This Economic Development Document highlights the Moldova 2020 National Development Strategy focus on producing a social and economic impact on various development priorities. Poverty reduction has progressed significantly during the past eight years: the national poverty rate decreased from 26.4 percent in 2008 to 9.6 percent in 2015. Remittances by emigrants and higher agricultural income, salaries, and social benefits were the major drivers of poverty reduction. The means-tested social assistance program had a significant impact. This social aid has proved to be the most efficient social protection against poverty; however, social support programs that are not means tested are ineffective.
This Joint Staff Advisory Note focuses on Republic Of Moldova’s Poverty Reduction Strategy Paper and National Development Strategy (NDS). The NDS unifies in one document the government’s poverty reduction strategy and development vision. The NDS argues that Moldova needs to add productivity-enhancing investment and exports as growth drivers to its traditional consumption-based growth model. The strong pace of growth observed in the mid-2000s was driven by domestic consumption fuelled by remittances. The NDS calls for a shift from the current consumption-based growth model toward one based on raising investments, increasing productivity and competitiveness, developing export industries, and promoting a knowledge-based society.
This paper examines the Republic of Moldova’s Fourth Review under the Poverty Reduction and Growth Facility and request for Waiver of Nonobservance of Performance Criterion. Investors have been attracted by Moldova’s low costs, and export prospects have improved with the resumption of wine exports to Russia and a new trade agreement with the European Union. Inflation is the main concern. While rising inflation partly reflects regional trends in food and energy prices, strong demand has been adding to inflation pressures.
The economic growth of Moldova continued to be strong during the Economic Growth and Poverty Reduction Strategy Paper (EGPRSP) implementation period despite external shocks. Macroeconomic management remained prudent in reducing public external debt. The government has approved National Development Strategy (NSD) (PRSP II), which aims to unify the reduction strategy and development vision. The Joint Staff Advisory Note (JSAN) emphasized the need for strengthening strategy and its effective implementation. It also stressed the need to maintain a macroeconomic framework, ensure better strategic linkages between annual budgets, medium-term expenditure framework (MTEF) and Poverty Reduction Strategy Paper (PRSP), restructuring of public finances, and strengthening the target efficiency of social assistance.
This Joint Staff Advisory Note provides IMF staff’s assessment of the Moldova authorities’ first Annual Evaluation Report (AER), which covers the period from late 2004 to early 2006. Broadly, the AER provides a candid assessment of the accomplishments and shortcomings of the past year, focusing on outcomes rather than inputs. It points to evidence of continued poverty reduction, but also highlights areas where policy implementation has been slower than originally envisaged. The AER also presents an updated description of the dynamics of poverty and inequality in Moldova.
This paper discusses the 2006 Article IV Consultation for Moldova and Request for a Three-Year Arrangement Under the Poverty Reduction and Growth Facility. The economic growth of Moldova has continued to be robust, although the drivers of growth—household consumption and construction—remain heavily dependent on inflows of remittances, as well as strong wage growth. Real GDP growth in 2005 was more than 7 percent, as it has been since early in the decade. Inflation has gradually abated. The trade balance deteriorated significantly in 2005, owing in large part to the impact of higher energy prices.
This Joint Staff Advisory Note (JSAN) reviews Moldova’s Economic Growth and Poverty Reduction Strategy Paper (EGPRSP) Progress Report. Moldova’s EGPRSP is an important step toward achieving sustainable economic growth and poverty reduction. This JSAN highlights key characteristics of the EGPRSP. It provides IMF staff advice on key priorities for strengthening the EGPRSP and for ensuring effective implementation. It also highlights several critical areas where current policies do not match those articulated in the EGPRSP.