IMF Considers Lending Money to Moldova: Talks Ongoing

Moldovan officials have asked the IMF for loan assistance, but the international body is reviewing the Eastern European nation’s broken financial system before approval, according to Radio Free Europe.

The government has contended with various corruption scandals, including $1 billion missing from the banking sector. Moldovan authorities will meet with International Monetary Fund (IMF) officials until the end of this week.

Moldovan officials have asked the IMF for loan assistance, but the international body is reviewing the Eastern European nation’s broken financial system before approval, according to Radio Free Europe.

The government has contended with various corruption scandals, including $1 billion missing from the banking sector. Moldovan authorities will meet with International Monetary Fund (IMF) officials until the end of this week.

Moldovan leaders face a tough road ahead when it comes to loan qualification, but they stand a good chance of approval if they agree to IMF directives. Moldova is also relying on neighboring countries, such as Romania, to finance the government. Protests have erupted throughout the country in reaction to corruption and an entrenched monopoly system that stifles innovation. The economy underwent a recession in the beginning of 2015, and 2016 will prove to be another lackluster year.

Moldova’s output has fallen for various reasons, most notably weak exports, a downtrodden world economy, and agricultural failures. Moldova’s economy was well diversified when under Soviet control, but privatization efforts have fueled a system where oligarchs control much of the economy.

Moldova has since struggled to compete in the world market because of corrupt governance and lacking foreign investment, eventually becoming one of the poorest nations in Europe that relies on the Russian economy to stay afloat. Moldova, however, is seeking to pivot to the West and the IMF, but Moldovan leaders are caught between East and West.

With that, Moldova must instill new policies to breathe new life into the economy, and policymakers could begin by reforming the labor market, notes The World Bank. Moreover, IMF convoy Ivanna Vladkova-Hollar suggested that Moldova’s banking system needs to operate within regulated parameters.

She further stated that the banking system must operate without interference, but this is easier said than done, as too many special interest groups have access to the treasury in secret. No one is certain about the missing funds, but some suspect that oligarchs stole the money. The looting of the treasury is dire to the point where the government may not be able to pay state workers in due time.

The current system primarily benefits the few on the top while the poor and working classes are left behind, and the public will not see relief in the foreseeable future. Protesters have demanded the resignations of government officials while requesting a snap election, and many protesters have clashed with police.

Further, Prime Minister Pavel Filip has close ties to Moldova’s elite, and many do not believe his administration will make the necessary reforms that could save the economy.