Moldovan government approved credit agreements with Russian Federation, IMF

Chisinau, 21 April /MOLDPRES/- The Moldovan government held a meeting today and approved two projects on the ratification of the credit agreements with the Russian Federation and the International Monetary Fund (IMF).

The government's decisions come after the end of last week, in Russia, the Agreement for sovereign credit of 200 million euros offered by Russia was signed, and the IMF Board of Directors approved the budget support of 235 million dollars for Moldova.

Prime Minister Ion Chicu said that the two credits are very necessary for our country in the extremely difficult conditions caused by the COVID-19 pandemic.

Thus, according to the provisions of the Agreement between the governments of the Republic of Moldova and Russia, our country will receive a sovereign state loan worth two hundred million euros. This loan will be disbursed in two installments. The first amounting to one hundred million euros within no more than 30 days from the date of entry into force of this agreement, and the second tranche worth one hundred million euros not later than 31 October 2020. For this loan, the Republic of Moldova commits to pay an interest rate of 2% per year, and the maturity of the loan is 11 years. According to the prime minister, "this is a classic financing agreement, without hidden details and speculation, which the Republic of Moldova is in great need now."

Also, the emergency loan, worth 235 million dollars, approved by the Board of Directors of the International Monetary Fund, will allow, according to the prime minister, "to finance over half of the budget deficit this year". "This means that we will be able to pay the salaries of teachers, doctors, police officers and other state employees," Chicu said.

On 17 April, the government approved the draft amendment to the budget law for 2020. The need to amend occurred as a result of assessing the economic effects of the measures imposed in managing the epidemiological situation.

Initially, the national budget was formed taking into account GDP growth in 2020 by 3.8%, compared to 2019. The effects of the COVID-19 pandemic on global, regional and national economic processes determined the need to reassess the evolution of economic indicators and to recalculate the national public budget based on a 3% drop in GDP in 2020, which implies a reduction of budget revenues by 6.338 billion lei.

Under the new conditions, the budget deficit will amount to 15.975 billion lei or 7.52% of GDP.