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The IMF forecasts that Moldova's real GDP will shrink by 1.5% in 2022.

The IMF forecasts that Moldova's real GDP will shrink by 1.5% in 2022.

The head of the International Monetary Fund's mission Ruben Atoyan said this as of the end of discussions with the Moldovan authorities in the context of the second review of the IMF funded program through ECF (Extended Credit Facility) and EFF (Extended Fund Facility) lending facilities. Ruben Atoyan noted that the consequences of the war in Ukraine continue to affect activity in Moldova's economy. According to IMF forecasts, the real GDP of Moldova will decrease by 1.5% in 2022, as higher prices lead to lower disposable income of the population, and the deterioration of confidence in the future affects investments. The IMF notes that inflation reached 34.6% in October, reflecting still high energy and food prices, but is expected to fall in the coming months. Ruben Atoyan stressed that public finances remained resilient due to higher-than-expected revenues from corporate income tax and value-added tax collections, on the back of significant external financing inflows, as well as shortfalls in current and capital spending. Thanks to the continuous monitoring of risks in the financial sector and improvement of the set of macroprudential instruments, banks remain well capitalized, profitable, and generally liquid, and excessive credit growth has stopped. The head of the IMF mission noted that the data-driven and forward-looking monetary policy tightening decisions by the NBM have helped contain secondary effects associated with imported inflation and supply disruptions. While the expected easing of inflationary pressures in the short term should create room for more flexible monetary policy, the NBM will still need to demonstrate a willingness to act accordingly in the event that high inflation proves more persistent. According to him, since the external environment remains unclear, the NBM intends to continue to maintain a flexible exchange rate and intervention in the foreign exchange market will be limited, aiming to smooth out excessive market volatility and prevent market disorganization. // 01.12.2022 – InfoMarket

News on the subject

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