IMF: the country is hampered by the labor market and misuse of funds
The IMF Board of Directors agreed with the main conclusions of the Fund’s experts, who at the end of last year finalized the consultations under the fourth article of the IMF agreement and presented the relevant evaluation report. The Moldovan authorities agreed to its publication.
Moldova faces long-standing problems, including “high emigration, low competitiveness, and limited institutional capacity.” EU accession and the Economic Growth Plan provide an opportunity to address these challenges.
To seize this opportunity, Moldova needs “ambitious reforms to address structural problems and sound policies to increase resilience and maintain macroeconomic stability.” state IMF experts state.
What does economic growth depend on?
“In the medium term, the economy will grow at a moderate pace: 2.7% in 2025 and 2.3% in 2026, “supported by a good harvest, strong domestic demand and substantial EU funding,” the report says. Investment and reforms “aimed at increasing productivity” will remain the growth driver.
A significant brake, according to the Fund, is the situation on the labor market, which remains “not entirely favorable.” As for inflation, “the situation looks better. The IMF is also concerned about the situation in the banking sector, the real estate market and the country’s energy security.
Strong credit growth and soaring housing prices “require close attention.” Strengthening measures aimed at protecting borrowers will help contain risks, the fund believes.
The IMF also reassures the authorities that “renewed governance reforms are critical to strengthening the business environment and protecting public resources.”
The main risks are “related to the war in Ukraine and other geopolitical events, as well as delays in the implementation of the EU Growth Plan or the misuse of the financing provided”.
