State budget Proposal for combination of the land and real estate tax in a property tax in 2000. Differentiated rates for dwelling purposes depending of surface. Main exemptions: Afghanistan War veterans and workers in the Chernobyl clean-up in 1999.	Varies between 0.1 and 0.5 percent of the real estate value. Reduction to 0.15 percent in 1998. Varies between 0.1 and 0.3 percent of (be real estate value (1999)	Real Estate Tax Law (No. 189 of November 8, 1993). Annual Budget Laws.
Special Road Tax	Vehicle registration and road tolls.		Law on the Road Fund (No. 720-XIII of February 2, 1996).

Table 45.

Moldova: Summary of Tax Structure and Recent Changes

Main Taxes	Description	Rates	Legislation
Corporate Income Tax	Base: Corporate earnings Revenue sharing arrangements (2000) 50 percent allocated to local budgets in Chisimau and Balti 100 percent in Gagauzia, and 50 percent in other rayons. Income tax of banks and insurance companies not shared with local budgets. In 2000, the Law on Local Public Finances changes the current revenue sharing arrangements. Main exemptions: Agricultural enterprises (1937). Charity fluids, religious organizations, orthopedic equipment producers. Tax benefits for small enterprises and foreign investors. Lower rate for agricultural enterprises, and Free Trade Zones (until 1998)	32 percent until 1997. Reduction to 28 percent in 1998.	Corporate Income Tax Law (No. 1214-XII of December 2, 1992). Law on Income Tax for Banks and Financial Institutions (No. 490-XIII of June 8, 1955). Annual Budget Laws. Chapters I and II of the Tax Code (1998).
Personal Income Tax	Base: Earnings (in cash and in kind). Revenue sharing: Local tax not shared with State budget. Main exemptions: Disabled, military, and registered unemployed.	1997 Budget Law: 10, 20, and 32 percent rates, 1998 Budget Law: 15, 20 and 32 percent rates. 1999 Budget Law: 10,15, and 28 percent rates in 1999-2000 Budget Law: 10, 15 and 28 percent rates in 2000 Annual thresholds were changed: minimum - 2520 lei, up to 10800 lei - 10%, from 10800- to 14400 lei- 15%, above 14400 lei - 28%	Individual Income Tax Law (No. 1218-XII of December 2, 1992). Annual Budget Laws. Chapters 1 and II of the Tax Code (1998).
VAT	Base: Goods and services produced domestically or imported Revenue sharing arrangements (2000): 10 percent allocated to local budgets in Chisinau and Balti, 100 percent in Gagauzia for 2000, and 20-30 percent in other rayons. VAT on imported goods not shared with local governments. Exemptions; Annual budget Law	20 percent (8 percent on necessity goods). 2000 Budget Law - 5% on gas and agriculture	Value Added Tax Law (No. 264-XIII of November 8, 1994). Chapter II of the Tax Code (1998). Chapter III of the Tax Code (1.07.98). Annual Budget Laws.
Excises	List of excisable goods in annual Budget Laws. Revenue sharing: State budget tax not shared with local budgets.	According to annual Budget Laws, Increase in rates for certain excisable goods in 1999.	Excise Tax Law (No. 347-XIII of December 2, 1994). Annual Budget Laws.
Foreign Trade Tax	Free trade agreement with CIS and Romania. Revenue sharing: State budget tax not shared with local budgets.	Tariff range of 0-50 percent in 1997. Tariff range of 0-40 percent in 1998. Maximum tariff of 15 percent in 1999. Minimum 5 percent tariff in 1999 (including Romania and the CIS). Special tax of 5 percent on import was eliminated in Budget Law for 2000	Annual Budget Laws.
Land Tax	Base: Collective, State-owned and private rural and urban parcels of land. Revenue sharing: Local tax not shared with State budget.	Varies according to location and use between 1 and 350 lei per hectare. Increase in rates in 1999.	Law on Taxes No. 1254 -XII of December 2, 1992 Annual Budget Laws.
Real Estate Tax	Base: real estate and fixed assets. Revenue sharing: Local tax not shared with State budget Proposal for combination of the land and real estate tax in a property tax in 2000. Differentiated rates for dwelling purposes depending of surface. Main exemptions: Afghanistan War veterans and workers in the Chernobyl clean-up in 1999.	Varies between 0.1 and 0.5 percent of the real estate value. Reduction to 0.15 percent in 1998. Varies between 0.1 and 0.3 percent of (be real estate value (1999)	Real Estate Tax Law (No. 189 of November 8, 1993). Annual Budget Laws.
Special Road Tax	Vehicle registration and road tolls.		Law on the Road Fund (No. 720-XIII of February 2, 1996).

Table 46.

Main Expenditure Policy Measures in 1999-2000.

Source: Ministry of Finance.

Prepared by Luiz de Mello and Irina Dolinskaya.

For more information, see Hussein and de Mello (1999).

This restriction combines an identification test of the VAR with the exogeneity test of the cash flow. The VAR is identified and the cash flow parameters are weakly exogenous when the restriction is rejected.

The cash flow is weakly exogenous when this restriction is not rejected.

We attempted to disaggregate private and public investment on the basis of available information for public outlays on investment projects. Nevertheless, information on public capital expenditures is not available for the entire period under examination. This would severely reduce the degrees of freedom in the empirical analysis.

The test yields χ² (1) = 4.75 (0.03), hence the exogeneity hypothesis cannot be accepted at the 5 percent level.

The number of lags was selected according to the Schwartz criterion.

Explicit accounting for the composition of foreign borrowing is difficult due to data limitations.

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Republic of Moldova: Recent Economic Developments

Author:

International Monetary Fund

Volume/Issue:: Volume 2001: Issue 022

Publisher:: International Monetary Fund

ISBN:: 9781451824957

ISSN:: 1934-7685

Pages:: 122

DOI:: https://doi.org/10.5089/9781451824957.002

Keywords
VI. Current Account Determination in Moldova55
References

View raw image

Figure 19.

Moldova: Current Account Balance, 1993-2000

(In percent of GDP)

View raw image

Figure 20.

Moldova: GDP, Fixed Investment, and Government Spending, 1993-2000

(In percent of GDP)

View raw image

Figure 21.

Moldova: VAR Impulse Response Functions

A. Wages and Public Sector Employment
1. Partial hiring freeze in the public sector	Total employment in public sector institutions was cut from 309,300 in January, 1999 to 284,676 in January 2000. Law No. 96 of July 16, 1998 provided for a reduction of employment in public sector institutions by cutting vacant positions and introducing a hiring freeze in these institutions. Additional measures were introduced by Government Resolution. “Additional measures to ensure the execution of the 1999 Budget,” No. 28 of January 20, 1999.
2. Consolidation of ministries and departments, and elimination of public sector functions	In the context of the administrative and territorial reform, the structure and staffing of local departments of ministries and government departments are being reviewed, overlapping functions are being eliminated, and certain functions were transferred to self-supporting agencies.
3. Consolidation of local government	The Local Government Law (February 8, 1999) was implemented in conjunction with the Law on the Administrative and Territorial Reform. Local government employment has been reduced by 5,000-10,000 in 1999. The fiscal impact is estimated at Mdl 28 million in expenditures cuts in 2000.
4. Centralization of recruitment of central government civil servants	The computerization of records in the personnel departments of the ministries and departments of the Central Government is being carried out with technical assistance from TACIS. Regulations on recruitment for vacant positions in the civil service are being adopted.
B. Education
1. Partial hiring freeze in the education sector	As a result of the introduction of a new “staff-scheme” in the eduction sector in September 1999, employment fell from 148,977 in 1998 to 135,212 in 1999. Wage bill decreased from Mdl 285,3 million to Mdl 260,2 million.
2. Increase in average class size and teaching load	In 1999, the average number of students per class increased by 0.4 compared to 1998 to 24.1 students per class. The Ministry of Finance proposed amendments to article 13 (4) of the Education Law along the following lines: Increase to 20 children per group instead of 10 in crèches. Increase to 25 children per class instead of 15 in kindergartens; in primary, secondary, advanced secondary schools, increase to 25 students per class instead of 20; In colleges and universities, increase to 30 students per class instead of 25. Since September 1, 1998, school curricula have been changed to reduce the number of teaching hours per subject.
3. Streamlining of pre-school education	In 1998, there were 1,237 pre-schools with enrollment of 108,800 children, against 1,246 pre-schools with 115,996 children in 1997. In 1999 there were 1,187 pre-schools with enrollment of 92,090 children. Budget expenditure on these institutions fell from Mdl 1988 million in 1997 to Mdl 146,3 million in 1998, and to MdI 99,7 million in 1999. Employment in pre-schools fell from 31,500 in 1998 to 25,500 in 1999. In 1999, pre-school fees were increased from 30 to 50 percent of the food costs, resulting in a fall in expenditures of approximately Mdl 10 million.
4. Elimination of underutilized educational institutions	In 1999, the total number of educational institution (pre-schools, colleges, etc.) was reduced by 349 institutions (state budget - 22, and local budgets - 327) compared to 1998.
5. Introduction of user charges in universities and colleges	In 1999, students of vocational and professional schools received student benefits instead of free meals (Government resolution No. 71 of February 2, 1999). Government Resolution No. 367 of April 28,1999 introduced accommodation fees for students (30 percent of the accommodation costs for undergraduates, and 50 percent of the accommodation costs for post-graduates). Other resident students paid rents at full cost-recovery level. The possibility of introducing user charges is being considered.
	Contract students increased from 23,382 in 1998 to 28,862 in 1999 (by 5,280). As a result their out-of-pocket payments rose by Mdl 33,7 million (from Mdl 77,3 million in 1998 to Mdl 115,1 million in 1999.
C. Health Care
1. Restructuring of health care services	A number of village hospitals were closed, leading to a reduction in the number of hospital beds. The 1999 budget eliminated 4,000 beds in hospitals funded by local budgets, and 3,000 beds in hospitals funded by the State budget. The saving to the budget is estimated at approximately Mdl 70 million.
2. Introduction of per capita budget allocation	In 1999, budget funds for health care were estimated on per capita basis.
3. Adoption of a minimal medical services package in conformity with budgeted funds	The Law on Minimum Medical Services Guaranteed by the State No. 267-XIV was implemented on February 3, 1999. The implementation of this law was reviewed by the Government on July 2, 1999 including the goals achieved by the introduction of medical services guaranteed by the state; the regulation on paid medical services provided to the population; and the formulation of medical services charges and tariffs. The introduction of user charges is expected to yield additional Mdl 50 million in 1999 and approximately Mdl 100 million the following year.
4. Partial hiring freeze in the health care sector	Over last five years, the staff of medical institutions was reduced by 9,266 employees (10 percent), of which 3,944 in 1998. In most cases, downsizing was carried out mainly at the local level and amounted to 8,718 employees over last 5 years, including 3,944 employees in 1998. In view of the partial hiring freeze, downsizing has continued in 1999. Total employment in health care sector fell by slightly less than 10,000 in 1999, from 79,956 at the end-1998 to 69,960 at end-1999.
D. Social Assistance and Social Insurance
1. Pegging of pensions to contributions and increase in the retirement age	On January 1, 1999, the Law on Public Pensions was implemented, including a gradual increase of the retirement age and pegging pensions to length of service and contributions.
2. Elimination of privileges, and reform of targeted compensations	The new Law on targeted compensations, that limits the benefits to the most vunerable groups of the population (nine groups including 1st and 2nd degree invalids, disabled children under 16, families of those killed in service, World War II participants), was approved and came into force on June, 22 2000. It changed the mechanism of granting such benefits by providing money compensations directly to beneficiaries for utilities, electricity, natural gas, heat and fuel and covering the costs from the State budget through the Social Fund. The budget law provided Mdl 50 million to finance the heating subsidies in 2000, although the estimated cost of the scheme is around Mdl 150 million. The annual cost of the new compensation scheme is around Mdl 245 million. Government Resolution No. 569 of June 18, 1999 eliminated all effective housing and utilities privileges and transportation benefits.
3. Elimination of subsidies for milk and cattle	No funds for these purposes were budgeted for 1999 and 2000.
E. Capital Expenditures
1. Identifying key investment projects	Government Resolution No. 379 of May 4, 1999 identified specific investment projects and allocated Mdl 39.5 million in 1999 for public sector funding of investment projects with foreign participation, including the modernization of Chisinau International Airport (Mdl 22.7 million), water supply to the south of the country (Mdl 9.6 million), and rehabilitation of water supply system in the municipality of Chisinau (Mdl 7.25 million).
2. Suspension of new housing construction projects	The capital expenditure program for 1999 (Government Decision No. 379 of May 4, 1999) and 2000 does not allocate budget resources for new housing construction projects. Funding for completion of housing construction already in progress and having reached completion at more than 90 percent amounts to Mdl 2.8 million in 1999, or 4.2 percent of total investment and 71 percent less than total investment for these purposes in 1998.
3. Suspension of construction of education and health care facilities	Funding for construction of education and health care facilities was suspended. The budget allocated Mdl 1.5 million for completion of unfinished construction.
4. Suspension of construction of gas pipes in rural areas	Construction of gas pipes in rural areas was not included in the State budget investment program. It has financed primarily by residents and partly by local budgets and the social investment fund. The 1999 Budget allocated Mdl 13 million for construction of high- and medium-pressure gas pipes (56 percent of 1998 allocation).
5. Creation of a data base of government guarantees and loans in the Ministry of Finance	In 1993–1998, government guarantees for domestic loans were issued at a total of Mdl 589.1 million in accordance with parliament and government resolutions. As of July 1, 1999, Mdl 387.6 million were withdrawn from the budget, Mdl 338.6 million were repaid, and debt of economic agents to the Ministry of Finance amounts to Mdl 97 million. Article 5 of the 1999 Budget Law prohibits the issuance of new government guarantees to economic agents for domestic and foreign loans.

A. Wages and Public Sector Employment
1. Partial hiring freeze in the public sector	Total employment in public sector institutions was cut from 309,300 in January, 1999 to 284,676 in January 2000. Law No. 96 of July 16, 1998 provided for a reduction of employment in public sector institutions by cutting vacant positions and introducing a hiring freeze in these institutions. Additional measures were introduced by Government Resolution. “Additional measures to ensure the execution of the 1999 Budget,” No. 28 of January 20, 1999.
2. Consolidation of ministries and departments, and elimination of public sector functions	In the context of the administrative and territorial reform, the structure and staffing of local departments of ministries and government departments are being reviewed, overlapping functions are being eliminated, and certain functions were transferred to self-supporting agencies.
3. Consolidation of local government	The Local Government Law (February 8, 1999) was implemented in conjunction with the Law on the Administrative and Territorial Reform. Local government employment has been reduced by 5,000-10,000 in 1999. The fiscal impact is estimated at Mdl 28 million in expenditures cuts in 2000.
4. Centralization of recruitment of central government civil servants	The computerization of records in the personnel departments of the ministries and departments of the Central Government is being carried out with technical assistance from TACIS. Regulations on recruitment for vacant positions in the civil service are being adopted.
B. Education
1. Partial hiring freeze in the education sector	As a result of the introduction of a new “staff-scheme” in the eduction sector in September 1999, employment fell from 148,977 in 1998 to 135,212 in 1999. Wage bill decreased from Mdl 285,3 million to Mdl 260,2 million.
2. Increase in average class size and teaching load	In 1999, the average number of students per class increased by 0.4 compared to 1998 to 24.1 students per class. The Ministry of Finance proposed amendments to article 13 (4) of the Education Law along the following lines: Increase to 20 children per group instead of 10 in crèches. Increase to 25 children per class instead of 15 in kindergartens; in primary, secondary, advanced secondary schools, increase to 25 students per class instead of 20; In colleges and universities, increase to 30 students per class instead of 25. Since September 1, 1998, school curricula have been changed to reduce the number of teaching hours per subject.
3. Streamlining of pre-school education	In 1998, there were 1,237 pre-schools with enrollment of 108,800 children, against 1,246 pre-schools with 115,996 children in 1997. In 1999 there were 1,187 pre-schools with enrollment of 92,090 children. Budget expenditure on these institutions fell from Mdl 1988 million in 1997 to Mdl 146,3 million in 1998, and to MdI 99,7 million in 1999. Employment in pre-schools fell from 31,500 in 1998 to 25,500 in 1999. In 1999, pre-school fees were increased from 30 to 50 percent of the food costs, resulting in a fall in expenditures of approximately Mdl 10 million.
4. Elimination of underutilized educational institutions	In 1999, the total number of educational institution (pre-schools, colleges, etc.) was reduced by 349 institutions (state budget - 22, and local budgets - 327) compared to 1998.
5. Introduction of user charges in universities and colleges	In 1999, students of vocational and professional schools received student benefits instead of free meals (Government resolution No. 71 of February 2, 1999). Government Resolution No. 367 of April 28,1999 introduced accommodation fees for students (30 percent of the accommodation costs for undergraduates, and 50 percent of the accommodation costs for post-graduates). Other resident students paid rents at full cost-recovery level. The possibility of introducing user charges is being considered.
	Contract students increased from 23,382 in 1998 to 28,862 in 1999 (by 5,280). As a result their out-of-pocket payments rose by Mdl 33,7 million (from Mdl 77,3 million in 1998 to Mdl 115,1 million in 1999.
C. Health Care
1. Restructuring of health care services	A number of village hospitals were closed, leading to a reduction in the number of hospital beds. The 1999 budget eliminated 4,000 beds in hospitals funded by local budgets, and 3,000 beds in hospitals funded by the State budget. The saving to the budget is estimated at approximately Mdl 70 million.
2. Introduction of per capita budget allocation	In 1999, budget funds for health care were estimated on per capita basis.
3. Adoption of a minimal medical services package in conformity with budgeted funds	The Law on Minimum Medical Services Guaranteed by the State No. 267-XIV was implemented on February 3, 1999. The implementation of this law was reviewed by the Government on July 2, 1999 including the goals achieved by the introduction of medical services guaranteed by the state; the regulation on paid medical services provided to the population; and the formulation of medical services charges and tariffs. The introduction of user charges is expected to yield additional Mdl 50 million in 1999 and approximately Mdl 100 million the following year.
4. Partial hiring freeze in the health care sector	Over last five years, the staff of medical institutions was reduced by 9,266 employees (10 percent), of which 3,944 in 1998. In most cases, downsizing was carried out mainly at the local level and amounted to 8,718 employees over last 5 years, including 3,944 employees in 1998. In view of the partial hiring freeze, downsizing has continued in 1999. Total employment in health care sector fell by slightly less than 10,000 in 1999, from 79,956 at the end-1998 to 69,960 at end-1999.
D. Social Assistance and Social Insurance
1. Pegging of pensions to contributions and increase in the retirement age	On January 1, 1999, the Law on Public Pensions was implemented, including a gradual increase of the retirement age and pegging pensions to length of service and contributions.
2. Elimination of privileges, and reform of targeted compensations	The new Law on targeted compensations, that limits the benefits to the most vunerable groups of the population (nine groups including 1st and 2nd degree invalids, disabled children under 16, families of those killed in service, World War II participants), was approved and came into force on June, 22 2000. It changed the mechanism of granting such benefits by providing money compensations directly to beneficiaries for utilities, electricity, natural gas, heat and fuel and covering the costs from the State budget through the Social Fund. The budget law provided Mdl 50 million to finance the heating subsidies in 2000, although the estimated cost of the scheme is around Mdl 150 million. The annual cost of the new compensation scheme is around Mdl 245 million. Government Resolution No. 569 of June 18, 1999 eliminated all effective housing and utilities privileges and transportation benefits.
3. Elimination of subsidies for milk and cattle	No funds for these purposes were budgeted for 1999 and 2000.
E. Capital Expenditures
1. Identifying key investment projects	Government Resolution No. 379 of May 4, 1999 identified specific investment projects and allocated Mdl 39.5 million in 1999 for public sector funding of investment projects with foreign participation, including the modernization of Chisinau International Airport (Mdl 22.7 million), water supply to the south of the country (Mdl 9.6 million), and rehabilitation of water supply system in the municipality of Chisinau (Mdl 7.25 million).
2. Suspension of new housing construction projects	The capital expenditure program for 1999 (Government Decision No. 379 of May 4, 1999) and 2000 does not allocate budget resources for new housing construction projects. Funding for completion of housing construction already in progress and having reached completion at more than 90 percent amounts to Mdl 2.8 million in 1999, or 4.2 percent of total investment and 71 percent less than total investment for these purposes in 1998.
3. Suspension of construction of education and health care facilities	Funding for construction of education and health care facilities was suspended. The budget allocated Mdl 1.5 million for completion of unfinished construction.
4. Suspension of construction of gas pipes in rural areas	Construction of gas pipes in rural areas was not included in the State budget investment program. It has financed primarily by residents and partly by local budgets and the social investment fund. The 1999 Budget allocated Mdl 13 million for construction of high- and medium-pressure gas pipes (56 percent of 1998 allocation).
5. Creation of a data base of government guarantees and loans in the Ministry of Finance	In 1993–1998, government guarantees for domestic loans were issued at a total of Mdl 589.1 million in accordance with parliament and government resolutions. As of July 1, 1999, Mdl 387.6 million were withdrawn from the budget, Mdl 338.6 million were repaid, and debt of economic agents to the Ministry of Finance amounts to Mdl 97 million. Article 5 of the 1999 Budget Law prohibits the issuance of new government guarantees to economic agents for domestic and foreign loans.

A. Wages and Public Sector Employment
1. Partial hiring freeze in the public sector	Total employment in public sector institutions was cut from 309,300 in January, 1999 to 284,676 in January 2000. Law No. 96 of July 16, 1998 provided for a reduction of employment in public sector institutions by cutting vacant positions and introducing a hiring freeze in these institutions. Additional measures were introduced by Government Resolution. “Additional measures to ensure the execution of the 1999 Budget,” No. 28 of January 20, 1999.
2. Consolidation of ministries and departments, and elimination of public sector functions	In the context of the administrative and territorial reform, the structure and staffing of local departments of ministries and government departments are being reviewed, overlapping functions are being eliminated, and certain functions were transferred to self-supporting agencies.
3. Consolidation of local government	The Local Government Law (February 8, 1999) was implemented in conjunction with the Law on the Administrative and Territorial Reform. Local government employment has been reduced by 5,000-10,000 in 1999. The fiscal impact is estimated at Mdl 28 million in expenditures cuts in 2000.
4. Centralization of recruitment of central government civil servants	The computerization of records in the personnel departments of the ministries and departments of the Central Government is being carried out with technical assistance from TACIS. Regulations on recruitment for vacant positions in the civil service are being adopted.
B. Education
1. Partial hiring freeze in the education sector	As a result of the introduction of a new “staff-scheme” in the eduction sector in September 1999, employment fell from 148,977 in 1998 to 135,212 in 1999. Wage bill decreased from Mdl 285,3 million to Mdl 260,2 million.
2. Increase in average class size and teaching load	In 1999, the average number of students per class increased by 0.4 compared to 1998 to 24.1 students per class. The Ministry of Finance proposed amendments to article 13 (4) of the Education Law along the following lines: Increase to 20 children per group instead of 10 in crèches. Increase to 25 children per class instead of 15 in kindergartens; in primary, secondary, advanced secondary schools, increase to 25 students per class instead of 20; In colleges and universities, increase to 30 students per class instead of 25. Since September 1, 1998, school curricula have been changed to reduce the number of teaching hours per subject.
3. Streamlining of pre-school education	In 1998, there were 1,237 pre-schools with enrollment of 108,800 children, against 1,246 pre-schools with 115,996 children in 1997. In 1999 there were 1,187 pre-schools with enrollment of 92,090 children. Budget expenditure on these institutions fell from Mdl 1988 million in 1997 to Mdl 146,3 million in 1998, and to MdI 99,7 million in 1999. Employment in pre-schools fell from 31,500 in 1998 to 25,500 in 1999. In 1999, pre-school fees were increased from 30 to 50 percent of the food costs, resulting in a fall in expenditures of approximately Mdl 10 million.
4. Elimination of underutilized educational institutions	In 1999, the total number of educational institution (pre-schools, colleges, etc.) was reduced by 349 institutions (state budget - 22, and local budgets - 327) compared to 1998.
5. Introduction of user charges in universities and colleges	In 1999, students of vocational and professional schools received student benefits instead of free meals (Government resolution No. 71 of February 2, 1999). Government Resolution No. 367 of April 28,1999 introduced accommodation fees for students (30 percent of the accommodation costs for undergraduates, and 50 percent of the accommodation costs for post-graduates). Other resident students paid rents at full cost-recovery level. The possibility of introducing user charges is being considered.
	Contract students increased from 23,382 in 1998 to 28,862 in 1999 (by 5,280). As a result their out-of-pocket payments rose by Mdl 33,7 million (from Mdl 77,3 million in 1998 to Mdl 115,1 million in 1999.
C. Health Care
1. Restructuring of health care services	A number of village hospitals were closed, leading to a reduction in the number of hospital beds. The 1999 budget eliminated 4,000 beds in hospitals funded by local budgets, and 3,000 beds in hospitals funded by the State budget. The saving to the budget is estimated at approximately Mdl 70 million.
2. Introduction of per capita budget allocation	In 1999, budget funds for health care were estimated on per capita basis.
3. Adoption of a minimal medical services package in conformity with budgeted funds	The Law on Minimum Medical Services Guaranteed by the State No. 267-XIV was implemented on February 3, 1999. The implementation of this law was reviewed by the Government on July 2, 1999 including the goals achieved by the introduction of medical services guaranteed by the state; the regulation on paid medical services provided to the population; and the formulation of medical services charges and tariffs. The introduction of user charges is expected to yield additional Mdl 50 million in 1999 and approximately Mdl 100 million the following year.
4. Partial hiring freeze in the health care sector	Over last five years, the staff of medical institutions was reduced by 9,266 employees (10 percent), of which 3,944 in 1998. In most cases, downsizing was carried out mainly at the local level and amounted to 8,718 employees over last 5 years, including 3,944 employees in 1998. In view of the partial hiring freeze, downsizing has continued in 1999. Total employment in health care sector fell by slightly less than 10,000 in 1999, from 79,956 at the end-1998 to 69,960 at end-1999.
D. Social Assistance and Social Insurance
1. Pegging of pensions to contributions and increase in the retirement age	On January 1, 1999, the Law on Public Pensions was implemented, including a gradual increase of the retirement age and pegging pensions to length of service and contributions.
2. Elimination of privileges, and reform of targeted compensations	The new Law on targeted compensations, that limits the benefits to the most vunerable groups of the population (nine groups including 1st and 2nd degree invalids, disabled children under 16, families of those killed in service, World War II participants), was approved and came into force on June, 22 2000. It changed the mechanism of granting such benefits by providing money compensations directly to beneficiaries for utilities, electricity, natural gas, heat and fuel and covering the costs from the State budget through the Social Fund. The budget law provided Mdl 50 million to finance the heating subsidies in 2000, although the estimated cost of the scheme is around Mdl 150 million. The annual cost of the new compensation scheme is around Mdl 245 million. Government Resolution No. 569 of June 18, 1999 eliminated all effective housing and utilities privileges and transportation benefits.
3. Elimination of subsidies for milk and cattle	No funds for these purposes were budgeted for 1999 and 2000.
E. Capital Expenditures
1. Identifying key investment projects	Government Resolution No. 379 of May 4, 1999 identified specific investment projects and allocated Mdl 39.5 million in 1999 for public sector funding of investment projects with foreign participation, including the modernization of Chisinau International Airport (Mdl 22.7 million), water supply to the south of the country (Mdl 9.6 million), and rehabilitation of water supply system in the municipality of Chisinau (Mdl 7.25 million).
2. Suspension of new housing construction projects	The capital expenditure program for 1999 (Government Decision No. 379 of May 4, 1999) and 2000 does not allocate budget resources for new housing construction projects. Funding for completion of housing construction already in progress and having reached completion at more than 90 percent amounts to Mdl 2.8 million in 1999, or 4.2 percent of total investment and 71 percent less than total investment for these purposes in 1998.
3. Suspension of construction of education and health care facilities	Funding for construction of education and health care facilities was suspended. The budget allocated Mdl 1.5 million for completion of unfinished construction.
4. Suspension of construction of gas pipes in rural areas	Construction of gas pipes in rural areas was not included in the State budget investment program. It has financed primarily by residents and partly by local budgets and the social investment fund. The 1999 Budget allocated Mdl 13 million for construction of high- and medium-pressure gas pipes (56 percent of 1998 allocation).
5. Creation of a data base of government guarantees and loans in the Ministry of Finance	In 1993–1998, government guarantees for domestic loans were issued at a total of Mdl 589.1 million in accordance with parliament and government resolutions. As of July 1, 1999, Mdl 387.6 million were withdrawn from the budget, Mdl 338.6 million were repaid, and debt of economic agents to the Ministry of Finance amounts to Mdl 97 million. Article 5 of the 1999 Budget Law prohibits the issuance of new government guarantees to economic agents for domestic and foreign loans.

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Abstract

VI. Current Account Determination in Moldova55

A. Introduction

B. Brief Literature Review

C. The Methodology

The VAR Model

The Variance Decomposition Analysis

D. The Data

Data Sources

The Unit Root Properties of the Data

E. The Results

The VAR Analysis

Variance Decomposition Analysis

F. Conclusions

References

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VI. Current Account Determination in Moldova⁵⁵