March 27, 2018 / 1:33 PM / a month ago

Moldova on track to get second loan tranche worth $35 mln - IMF

CHISINAU, March 27 (Reuters) - Moldova is on track to receive a second loan tranche worth about $35 million from the International Monetary Fund, an IMF representative said on Tuesday at the end of a visit to review progress under its aid-for-reforms programme.

The IMF and the former Soviet country agreed the $183 million three-year loan programme in November 2016, after negotiations had been disrupted by a $1 billion corruption scandal that plunged the country into turmoil.

Ben Kelmanson, the head of the Fund’s Moldova mission, announced the agreement on the second tranche at a briefing in Chisinau. The IMF’s board will need to approve the disbursement.

“The Moldovan authorities continue to make progress in strengthening economic policies and addressing vulnerabilities in the banking sector,” Kelmanson said.

The IMF forecasts the economy growing 3.8 percent this year and recommends the Moldovan authorities sustain growth by strengthening the banking sector and improving regulatory frameworks, he said.

In 2015, Moldova’s negotiations with the IMF and the European Union on funding were disrupted when it emerged that the equivalent of one-eighth of national output had disappeared from Moldova’s banking system, triggering an economic and political crisis.

The shock to the banking sector caused the economy to shrink 0.5 percent in 2015, although it has since returned to growth, expanding 4.1 percent in 2016 and 4.5 percent in 2017. (Reporting by Alexander Tanas; Writing by Alessandra Prentice; Editing by Hugh Lawson)

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