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Moldova: Recent Economic Developments Tokhir Mirzoev, IMF Resident Representative January 2011

Moldova: Recent Economic Developments Tokhir Mirzoev, IMF Resident Representative January 2011. The real sector is recovering fast. Real GDP grew 8% in Q3 (relative to 2009 Q3) and reached pre-crisis level. Nine-month real growth was 6.5% and expected to reach about 6% by year-end.

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Moldova: Recent Economic Developments Tokhir Mirzoev, IMF Resident Representative January 2011

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  1. Moldova: Recent Economic Developments Tokhir Mirzoev, IMF Resident Representative January 2011

  2. The real sector is recovering fast Real GDP grew 8% in Q3 (relative to 2009 Q3) and reached pre-crisis level. Nine-month real growth was 6.5% and expected to reach about 6% by year-end.

  3. And recovery appears broad-based. Industrial production, retail sales and international trade have picked up. (twelve-month growth rates, percent)

  4. Strong domestic demand, supported by recovering remittances, has helped the budget. End-year IMF program budget deficit target is expected to be met comfortably. (year-on-year growth rates, percent)

  5. Since last spring, 12-month inflation has been hovering at around 8% As expected, effects from energy price shocks early in the year dissipated by summer, also helped by a good harvest. (Percent)

  6. Meanwhile, financial sector conditions have improved… Credit growth resumed at healthy rates; and banks have begun cleaning up their balance sheets by writing off non-performing loans

  7. …which kept interest spreads stable, albeit still at an elevated level. (Percent)

  8. Outlook • Growthshould continue to remain strong, but its rate this year could be lower. • Inflation could rise somewhat early this year, but should decline with determined monetary policy action. • Fiscaladjustment should continue in line with recovery • Current account deficit will widen temporarily • Downside risks still remain

  9. IMF program issues • Second review under the program will take place in the first half of February • Completion of the review will unlock the next disbursement: • SDR 50 million ( about US$ 77 million) • of which SDR 15 million (about US$ 23 million) for budget support. • Key topics for upcoming negotiations: • Fiscal policy (2011 budget, MTEF, tax administration reform) • Monetary policy • Energy sector (sector restructuring and current payments) • Financial sector (insolvency and debt restructuring framework) • Other structural reforms

  10. Thank You!

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