IMF MISSION: MOLDOVA'S ECONOMIC RECOVERY IS SLOWER THAN EXPECTED

The recovery of the Moldovan economy "is slower than expected, as the country continues to suffer the consequences of the war that Russia is waging in Ukraine and face difficulties in this situation, " according to a statement by IMF Mission Chief Clara Mira, following her visit to Chisinau from April 22 to May 3.

According to her, Moldova's GDP in real terms will grow by only 0.7% in 2023, which is lower than the 2% forecasted by the IMF.

"The main reason was a weaker recovery in domestic demand, especially private consumption and investment activity. The economic recovery will continue into 2024 with growth of 2.6%, again lower than previously forecast. Risks to the recovery include the possibility of further shocks in the energy sector or a new wave of refugees. Among the favorable factors, we should mention faster than expected economic growth in Moldova's trading partners, faster progress towards EU accession and acceleration of structural reforms," the head of the Mission said.

She believes that the 2024 budget "contributes to strengthening the social safety net, ensuring energy security and supporting growth-enhancing investments and reforms."

"As inflation is within the NBM's target range from November 2023 the current monetary policy is appropriate. Exchange rate flexibility and maintaining an adequate level of foreign exchange reserves will be critical if shocks are to be overcome. Monetary policy should remain focused on maintaining price stability", Clara Mira noted, expressing the opinion that the Program "is being implemented in general successfully, although some structural reforms are progressing slower than agreed."