1 Moldova, Europe and the IMF Thomas Richardson & Edgardo Ruggiero International Monetary Fund Conference: Moldova and Europe: Bridging the Gap Chişinău, April 26-27, 2005

2 Outline of talk I. Moldova & the IMF – background II. Moldova & Europe – a view from the IMF III. Moldova, Europe and the IMF – the way forward

3 I. Moldova & the IMF – background What is the goal of the IMF in Moldova? Our mission is to support macroeconomic policies that are conducive to rapid and equitable economic growth, and thus poverty reduction. Our mission is to support macroeconomic policies that are conducive to rapid and equitable economic growth, and thus poverty reduction. How do we achieve it? By providing macroeconomic policy advice and technical assistance based on best international practice, as well as concessional financial assistance in the form of long term, low interest loans to the NBM, conditioned consistent implementation of good policies by the authorities. How do we achieve it? By providing macroeconomic policy advice and technical assistance based on best international practice, as well as concessional financial assistance in the form of long term, low interest loans to the NBM, conditioned consistent implementation of good policies by the authorities.

4 Moldova and the IMF: a short summary Since joining the IMF in August 1992, Moldova has borrowed SDR 270 million (about $420 million) Since joining the IMF in August 1992, Moldova has borrowed SDR 270 million (about $420 million) Most recent program was the PRGF, which was approved in December 2000, and expired in 2003 (after relatively poor implementation) Most recent program was the PRGF, which was approved in December 2000, and expired in 2003 (after relatively poor implementation) EGPRSP approved in May 2004, discussed by IMF and World Bank Executive Boards in November. EGPRSP approved in May 2004, discussed by IMF and World Bank Executive Boards in November. Article IV consultation – most recent discussed by IMF Executive Board in February 2005: see these and other papers at Article IV consultation – most recent discussed by IMF Executive Board in February 2005: see these and other papers at

5 II. Moldova and Europe: a view from the IMF 1. European Union as a model– best international practice described by Acquis Communautaire In areas as wide-ranging as public health / sanitation and financial sector supervision In areas as wide-ranging as public health / sanitation and financial sector supervision IMF advice and EU directives broadly agree IMF advice and EU directives broadly agree

6 2. EU accession – useful anchor for policies in prospective member states EU accession itself may have been less important than the change in policies it induced in the new member states 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)

7 III. Moldova, Europe and the IMF: the way forward 1. The IMF contributed to the accession process for the new member states in Central & East Europe: Macroeconomic advice (annual Article IV consultations) Macroeconomic advice (annual Article IV consultations) Lending programs (often precautionary, however) to bolster market confidence Lending programs (often precautionary, however) to bolster market confidence Technical assistance Technical assistance 2. The IMF stands ready to support good policies in Moldova—regardless of EU accession status Accession is less important than institutions and implementation Accession is less important than institutions and implementation

8 IMF TA granted to Moldova ( , by area of TA)

9 IMF TA granted to Moldova ( , by year)

10 Attendance at IMF Institute Courses in Washington DC ( )

11 Attendance at IMF Courses at Joint Vienna Institute ( )

12 3. There are several roadmaps for Moldova at present: EU-Moldova Action Plan EGPRSP Moldovan Village (Satul Moldovenesc)   Important to ensure consistency with one another and administrative sustainability 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

13 Conclusion The IMF stands ready to support the authorities’ plans to implement the EU-Moldova action plan The IMF stands ready to support the authorities’ plans to implement the EU-Moldova action plan Actions are more important than words at this point Actions are more important than words at this point Hence, the international community, including the EU and the Fund, are looking to the authorities to take concrete steps to implement both plansHence, the international community, including the EU and the Fund, are looking to the authorities to take concrete steps to implement both plans