Moldova has requested an expansion and modification of the existing program with the IMF to help cover the costs associated with the current crisis.
This was said in a statement by the staff of the International Monetary Fund on the economic consequences of the war in Ukraine. As noted in the document, the IMF Executive Board held a meeting chaired by Managing Director Kristalina Georgieva, informing the Board about the economic consequences of the war in Ukraine and the possible accelerated financial assistance to the affected countries. According to the Fund's experts, although the situation remains highly unstable and the outlook is extremely uncertain, the economic consequences are already very serious. Energy and commodity prices, including wheat and other grains, have risen sharply, adding to inflationary pressures due to supply chain disruptions and recovery from the Covid-19 pandemic. Price shocks will have an impact around the world, especially on poor households, for whom food and fuel account for a higher share of expenditures. If the conflict escalates, the economic damage will be even more devastating. Sanctions on Russia would also have a significant impact on the world economy and financial markets, with significant consequences for other countries. IMF experts emphasize that in many countries the crisis has a negative impact on both inflation and economic activity amid already heightened price pressures. Monetary authorities will need to carefully monitor the impact of rising global prices on domestic inflation in order to calibrate appropriate responses. Fiscal policy will have to support the most vulnerable households. It is noted that in Ukraine, in addition to human casualties, the economic damage is already significant. Seaports and airports are closed and damaged, and many roads and bridges are damaged or destroyed. While it is very difficult to estimate funding needs at this particular stage, it is already clear that Ukraine will face significant recovery and reconstruction costs. Ukraine has already requested $1.4 billion in emergency financing under the IMF's Rapid Financing Instrument. Staff anticipates referring this request to the Executive Board for urgent consideration. International sanctions against Russia's banking system and the exclusion of a number of banks from SWIFT have significantly undermined Russia's ability to receive payments for exports, pay for imports and participate in cross-border financial transactions. According to IMF experts, countries that have very close economic ties with Ukraine and Russia are particularly at risk of shortages and supply disruptions and are most affected by the growing influx of refugees. It is stressed that Moldova has requested an expansion and modification of the existing IMF program to help cover costs related to the current crisis, and IMF staff are actively discussing options with the Moldovan authorities. The IMF staff will continue monitoring spillover effects in other countries in the region, particularly in countries with existing IMF programs and in countries with heightened vulnerabilities or exposure to crisis. // 07.03.2022 – InfoMarket
