International Monetary Fund Executive Board concludes Moldova Article IV consultation and urges prudent policies amid wider deficit and fast credit growth

The International Monetary Fund Executive Board concluded the 2025 Article IV consultation with Moldova and authorized publication of the staff report, judging that the economy is recovering but remains exposed to high uncertainty and longstanding structural constraints. EU accession and the EU Growth Plan were highlighted as an opportunity to lift growth, alongside calls for prudent macroeconomic policies and accelerated structural and governance reforms. Real GDP growth is projected at 2.7% in 2025 and 2.3% in 2026, while the fiscal deficit is expected to widen to 4.8% of GDP in 2026 as capital spending scales up. Directors emphasised stronger public financial management and revenue mobilisation, including planned tax reforms and VAT base-broadening, and noted that costs from the planned public wage reform should be covered by additional domestic revenues. Inflation is expected to remain within the National Bank of Moldova’s 5% ± 1.5% target range in 2026, with monetary policy advised to remain cautious and state-contingent; high reserve requirements were flagged for reduction once inflation risks subside, alongside measures to strengthen central bank independence and governance and to maintain exchange rate flexibility with adequate foreign exchange buffers. The banking sector was assessed as sound, but strong credit growth and rising house prices were identified as risks requiring close monitoring, stronger borrower-based measures, and continued progress on risk-based supervision, crisis management, and AML/CFT reforms in line with FSAP recommendations. The staff report will be published shortly, and the next Article IV consultation is expected on the standard 12-month cycle.