Republic of Moldova: Third Reviews Under the Extended Credit Facility and Extended Fund Facility Arrangements and Request for Modification of Performance Criteria—Press Release; Staff Report; and Statement by the Executive Director for the Republic of Moldova
Author: International Monetary Fund. European Dept.
Publication Date:
05 Jul 2018
eISBN:
9781484365847
Language:
English
Keywords:
ISCR; CR; NBS proceeds; EFF arrangement; fund staff; priority infrastructure needs; Executive Board discussion; bank fraud; bank assets; inflation-targeting regime; NBM staff; NBM profit; Credit
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The economy strengthened in 2017. Higher-than-expected GDP growth was driven by strong domestic demand and a positive external environment.

Abstract

The economy strengthened in 2017. Higher-than-expected GDP growth was driven by strong domestic demand and a positive external environment.

Recent Economic Developments

1. Growth strengthened somewhat in 2017. Growth surprised on the upside at 4.5 percent in 2017. Domestic demand picked up sharply, largely driven by an increase in investment growth—which turned positive for the first time since the 2014 crisis—and in private consumption. Net trade was a drag on growth, with imports accelerating faster than exports (Figure 1).

Figure 1.
Figure 1.

Moldova: Real Sector Developments, 2010–18

Citation: IMF Staff Country Reports 2018, 205; 10.5089/9781484365847.002.A001

Sources: Moldovan authorities; National Bureau of Statistics of the Republic of Moldova; and IMF staff calculations.

2. Inflation slowed more quickly than expected. After peaking at 7.9 percent in late 2017, CPI inflation declined to 2.8 percent in May 2018, below the NBM’s target. Inflation fell marginally outside the inner band of the inflation consultation clause in March. The consultation between the NBM and Fund staff concluded that, while inflation had been expected to ease, the magnitude of the slowdown had surprised, driven largely by changes in regulated services (partly associated with falling input prices), and fuel prices. Previous adjustments to regulated prices have started to fade, as expected, while underlying inflation1 remains relatively stable, largely driven by the recent exchange rate appreciation (Figure 2).

Figure 2.
Figure 2.

Moldova: Money, Prices, and Interest Rates, 2011–18

Citation: IMF Staff Country Reports 2018, 205; 10.5089/9781484365847.002.A001

Sources: Moldovan authorities; and IMF staff calculations.

3. The fiscal deficit was well within the program ceiling, with priority social spending protected. The 2017 fiscal outturn was better than expected. The augmented overall deficit was 1.0 percent of GDP, due to under-execution of capital and current spending and higher than expected revenues (Figure 3). Under-execution reflects implementation delays in road transportation projects, reorganization of ministries, and delays in external financing. This pattern continued in 2018Q1, with spending lagging plans and revenues over-performing, including from CIT that grew by 42 percent year-on-year. To support those most in need, priority social spending continues to be protected under the program; and since program inception, has risen by almost 10 percent through end-2017.

Figure 3.
Figure 3.

Moldova: Fiscal Developments, 2009–2017 1/

Citation: IMF Staff Country Reports 2018, 205; 10.5089/9781484365847.002.A001

Sources: Moldovan authorities; and IMF staff calculations1/ General government overall balance. Higher education institutions are excluded from the budget from 2013. This results in a sizeable reduction of nontax revenue, offset by lower current expenditure.2/ Targets are calculated as the absolute value in lei as a percent of current GDP.

4. The financial condition of banks is stable. Financial statements indicate that banks remain highly liquid, well capitalized, and profitable (Figure 4). Depositor confidence is steady and credit growth is less negative than in 2016. The stock of nonperforming loans (NPL) for the three largest banks that are not part of foreign banking groups remained broadly stable.

Figure 4.
Figure 4.

Moldova: Banking Sector Developments, 2013–18

Citation: IMF Staff Country Reports 2018, 205; 10.5089/9781484365847.002.A001

Sources: National Bank of Moldova; and IMF staff calculations.1/ The acquisition of EXIMBANK by Veneto Banca S.p.A. in February 2018 required mandatory liquidation of NPLs and loan balances.

5. The current account deficit widened in 2017. The deterioration, to 7.9 percent of GDP, was largely driven by lower net transfers and a weaker trade balance (Figure 5). Imports were boosted by strong income growth and real effective exchange rate appreciation (by 10.3 percent in 2017). Exports were buoyed by strong agricultural production and increased manufacturing exports to the EU, reflecting the impact of FDI and new free trade agreements. These trends have continued during Q1 2018. FDI and other non-debt creating inflows helped cover the higher current account deficit, and led to a moderate appreciation. At end-April, reserves were US$2.8 billion (equivalent to 5.0 months of prospective imports).

Figure 5.
Figure 5.

Moldova: External Sector Developments, 2009–2017

Citation: IMF Staff Country Reports 2018, 205; 10.5089/9781484365847.002.A001

Sources: National Bank of Moldova; Moldovan Authorities; and IMF staff and calculations.1/ Short-term assets include portfolio investment, financial derivatives, trade credits and currency and deposits.2/ Short-term liabilities include portfolio investment, financial derivatives, trade credits, short-term loans by banks and other sectors, currency and deposits, short-term other liabilities by general government, banks and other sectors.

Outlook and Risks

6. The macroeconomic framework has been updated to reflect recent developments and prospects

  • Growth is forecast to remain solid. The growth forecast for 2018 was revised up to 3¾ percent (up from 3 percent in the second review). Rising real incomes, continued remittance inflows, and previous monetary policy easing should support private consumption, while private investment is expected to slow ahead of the elections. Net exports are forecast to remain under pressure from a stronger exchange rate, less robust agricultural production, and robust domestic demand. Over the medium term, growth is projected to be close to 4 percent. To remain at this level will require ongoing structural reforms to address challenges, including from relatively low capital stock, slow productivity growth, limited financial intermediation, the shadow economy, and adverse demographics.

  • Inflation is forecast to slow further in the near term, before returning to target in 2019. CPI inflation is expected to average under 4 percent in 2018 (down from 4.3 percent in the second review), breaching the lower bound of the range around the NBM’s target, as previous upward price-level shocks dissipate, lower regulated energy prices—including gas and electricity—feed through, and the appreciation of the exchange rate continues to weigh on prices. These downward pressures will be only partly offset by previous monetary policy easing and less slack in the economy. Inflation is then forecast to pick up notably in early 2019, exceeding 5 percent later in the year, as the effect of tariff cuts drops out of the annual comparison.

  • The current account deficit is projected to improve modestly during 2018. Large FDI-funded investment projects are expected to contribute to strong import demand during 2018. Over the medium-term, the current account deficit is expected to narrow to about 6.5 percent of GDP. FDI inflows, remittances and compensation of employees, and strong, albeit lower, other capital inflows, will contribute to further accumulation of gross international reserves. Total external and public and publicly guaranteed debt to GDP ratios are projected to gradually decline preserving Moldova’s low risk of debt distress (see IMF Country Report 17/398).

7. The outlook remains subject to a range of risks (Annex I). In the near term, there is an upside risk to growth from further momentum in domestic demand, though agricultural prospects remain uncertain and weather dependent. Program implementation could also be tested in the run-up to the November parliamentary elections, with continued progress on banking sector reforms hinging on sustained political commitment.

Program Policy Discussions

A. Making Decisive Progress to Cleanse the Financial Sector

Securing Shareholder Transparency, Fitness and Probity

Background

8. Progress is being made to ensure fitness and probity of shareholders in the largest banks. Notably:

  • Victoriabank (VB). The sale by a non-transparent shareholder of 39 percent of VB to a strategic investor (Banca Transilvania) in January 2018 represented a major milestone in efforts to cleanse the sector. The new management of VB has been certified as fit and proper by the NBM.

  • Moldova-Agroindbank (MAIB). Following the passage of laws to facilitate the sale of previously cancelled shares in systemic banks by the Government, the authorities have continued negotiations with an EBRD-led consortium for the acquisition of “problem” shares in MAIB representing 41.09 percent of the bank. Agreement on the terms of a pre-contract for this operation were concluded in early June, paving the way to conclude the transaction, which is expected in late summer.

  • Moldindconbank (MICB). Newly issued shares (replacing cancelled shares) have been valued by an international firm and offered for sale on the stock exchange. Discussions are underway with potential buyers, including strategic investors, but there is no firm buyer yet.

9. Efforts to identify concerted and unfit shareholders in the non-systemic banks have been completed. The NBM’s Bank Supervision Department finalized investigations into concerted activities and the fitness and probity of shareholders, and is following up in line with the law to ensure that all shareholders are certified as fit and proper.

10. The process for removing unfit shareholders is being strengthened. The December 2017 legal amendments of procedures for share cancelation, issuance, and sale of newly issued shares completed the first step of strengthening the framework’s legal basis and addressing decapitalization risk. However, the revised framework lacked incentives for timely action and risked remaining open-ended, requiring further action.

11. The safety, efficiency and soundness of securities’ depository is being strengthened. The verification of legal records of shares of banks and insurance companies was completed in March by the National Commission for Financial Markets (NCFM). This was a vital precondition to moving securities’ registration to a new Central Securities Depositary (CSD) from the current 11 private registries. This new framework is designed to guarantee the safety of securities and ensure their transparency, helping develop new financial market instruments.

Policies

12. The authorities are working actively to close the chapter on shareholder transparency, fitness, and probity in the largest banks. In MAIB, the authorities and the investors expect the sale transaction to be finalized later in the summer. In MICB, there are ongoing discussions investors regarding the purchase of a 64 percent share. Successful conclusion of the discussions will allow the bank to exit from temporary administration in an orderly manner (structural benchmark, reset to end-October-2018, to provide additional time to conclude discussions). The NBM has a contingency plan in place, should this approach face substantive impediments or delays that would undermine financial stability.

13. The shareholder removal process will be streamlined. The authorities agreed to adopt legal amendments to the new shareholder removal framework to incentivize effective and timely removal of unfit shareholders (prior action, previous structural benchmark), in consultation with Fund staff. The revised framework will provide for: immediate removal from effective control or decision-making of concerted or unfit shareholders; strict limits on possible recertification of existing shareholders; price incentives to facilitate sale of shares early in the process; and clear steps to deal with unsold shares while protecting bank capital and governance. In parallel, NBM will also impose sanctions and exercise special supervision.

14. Any unfit shareholders in domestic non-systemic banks will be removed, and UBOs identified. Following amendments to the shareholder removal framework, the NBM will apply legal enforcement actions as needed vis-à-vis shareholders, and take decisions that will allow it to remove any unfit shareholders in domestic non-systemic banks before end-March 2019 (proposed structural benchmark). The NBM will identify ultimate beneficiary owners (UBOs) of all qualified shareholders (≥1 percent ownership) in non-systemic domestic banks.

15. The CSD will become operational in end-October 2018. Implementation of a software platform for government securities will allow the transfer of their registry from NBM to the CSD. Following the verification of legal records of shares of banks and insurance companies, the NBM will develop a methodology to guide the transfer by October. The Supervisory Board established by the NBM will ensure effective oversight and operations of the CSD.

Completing Bank Diagnostics and Balance Sheet Clean-Up

Background

16. The NBM is finalizing bank diagnostics and follow up actions.

  • Regarding the systemic banks, in late-April, the NBM Executive Board approved the list of related party (RP) exposures for the largest three banks, ordered those banks to prepare time-bound plans for bringing RP exposures into compliance with prudential limits and subsequently NBM staff reached agreement on those plans.

  • In non-systemic banks, on-site inspections have been completed. Inspections of two small domestic banks were completed with some delay in February 2018, with those in banks that are part of foreign groups being undertaken by end-May 2018. The identification of RPs, their transactions, and exposures in these banks, is in progress.

  • The NBM developed and issued for consultation with banks guidelines for RP risk management programs to ensure appropriate risk management in the context of RP exposures.

  • Further, the NBM instructed all banks to conduct a self-assessment of corporate governance.

Policies

17. The NBM will ensure full compliance of RP exposures with prudential limits in all banks as soon as possible, and in line with the law. The NBM will ensure that credible time-bound action plans are in place for unwinding RP exposures for all domestic banks that are not part of foreign groups (proposed structural benchmark, end-July 2018). It will seek to unwind excessive exposures as quickly as possible, and in any case in line with the law, namely no longer than 24 months. In addition, during the next round of onsite inspections in the largest three banks before end-2018, the NBM will investigate counter-parties for whom there was insufficient evidence to presume relatedness during previous diagnostics.

18. To further strengthen risk management frameworks, the NBM will publish guidelines for bank RP risk management. These guidelines will include policies, procedures, and systems for identification of RPs’ transactions and exposures. The updated NBM regulation outlining the terms of on-site inspections will stipulate that the final on-site inspection report and enforcement decision by NBM should be completed within 60 days from finalizing an inspection.

Further reforms to strengthen financial sector resilience

Background

19. The non-bank financial sector is growing quickly, and needs tighter regulation and closer supervision. Households and small and medium enterprises are increasingly served by micro-credit institutions. Efforts to improve data collection on this fast-growing sector are welcome. However, the law on non-bank credit organizations, which came into force on March 30, 2018, allows micro-credit institutions to attract certain types of funds that are close substitutes to deposits in contrast to Fund staff advice. The underdeveloped prudential framework of this sector and less developed oversight offer scope for regulatory arbitrage.

20. Financial safety nets are being strengthened. The authorities are implementing recommendations of recent Fund TA on Emergency Liquidity Assistance (ELA) and are committed to updating the deposit insurance law in line with Fund recommendations. They are also preparing to transpose the legal framework for bank insolvency/liquidation from the Law on Financial Institutions to the Corporate Insolvency Law.

Policies

21. The authorities are looking to strengthen the prudential framework for the non-bank financial sector and deepen its oversight. Future reviews will consider issues related to the law on non-bank credit organizations, which should be amended to fully prohibit micro-credit institutions from attracting funds that are deposits or close substitutes. Otherwise, institutions collecting such funding should be supervised as banks. In the insurance sector, the NCFM will ensure strong governance, ownership transparency, and financial strength. Future reviews will also provide an opportunity to review the regulatory framework, in collaboration with international partners, with the intention of aligning it with European standards.

22. The authorities are looking to further strengthen financial safety nets, to complement the Bank Recovery and Resolution Law. Further reforms are needed to support crisis preparedness and management. These reforms include (i) ensuring backup funding for the Deposit Guarantee Fund (DGF), expanding coverage to corporates, and allowing support of the transfer of liabilities in liquidation; (ii) strengthening the ELA operational framework, its governance, and oversight; and (iii) improving the bank liquidation framework to facilitate orderly exit in the event of failure. The authorities agree with these priorities and also intend to maintain an administrative liquidation framework for financial institutions, in line with Fund advice.

B. Preserving Fiscal Sustainability with a Growth-Friendly Spending Orientation

Background

23. The fiscal balance continued to overperform. The augmented overall deficit at end-2017 was 1.0 percent of GDP (versus 3.2 percent targeted), due to under-execution of capital and current spending by 1.8 percent of GDP, as well as higher than expected revenues by 0.4 percent of GDP. Underspending was related to heavy reliance on external financing, and delays in project appraisal, selection, and implementation. The wage bill remained within the indicative target; domestic state arrears were virtually eliminated, marginally exceeding the indicative target by some 0.002 percent of GDP; and priority social spending was slightly below the indicative floor by about 0.03 percent of GDP. Social spending underperformed due to lower registered unemployment and lower social transfers following an increase in pension payments. A similar pattern was observed in 2018Q1, with expenditures running behind plans and revenues over performing, resulting in an augmented surplus of 0.7 percent of GDP. The risk of debt distress remains low, with PPG debt to GDP declining to 37 percent in 2017 down from close to 45 percent in 2015, and debt service to exports of goods and services remains low at 10.5 percent.

Moldova: General Government, December 2017 and March 2018

(Cumulative from the beginning of calendar year; millions of Moldovan lei)

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Source: Ministry of Finance; and IMF staff calculations

Target for December is adjusted for the shortfall between the total amount of actually disbursed and programmed onlending from external creditors to SOEs as per the TMU.

Target for March 2018 is indicative.

24. The Criminal Procedures Code was amended to grant the STS powers to establish whether tax crimes have been committed. While the STS has been operational since April 1, 2017, the powers to establish tax crimes could not be exercised without corresponding amendments to the Criminal Procedure Code. Such enabling legislation was passed on March 23, 2018, thereby allowing the STS to expand the current Division of Violations Discovery and Review to include criminal investigation attributes.

Policies

25. The 2018 Budget Amendment approved by Parliament is in line with program objectives (prior action). The deficit is expected to reach 3.5 percent of GDP, 0.2 percent higher than initially planned on the back of changes in the disbursement of expected grants. The amendment provides for an increase in priority social spending (0.1 percent of GDP), along with additional spending on roads infrastructure financed by EU grants received earlier than expected (in 2017Q4, versus 2018Q1). While the fiscal stance is somewhat more expansionary than in 2017, this is mostly due to delays in execution of essential capital projects last year. The higher capital budget in 2018 is appropriate to address Moldova’s large infrastructure needs. Current spending will be contained as expected under the program. The wage bill will be limited to 8.6 percent of GDP, while accommodating: (i) legally mandated increases in salaries and medical insurance contributions; (ii) the inclusion of various public-sector entities as budgetary institutions; and (iii) staffing costs for agencies that are implementing donor-financed projects. Tax policy measures remain broadly unchanged.

26. The authorities agreed parameters for the 2019 Budget and 2019–2021 Medium-Term Budget Framework (MTBF) in line with program commitments. Tax policy decisions will be consistent with the agreed revenue path and progressivity of the tax system, while spending decisions will accommodate infrastructure spending on roads and projects that enhance energy security and reliability. The authorities published their first Fiscal Risk Statement at end-2017, and initiated a pilot spending review in the education sector that will be finalized by end-2018. They intend to fully institutionalize spending reviews into the regular annual and medium-term budget processed over the next two MTBF cycles. Local administration reform will be advanced in 2019 to streamline funding and improve project implementation at the municipality level.

27. Efforts to unify the public wage scale in 2019 will be carefully managed. Unification will improve budget planning and management by making the salary scale of all employees in the budgetary sector more manageable and transparent. Plans include replacing non-base payments with a performance-based component to help improve service delivery. The authorities will carefully assess the budgetary impact prior to implementation of the reform, and will consider options for transitional measures to prevent possible budget slippages associated with reform.

28. The authorities are pursuing stronger measures on arrears. They plan to amend Article 67 of the Law on Public Finances and Fiscal Accountability. They would incentivize local and other authorities to contain arrears by year-end, to be able to receive financing from the state budget in the following fiscal year. Staff also advised intensifying inspection of arrears repayment and improving monitoring to facilitate their elimination.

C. Strengthening the Effectiveness of Monetary and Exchange Rate Policies

Background

29. Monetary policy has remained on hold and reserves continue to accumulate. The NBM has kept both its base rate and the required reserve ratio unchanged in recent months. Inflation has slowed sharply since its 2016 peak while, despite the volatility of headline CPI, underlying inflation has remained relatively more stable. The end-December 2017 Net International Reserves (NIR) performance criteria (PC) and end-March 2018 indicative target under the program were met.

30. Financial conditions remain tight. Although lending rates have fallen since their peak in 2016, credit growth is still in negative territory, largely due to impaired financial intermediation. Staff analysis suggests that financial conditions have been a drag on economic growth since the 2014 banking crisis, with negative credit growth being the largest contributor. This underscores the need for financial sector rehabilitation to support new lending activity.

Policies

31. The NBM remains committed to maintaining price stability, and not resisting exchange rate movements driven by fundamentals. Inflation is forecast to remain relatively low and below the lower end of the range around NBM’s target in 2018 before rising notably in 2019, with both the slowdown and the upswing largely driven by changes to regulated prices. With inflation projected to return to target within the forecast horizon, the monetary policy stance remains appropriate for now, although the authorities are carefully monitoring any signs of second round effects from cuts in regulated prices and exchange rate appreciation, or demand pressures in an election year. They are committed to acting proactively, using all available policy instruments, if the inflation outlook changes. Reflecting the updated inflation forecast, and the supply side factors driving price movements, the inflation consultation bands were revised. The NBM’s interventions in the foreign exchange market will be aimed only at smoothing excess volatility. The NIR targets set under the program are consistent with this commitment, and were revised upward to reflect higher reserves accumulation through March 2018.

32. The operational framework for monetary policy will continue to be strengthened. The NBM reduced the number of monetary policy decisions from 12 to 8 per year, freeing up resources to allow for deeper policy analysis. This change will be accompanied by a broader set of measures including: (i) refining the forecasting process to strengthen outputs and decision-making, (ii) improving coordination across agencies, and (iii) strengthening internal and external communications, including by adhering to a regular calendar of monetary policy decisions.

33. The NBM is seeking to improve the efficiency of other frameworks supporting its monetary policy and market development objectives. The authorities have requested Fund technical assistance on changing the reference currency for intervening in the foreign exchange market from the US dollar to euro. Against a backdrop of high reserve requirements, the NBM is also considering reforms to the system of reserve remuneration.

D. Addressing Other Sectoral Issues

Background

34. The structural benchmark on energy was met. A new electricity tariff methodology, which is in line with Moldova’s new Energy law and best European practice, was developed and approved by the energy regulator (ANRE) and published in the official gazette. The methodology provides for an agreed basis for determining costs, plans for capital investment, and profitability, with tariffs set, generally, annually. This important step was accomplished in agreement with the EU’s Energy Community Secretariat and in consultation with other stakeholders, including the World Bank, Civil Society Organizations, and electricity distribution companies. Following this, energy companies have submitted requests for tariff cuts of around 5 percent, in many cases reflecting lower input prices.

35. Progress recovering stolen assets in the 2014 banking fraud has been slow. After publishing a summary report produced by Kroll on December 20, 2017, the final version of Kroll’s investigation documents was transmitted to the Anti-Corruption Prosecutors Office in March 2018. These documents will serve as the basis for time-bound actions for the recovery of stolen assets.

36. Efforts to strengthen the AML/CFT frameworks are underway. The new AML Law was published in the official Gazette in February 2018. Consequently, the AML Agency has been strengthened as an independent entity under the government with operational capacity. This institutional set-up, together with upcoming regulatory and legislative changes will enable the authorities to better address ML/TF risks. MoUs on cooperation and exchange of information across all relevant domestic agencies are being concluded.

Policies

37. The authorities have committed to electricity tariffs being set in line with the new methodology. These tariffs will be fully based on the February 2018 methodology and should also reflect differences in the assessment of financial deviations (from earlier tariff requests) from April 2017-February 2018 (proposed structural benchmark end-June 2018). Setting tariffs on the basis of the new methodology will safeguard the fiscal sustainability of the sector and ensure a stable environment for investors.

38. The authorities are committed to recovering stolen assets and will move the 2014 bank fraud investigation into the recovery phase. The General Prosecutor’s Office published a high-level strategy setting out a time-bound action plan for the recovery of stolen assets (prior action, previous structural benchmark). The strategy includes an outline of responsible agencies and their coordination as well as reporting requirements, without jeopardizing ongoing recovery efforts.

39. The authorities will align AML/CFT frameworks with international standards. They will amend the legal AML/CFT frameworks to ensure effective application of proportionate and dissuasive sanctions for AML/CFT violations by banks or other reporting entities in line with the Financial Action Task Force standards. They will also issue regulations, such as those on identification of suspicious transactions and activities, terrorism financing, and politically exposed persons. The effectiveness of the AML/CFT frameworks will be assessed by MONEYVAL in October 2018 and the report is expected to be discussed in the April 2019 plenary.

Program Modalities and Capacity to Repay

A. Program Monitoring and Financing

40. Program monitoring will continue to be guided by semi-annual reviews, semi-annual and continuous performance criteria and indicative targets, and structural benchmarks. The attached Letter of Intent (LOI) and Supplemental Memorandum of Economic and Financial Policies (SMEFP) describe the authorities’ progress in implementing their economic program. The updated program conditionality is presented in the SMEFP Tables 2 and 3. A revised Technical Memorandum of Understanding (TMU) is also attached. The authorities committed to implementing three prior actions for the completion of this review:

Table 1.

Moldova: Selected Economic Indicators, 2015–2023 1/

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Sources: Moldovan authorities; and IMF staff estimates.

Data exclude Transnistria.

Includes externally financed on-lending to SOEs as of 2016.

Includes private and public and publicly guaranteed debt.

Table 2.

Moldova: Balance of Payments, 2015–2023

(Millions of U.S. dollars, unless otherwise indicated)

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

Includes revaluation changes, which were not captured by changes of gross official reserves in the BOP.

The IMF composite measures are calculated as a weighted sum of short-term debt, other portfolio liabilities, broad money, and exports in percent of GDP. Official reserves are recommended to be in the range of 100-150 percent.

Table 3a.

Moldova: General Government Budget, 2015–2023

(Millions of Moldovan lei, unless otherwise indicated)

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Sources: Moldovan authorities; and IMF staff estimates and projections.

As of 2016, capital transfers are excluded from transfers to economy and recorded under capital expenditure.

Includes banking sector resolution costs in 2016.

Augmented balance includes externally financed on-lending to SOEs.

Includes mainly central bank liabilities to the IMF.

Table 3b.

Moldova: General Government Budget, 2015–2023

(Percent of GDP, unless otherwise indicated)

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Sources: Moldovan authorities; and IMF staff estimates and projections.

As of 2016, capital transfers are excluded from transfers to economy and recorded under capital expenditure.

Includes banking sector resolution costs in 2016.

Augmented balance includes externally financed on-lending to SOEs.

Includes mainly central bank liabilities to the IMF.