July 10, 2020 / 12:18 PM / a month ago

Moldova hopes to obtain new IMF loan in September

CHISINAU (Reuters) - Moldova hopes to secure a new loan deal with the International Monetary Fund this September and then receive the first $100 million tranche of the loan, Moldovan President Igor Dodon said on Friday.

The government is seeking external financing to support the economy during the turbulence caused by the coronavirus pandemic. The government expects that a 10-year loan could partially cover this year’s state budget deficit.

“If the two-week negotiations with the IMF mission are successful... a new three-year $550 million programme will be approved,” Dodon said on an official social media feed.

Moldova’s previous 40-month IMF Extended Credit Facility and Extended Fund Facility arrangements to support its economic and financial reform programme were approved in 2016, and the country received about $182 million.

One of Europe’s poorest countries, Moldova plunged into crisis in late 2014 after it emerged that the equivalent of one-eighth of national output had disappeared from the country’s banking system via three banks.

Squeezed between European Union member Romania and non-EU Ukraine, Moldovan politics tend to divide those who favour closer ties with the West and those who want strong ties with Moscow.

Dodon said the country aimed to receive 30 million euros from the European Union and would resume talks with Russia on a 200 million euro loan.

The Moldovan constitutional court in April blocked the disbursement of this loan, and Dodon, who favours tighter ties with Moscow, accused the opposition of provoking an economic crisis by blocking the receipt of Russian aid.

The opposition says Russia’s motivation in providing a loan is to support Dodon, who plans to run for a second term in presidential elections later this year.

The current government this month lost its majority in parliament and may be dismissed.

Former finance minister Ion Chicu became prime minister in November 2019 along with a new government composed mainly of ministers who support Dodon.

Reporting by Alexander Tanas; Writing by Pavel Polityuk; Editing by Hugh Lawson

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