1. This statement provides additional information on program implementation and presents new data on economic developments in Moldova that became available since the issuance of the staff report. The additional information does not change the thrust of the staff appraisal.
2. The prior action for the Executive Board consideration of the authorities’ request to complete the second review of the program has been carried out. On March 31, Parliament completed the passage of a 2011 budget in line with the Supplementary Memorandum of Economic and Financial Policies (SMEFP Table 3). Concurrently, Parliament passed legislation to reform sick leave benefits and phase out early retirement privileges of certain groups of public sector workers, thus completing two delayed structural benchmarks.
3. The latest available data are broadly in line with staff’s projections. Industrial production grew by nearly 10 percent in January 2011 compared to the same period in 2010 suggesting continuing robust growth. The fiscal data as of February indicate that fiscal adjustment is on track and the end-March program targets are within reach (SMEFP Table 2). Conditions in the financial sector continue to improve as well, with the banking system’s overall capital adequacy ratio remaining high at 30.1 percent in February, the NPL ratio declining to 12.7 percent, and profits steadily increasing. Discussions are ongoing between stakeholders to resolve the burden created by the failure of Investprivatbank in 2009 (Staff Report Box 1).
4. The authorities have consented to the publication of the staff report, the SMEFP, and the TMU dated March 24, 2011.