OREANDA-NEWS. June 12, 2009. As it was informed in the Permanent IMF Mission in Moldova, this prediction was made after the visit of the head of the IMF mission, the chief of the European department of the Fund Graeme Justice. Earlier, for 2009 the IMF predicted 5 % decline in Moldovan GDP with expectation that GDP will make 63.7 billion leis in nominal terms.

Graeme Justice noted that, as in the most countries of the region, the global economic downturn has had a serious impact on Moldova. "It is projected that in 2009 real GDP in Moldova will decline by at least 9% and there are disturbing signs of deflation", - emphasized Graeme Justice.

He noted that Moldovan exports have declined, and the foreign direct investments and remittances from the guest workers have significantly dropped. It is expected that the current account deficit in Moldova will remain high, despite the rapid decline in imports. According to the IMF experts estimates, due to the low level of the capital inflows, a high external deficit in financing is expected.

The experts of the fund believe that if Moldovan authorities do not take additional measures, in 2009 the budget deficit will increase and will exceed 11% of GDP. As Graeme Justice pointed out, massive currency interventions exceeding US 500 million for protection of leu led to the reduced competitiveness, as well as outflow of liquidity from the financial system, which has weakened the ability of the banks to lend the economy. Recently, the pressure on leu has weakened due to the lower demand for imports, what allowed NBM to buy some amount of currency at the market.

The head of IMF mission in Moldova also noted that the priority of the Moldovan authorities should be preservation of macroeconomic stability. According to him, it is essential that the Parliament urgently adopted amendments to the budget in order to balance state expenditure on consumption. In addition, during the economic recession, it is important to maintain the social costs and strengthen the investment budget to ensure rapid restoration of economic growth. Graeme Justice noted that monetary policy should be closely coordinated with the fiscal policy requiring changing legislation in this field.

According to him, if the amendments to the budget and legislation are not taken, deeper and longer recession can be expected. Graeme Justice said that the IMF is ready to support Moldova through provision of technical assistance, policy recommendations and financial aid if the new government (after the parliamentary elections) will ask about this.