Statement by the Staff Representative on the Republic of Moldova

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

Abstract

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

This statement provides information that has become available since the issuance of the staff report on December 7, 2017. The thrust of the staff appraisal remains unchanged.

1. All three remaining prior actions for this review have now been completed. On December 15, 2017, the Moldovan Parliament passed legislation in the following areas:

  1. Amended the laws on State Property Ownership and other relevant laws to facilitate pre-agreed back-to-back purchase and sale to fit and proper investors to safeguard financial stability;

  2. Replaced the procedures for share cancelation, issuance, and sale of newly issued shares currently in institution-specific NCFM decisions, by amending the Capital Market Law and the newly approved Banking Law; and

  3. Adopted the 2018 Budget in line with existing program commitments.

2. Data releases since the staff report was issued to the Board have generally been positive. Growth in Q3 was stronger than expected, with annual GDP growth picking up to 5.4 percent (from 2.5 percent in Q2 and 3.1 percent in Q1), driven by faster household consumption and a lower drag from net trade, as real export growth ticked up and real import growth slowed. The latest nominal trade data were also positive. CPI inflation eased from 7.9 percent to 7.3 percent in November—as food and regulated price inflation slowed—in line with expectations.