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Moldova, Europe and the IMFMoldova, Europe and the IMF

Thomas Richardson & Edgardo Ruggiero Thomas Richardson & Edgardo Ruggiero International Monetary FundInternational Monetary Fund

Conference:Conference:

Moldova and Europe: Bridging the GapMoldova and Europe: Bridging the GapChişinău, April 26-27, 2005Chişinău, April 26-27, 2005

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Outline of talkOutline of talk

I.I. Moldova & the IMF – backgroundMoldova & the IMF – background

II.II. Moldova & Europe – a view from Moldova & Europe – a view from the IMFthe IMF

III.III. Moldova, Europe and the IMF – the Moldova, Europe and the IMF – the way forwardway forward

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II. Moldova & the IMF – background. Moldova & the IMF – background

What is the goal of the IMF in Moldova?What is the goal of the IMF in Moldova?

Our mission Our mission is to support macroeconomic is to support macroeconomic policies that are conducive to rapid and equitable policies that are conducive to rapid and equitable economic growth, and thus poverty reduction.economic growth, and thus poverty reduction.

How do we achieve it?How do we achieve it? By providing By providing macroeconomic policy advice and technical macroeconomic policy advice and technical assistance based on best international practice, assistance based on best international practice, as well as concessional financial assistance in the as well as concessional financial assistance in the form of long term, low interest loans to the NBM, form of long term, low interest loans to the NBM, conditioned consistent implementation of good conditioned consistent implementation of good policies by the authorities.policies by the authorities.

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Moldova and the IMF:Moldova and the IMF:a short summarya short summary

Since joining the IMF in August 1992, Moldova has Since joining the IMF in August 1992, Moldova has borrowed SDR 270 million (about $420 million)borrowed SDR 270 million (about $420 million)

Most recent program was the PRGF, which was Most recent program was the PRGF, which was approved in December 2000, and expired in 2003 approved in December 2000, and expired in 2003 (after relatively poor implementation)(after relatively poor implementation)

EGPRSP approved in May 2004, discussed by IMF EGPRSP approved in May 2004, discussed by IMF and World Bank Executive Boards in November.and World Bank Executive Boards in November.

Article IV consultation – most recent discussed by Article IV consultation – most recent discussed by IMF Executive Board in February 2005: see these IMF Executive Board in February 2005: see these and other papers at and other papers at www.imf.orgwww.imf.org. .

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IIII. Moldova and Europe: . Moldova and Europe: a view from the IMFa view from the IMF

1.1. European Union as a model– European Union as a model– best best international practice described by international practice described by Acquis CommunautaireAcquis Communautaire

In areas as wide-ranging as public In areas as wide-ranging as public health / sanitation and financial sector health / sanitation and financial sector supervisionsupervision

IMF advice and EU directives broadly IMF advice and EU directives broadly agreeagree

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2.2. EU accession –EU accession – useful anchor for useful anchor for policies in prospective member statespolicies in prospective member states

EU accession itself may have been less important than the change in policies it induced in the new member states

3. Lesson for Moldova – Even without EU membership, the real

import of Europe for Moldova may be better policies and institutions (rather than transfers from Brussels)

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IIIIII. Moldova, Europe and the IMF: . Moldova, Europe and the IMF: the way forwardthe way forward

1.1. The IMF contributed to the accession The IMF contributed to the accession process for the new member states in process for the new member states in Central & East Europe:Central & East Europe:

Macroeconomic advice (annual Article IV Macroeconomic advice (annual Article IV consultations) consultations)

Lending programs (often precautionary, Lending programs (often precautionary, however) to bolster market confidencehowever) to bolster market confidence

Technical assistanceTechnical assistance

2.2. The IMF stands ready to support good The IMF stands ready to support good policies in Moldova—regardless of EU policies in Moldova—regardless of EU accession statusaccession status

Accession is less important than institutions Accession is less important than institutions and implementationand implementation

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IMF TA granted to Moldova IMF TA granted to Moldova (1994-2004, by area of TA)(1994-2004, by area of TA)

Monetary and

Financial Systems

56%

Fiscal Affairs19%

Statistics18%

Legal7%

Note: Total number of missions: 85

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IMF TA granted to Moldova IMF TA granted to Moldova (1994-2004, by year)(1994-2004, by year)

0

5

10

15

20

25

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Legal

Statistics

Fiscal Affairs

Monetary andFinancialSystems

Note: Total number of missions: 85

1010

Attendance at IMF Institute Attendance at IMF Institute Courses in Washington DC Courses in Washington DC (1992-2004)(1992-2004)

ASEM, 3

ARIA, 1

MoE, 6

MoF, 6MFA, 3

NBM, 40

Parliament, 2

Customs, 1

Note: Total number of participants: 62

Legend: NBM - National Bank of Moldova MoE - Ministry of EconomyMFA - Ministry of Foreign Affairs ASEM - Academy of Economic Studies of MoldovaMoF - Ministry of Finance ARIA - Agency for Enterprises' Restructuring

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Attendance at IMF Courses Attendance at IMF Courses at Joint Vienna Institute at Joint Vienna Institute (1992-2004)(1992-2004)

MoF, 106

ASEM, 3

Other, 12

Journalists, 17

MFA, 2

CCECC, 3

Public media officials, 2

Parliament, 18

MoL, 2

NBM, 162

MoE, 23

DSS, 10

Note: Total number of participants: 355

Legend:NBM - National Bank of Moldova MoL - Ministry of LaborMFA - Ministry of Foreign Affairs DSS - State Department of Statistics and SociologyMoF - Ministry of Finance CCECC - Center for Combating Economic Crime and CorruptionMoE - Ministry of Economy ASEM - Academy of Economic Studies of Moldova

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3.3. There are several roadmaps for Moldova There are several roadmaps for Moldova at present:at present:

EU-Moldova Action Plan EGPRSP Moldovan Village (Satul Moldovenesc) Important to ensure consistency with one

another and administrative sustainability

4. Keyword is implementation Need to establish a track record of good

polices Need to demonstrate that actions will match

declared commitments Actions must be consistent with the spirit of

these commitments

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ConclusionConclusion

The IMF stands ready to support the The IMF stands ready to support the authorities’ plans to implement the authorities’ plans to implement the EU-Moldova action planEU-Moldova action plan

Actions are more important than Actions are more important than words at this pointwords at this point• Hence, the international community, Hence, the international community,

including the EU and the Fund, are including the EU and the Fund, are looking to the authorities to take looking to the authorities to take concrete steps to implement both plansconcrete steps to implement both plans