Moldova might receive over $400 million from the IMF in September 2021 subject to no conditions and a Memorandum with the Fund.
This follows from the IMF Executive Board's decision to support the proposal by IMF Managing Director Kristalina Georgieva for a new general allocation equivalent to $650 billion in Special Drawing Rights (SDRs) - the largest allocation in the history of the IMF - to address the long-term global needs for reserves during the worst crisis since the Great Depression. The SDRs received in the order of distribution will be provided to the IMF member countries in proportion to their share of quotas in the IMF. The SDR allocation is planned to help each IMF member, especially vulnerable countries, and strengthen their response to the COVID-19 crisis. Kristalina Georgieva welcomed the support of the Fund's Executive Board for her initiative, noting that now this proposal must be considered and approved by the IMF Board of Governors. “If approved, we expect the SDR allocation to be completed by the end of August,” said Kristalina Georgieva. According to her, the SDR allocation will serve as an incentive for the whole world and will increase the liquidity and reserves of all IMF member states, build confidence and help to enhance the resilience and stability of the global economy. The IMF Managing Director said that the SDR allocation in 2009 made a significant contribution to the recovery from the global financial crisis, expressing confidence that the new allocation would have an equally beneficial impact, especially in helping vulnerable countries and strengthening their response to the COVID-19crisis. It should be noted that, under the IMF’s Articles of Agreement, the Managing Director may make a proposal for a general SDR allocation if the Managing Director is satisfied that the allocation would help meet a long-term global need to supplement existing reserve assets in a manner that will avoid stagnation and deflation as well as excess demand and inflation, and there is broad support among IMF members for the allocation. Once the Managing Director’s proposal is concurred in by the Executive Board, it is submitted to the Board of Governors whose decision to approve an SDR allocation requires support by members representing an 85 percent majority of the total voting power of members that are participants in the SDR Department (currently all IMF members). SDR allocations are distributed across the IMF membership in proportion to IMF quota shares. As follows from the materials of the IMF, taking into account the share of quotas in the IMF, when distributing SDRs equivalent to $650 billion, Moldova will receive 281.8 million SDRs, which is currently equivalent to $400.72 million. It is assumed that, for example, Ukraine and Romania can expect to receive about $4.6 billion (SDR 3 billion 223.3 million) and $3.9 billion (SDR 2 708 billion), respectively. It should be noted that after the approval of the new government, Moldova will be able to start negotiations with the IMF on a new financing program. Earlier it was reported that the cost of the new 3-year cooperation program between Moldova and the IMF will amount to $558 million. However, the previous authorities did not fulfill one of the important preconditions for the approval of the new Program with the IMF, which concerned the appointment by the parliament of three vice-presidents of the National Bank. // 23.07.2021 – InfoMarket
