July 10, 2019 / 10:16 AM / 2 months ago

New Moldovan government, IMF reach agreement on loan review

CHISINAU (Reuters) - The International Monetary Fund and new Moldovan government have reached a staff-level agreement on its IMF-supported economic programme, including tax compliance and banking reforms, to access another tranche of cash, the IMF said on Wednesday.

The IMF and the former Soviet country agreed the $183 million three-year loan programme in November 2016.

Completion of the review will make available about $46.5 million and most of the sum will replenish currency reserves of Moldovan central bank.

The Fund said in a statement that Moldova had to implement “agreed prior actions on ensuring the sustainability of public finances, improving tax compliance, and advancing the banking sector rehabilitation”.

It also said decisive steps to fight corruption and recover assets stolen in the 2014 bank fraud would be critical to maintain macroeconomic stability.

In 2015, Moldova’s negotiations with the IMF and the European Union on funding were disrupted when it emerged that the equivalent of an eighth of national output had disappeared from Moldova’s banking system, triggering an economic and political crisis.

The new government headed by Maia Sandu, a Harvard-educated former World Bank economist, was formed in June by the pro-European Union ACUM bloc and the Russian-backed Socialist Party after months of political uncertainty.

Reporting by Alexander Tanas; Writing by Pavel Polityuk; Editing by Alison Williams

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