Moldova has to fulfill 12 conditions in order to receive a $170.8 million external state loan from the IMF under a new mechanism of financing resilience and development.
This is stated in the Finance Ministry's information note to the draft law on the attraction of this external state loan from the IMF. It is noted that on December 6, 2023, the IMF Executive Board approved for Moldova a new Resilience and Sustainability Facility (RSF) program - a Funding Mechanism for Resilience and Long-Term Sustainability totaling $170.8 million. According to the IMF Board of Directors' report for December 2023, Moldova is to undertake 12 reform measures to receive funds from the IMF under the new Resilience and Sustainability Facility. These include the adoption of the Law on Climate Action to ensure low-carbon development and climate resilience, and the establishment of a National Commission on Climate Change within the Prime Minister's Office to manage climate change with clear tasks, responsibilities, and procedures (including regular meetings and reports) defined in a relevant government decree (March 2024). In addition, the Cabinet should approve a disaster risk management (DRM) program that covers the full range of the Sendai Framework and defines an institutional structure with clear roles and responsibilities at the national and sub-national levels, including the allocation of roles for DRM coordination and strategic planning in the Prime Minister's Office (July 2024). In addition, the government should develop and disseminate disaster risk and vulnerability maps, including information on how and where climate hazards may affect territories and regions, to assess risks and vulnerabilities of populations, infrastructure assets, sectors, and the economy/business (July 2025). At the same time, the Ministry of Energy is required to determine the cost recovery rate for electricity and natural gas supply (which fully reflects operating and capital costs), identify any mismatch between tariff and cost recovery, taking into account tax costs, conduct a distributional impact assessment and close any gap by adjusting the tariff or by compensating the transparently operating company from the budget (July 2024). It is also envisaged that starting from the 2024-2025 heating season, in coordination with the World Bank and other development partners, the Ministry of Labor and Social Protection will be tasked to administer the enforcement of payments to energy suppliers and provide targeted cash transfers to final beneficiaries (July 2024). It is planned that, based on the results of the ongoing pilot project to collect information on smart meters, the Ministry of Energy will review options for tariff differentiation (e.g. day-night tariff) as a tool to manage demand fluctuations to facilitate balancing, including in the context of renewable energy integration (January 2025). At the same time, the government should include climate change impacts and vulnerability assessments in appraisal (and project selection) methodologies (July 2024). The Ministry of Environment must review and provide a written opinion on the climate impacts and vulnerabilities of the projects and portfolio of projects included in the budget request (January 2025). The Ministry of Finance will need to report on the allocation of climate-related expenditures at the budget stage, report on the execution of climate-related expenditures, and include an assessment of climate risks in the budget risk report, including in relation to the financial risk caused by natural disasters to the population and infrastructure of state-owned enterprises (January 2025). It is planned to establish an inter-ministerial coordination committee (including NBM, Ministry of Finance, Ministry of Economic Development and Digitalization, National Financial Market Commission, Moldovan Banks Association etc.) for climate change financing (March 2024). At the same time, the National Bank of Moldova should develop, adopt and start the implementation of the Sustainable Finance Strategy ("Roadmap") and Action Plan for the financial sector of Moldova (March 2024). In addition, the NBM should develop a preliminary draft of the Taxonomy of Sustainable Finance and start a public consultation process for the approval of the taxonomy by December 2025 (July 2025). InfoMarket reported earlier that, Moldova plans to receive an external state loan of $170.8 million from the IMF through the Sustainability and Development Finance Facility. The loan will be used to finance state budget needs. The new 22-month RSF program will support Moldova's efforts to build resilience to climate shocks, help implement reforms in the energy sector and mobilize sustainable finance. The loan will be repaid in 20 equal installments after 10.5 years from the date of each drawdown from the loan account. The repayment period of the loan is 20 years. The interest applicable on the loan under consideration will be equal to the base interest rate in SDR (Special Drawing Rights) plus a margin of 0.75pc. The servicing fee will be 0.25% of the amount allocated. The new RSF program is planned to support Moldova's investments in building resilience to climate shocks, stimulating adaptation and mitigation finance, supporting energy sector reforms, and increasing the readiness of the domestic financial sector to mobilize sustainable finance. // 16.04.2024 - InfoMarket.
