OREANDA-NEWS. April 20, 2011. The Moldovan Government expects the economic growth to return to its sustainable pace of 4,5 - 5 percent in 2011 and thereafter. This is read in the letter, sent by the Moldovan authorities to Dominique Strauss-Kahn, Managing Director of the International Monetary Fund.

It reads that growth outperformed expectations in 2010, and the economic expansion is set to continue. Real GDP rebounded by 6.9 percent in 2010, more than offsetting the economic contraction of 6 percent recorded in 2009.

Expansion of domestic demand, exports, and investment are expected to drive activity in the near term, with tailwinds from trade liberalization reforms, a more favorable external environment, and improving competitiveness. The Moldovan authorities’ letter reads that strong economic recovery boosted budget revenues and helped improve the fiscal position.

In 2010, revenue significantly exceeded the program projections in nominal terms, but underperformed as percent of GDP, mainly due to high contribution to growth of the largely untaxed agriculture. Expenditure targets were also comfortably met, albeit largely due to under-spending of the capital budget caused by capacity constraints. As a result, the cash budget deficit narrowed to 2? percent of GDP in 2010, far below the program target of 5.4 percent of GDP.