IMF Demands Moldova Privatize Tobacco Concern (fwd)

[Robert Weissman <rob@essential.org>]

November 3, 1999
Dow Jones Newswires
IMF: Moldova Must Privatize Wine,Tobacco;Increase Deficit

CHISINAU, Moldova (AP)--Moldova must privatize its wine and tobacco
industries and make changes to the budget if it wants a $35 million loan, an
International Monetary Fund official said Wednesday.

IMF representative Richard Haas told reporters at a news conference
Moldova's parliament has to increase its fiscal deficit for this year from
2.3% to 5%, in an effort to balance the budget.

"If Moldova adopts these measures by December, it will be eligible for...the
loan by the end of the year," said Haas.

The mainly agricultural former Soviet republic, located between Romania and
Ukraine, desperately needs the loan to help support its ailing economy, hard
hit by last year's economic turmoil in Russia, which remains its main
trading partner.

The value of the national currency, the leu, has dropped by 50% against the
dollar in the past year. The average monthly salary in Moldova is 180 lei,
wage arrears stretch back years and some pensioners are paid in goods and
services.

Inflation for the first nine months of 1999 was 28.6%, higher than what the
IMF stipulated.

Reform-minded prime minister Ion Sturza will urge lawmakers Thursday to pass
the measures demanded by the IMF.

But lawmakers are seeking to dismiss the country's government, which is
accused of corruption and causing hardships for many of Moldova's 4.3
million citizens. Haas also warned against such a move, saying it would
disqualify Moldova from getting the loan.

After the government adopted the 1999 budget earlier this year, and began to
speed up market reforms, the IMF lifted a yearlong freeze on loans to the
country.