The IMF mission, led by Alina Janku, which finished its visit, reached an agreement with the authorities on a new 36-month policy coordination program. To regain the fund’s confidence, the government had to agree to a strict structural framework.
Press releases following the mission include statements which outline the preliminary findings of the Fund’s experts after the country visit and negotiations. Based on the preliminary findings, the mission will prepare a report, which, subject to management approval, will be submitted to the IMF Executive Board for discussion and decision.
In a statement following the visit, mission chief Alina Iancu reports on the agreement reached and expresses confidence in the need for such a program against the backdrop of new energy threats:
“The previous IMF-supported program helped maintain stability against the backdrop of Russia’s war against Ukraine and recurrent crises. The new PCI program does not involve financing, …. but ensures the authorities’ continued commitment to macroeconomic and financial stability and sustainable growth. While the economy has recovered in 2025, the new energy shock is now constraining economic momentum and adding to inflationary pressures,” the official statement following the visit said.
Inflation pressures and slowing growth
Growth is expected to slow from a forecast 1.9% to 1.5% this year as higher energy costs and weaker external demand weigh on consumption, investment and exports.
Average annual inflation is forecast to reach 8.1% in 2026 and the current account deficit is projected to widen to 22.1% of GDP.
IMF Forecast:
- Average annual inflation is revised from 6.9% to 8.1%;
- Due to weaker external demand and higher import prices, Moldova’s current account deficit will increase from 19.6% of GDP in 2025 to 22.1% in 2026.
The fund also believes that Moldova’s prospects “depend to varying degrees on the duration and direction of the war in the East, as well as the war in Ukraine”. Too high energy costs could lead to a prolonged period of inflationary pressure, as disruptions in fertilizer and fuel markets could adversely affect agricultural production.
High levels of uncertainty and a tightening of unfavorable financial conditions could also affect investment, external remittances, and external demand. These shocks could further dampen growth and exacerbate external imbalances.
Rising fiscal execution risks and state assets
The PCI program also aims to improve the assessment of fiscal risks. The IMF is increasing pressure on public administration. The agreement includes clauses on mandatory strengthening of financial risk assessment of state-owned enterprises and protection of public money from misuse.
The risks of misuse, based on the established opinion of the Fund’s experts, arise primarily due to the slowdown in the reform of state-owned enterprises, slow privatization processes and difficulties in medium-term planning. The systems of cash and public debt management and capital expenditures require reliable budget policy measures and continuous improvement.
And here, according to IMF experts, economic statistics comes to the fore, which will help to rationally use public funds within the framework of the agreed program. The experts emphasize “improving the quality, coverage, and timeliness of economic statistics” for policy formulation.
The National Bank, as always, promised to “closely monitor the macroeconomic situation and inflation risks, as well as to use additional tools to maintain price stability” and to be guided by “the regulatory framework, supervisory principles, financial safety nets and financial stability, adhering to the recommendations of the Financial Stability Adherence Programs (FSAP) of the IMF and the World Bank”.
Voluntary conditions?
The transition to the non-financial PCI program, where IMF supervision is strengthened but there is no cheap money for reforms, only confirms the theses of former Economy Minister Alexandru Muravski and other economists about the loss of confidence in Chisinau’s financial discipline.
There is indeed little cause for pride. While Prime Minister Alexandru Munteanu positions the agreement as “a signal of confidence on the part of partners”, Muravschi considers it a manipulation. In his opinion, the non-financial format means only that the IMF is no longer willing to risk “live” money, but reserves the right of strict supervision.
The IMF confirms the economist’s logic: the non-financial PCI program is subject to exactly the same strict requirements on reforms, taxes and budget deficit reduction as the credit programs. Moldova is assuming heavy commitments and tightens its belts without a direct financial cushion from the IMF.
According to Marina Solovieva, Program Director of Expert Grup, Moldova does not really need IMF financing at the moment. But it is unknown whether this financial independence will be maintained over the next three years.
“The current account deficit is still covered by capital inflows from abroad, among which financing from the EU accounts for a considerable share. We can say that now the EU has taken over the functions of the IMF in relation to Moldova. Also, the NBM reserve assets are sufficient and can be utilized in case of increasing pressure on the foreign exchange market. Nevertheless, if the situation with a huge and growing current account deficit lasts long enough, we may need again financial support from the IMF to balance the balance of payments,” the expert believes.
