OREANDA-NEWS. April 14, 2011. It is read in the International Monetary Fund’s new report World Economic Outlook. The Fund’s experts expect higher growth of Moldova’s GDP – on the level of 4.8% and the lower inflation rate – 6.3% - in 2012.

According to the preliminary data, Moldova’s GDP in 2010 grew 6.9%, totaling 71.8 billion leis (USD 6 billion) and having practically returned to the before-crisis level. Inflation in Moldova in 2010 was 8.1%. John Lipsky, IMF First Deputy Managing Director and Acting Chair, said at the end of the last week that Moldova’s economy had recovered rapidly from the 2009 recession and the outlook is encouraging.

Commenting upon the approval of SDR 50 million (USD 79) million disbursement to Moldova, John Lipsky said the authorities are making good progress toward reestablishing macroeconomic stability, promoting balanced growth, and reducing poverty in the context of the Fund-supported program. “The program is on track to restore fiscal sustainability by 2012 as planned. Building on the strong performance in 2010, the budget for 2011 appropriately advances fiscal consolidation by reducing current outlays while increasing public investment and priority social spending. Over the medium term, scaling back the oversized public sector will be key to maintaining a sound fiscal position.

The planned expansion of targeted social assistance will enhance protection of the most vulnerable and help reduce poverty further. “While inflation has declined, the economy’s strong rebound warrants a shift in the monetary stance from supporting the recovery to addressing inflation risks. The recent monetary policy tightening has been appropriate. Further tightening should be considered if the inflation outlook deteriorates and expectations are at risk of being destabilized. John Lipsky said conditions in the financial sector have improved with nonperforming loans declining and bank profitability rising.

Ongoing reforms to consolidate financial stability include improvements in crisis preparedness and debt resolution frameworks. “Further efforts are needed to improve the business climate and promote exports. Trade barriers hinder economic development and need to be removed as soon as conditions permit. Comprehensive reforms are needed to place the energy sector on a financially sustainable footing.

The planned divestment of state enterprises should help improve efficiency and attract foreign investments”, he said. Moldova’s three-year IMF program, approved on January 29, 2010, is supported by a loan of SDR 369.6 million, of which SDR 180 million were disbursed in 2010.