The International Monetary Fund (IMF) has approved the disbursement of the second tranche of funding to Moldova worth $21.5 million on the grounds of a stronger-than-expected growth. In November, the IMF wrapped up a 3-year-long program for Moldova worth about $178 million, $36 million of which was made immediately available for the country. The IMF said in a statement that “growth has returned and authorities remain committed to sound economic management,” while also predicting 4.5% growth this year. The Washington-based organization moreover concluded that “the program is broadly on track, enjoys strong country ownership, and is supported by the firm commitment of policymakers to sound economic management.”
Moldova has been stuck in an economic and political crisis since 2014 when around $1 billion – almost one-eighth of the country’s economic output – went missing from the country’s banking system. The EU has pledged to help Moldova with €100 million of aid in addition to the IMF’s contribution and other multilateral programs. €60 million will be provided in the form of loans and the remainder in grants. The EU’s long-term strategy is to seek to help Moldova achieve economic stability and pursue reforms.
The financing will be monitored by the European Commission and the European External Action Service and the disbursement of the funds would be dependent on Moldova respecting human rights, the rule of law and democratic principles. The EU’s assistance will also be governed by a memorandum of understanding between Moldova and the EU Commission, which could be a potential hurdle since Moldova’s pro-Russian President, Igor Dodon, has previously announced that he could scrap an association deal with the bloc.