IMF Freezes Financial Support For Moldova, Govt. Near Collapse (fwd)

[Robert Weissman <rob@essential.org>]

November 5, 1999
Dow Jones Newswires
IMF Freezes Financial Support Planned For Moldova
BUCHAREST -- The International Monetary Fund has suspended its plans to
provide loans to Moldova after the country's parliament rejected a
privatization law required by the IMF, an official said Friday.
"What happened today in Parliament means a change in policy, a change that
IMF cannot support," the Fund's representative in Moldova, Hassan Al-Atrash,
told Dow Jones Newswires.
Earlier Friday, the parliament voted against legislation that would have
allowed the privatization of the state-owned wine and tobacco industries, a
condition imposed by the IMF for the release of a $35 million Expanded Fund
Facility loan by the end of the year.
"All projects will be frozen for an unlimited period, until this issue is
solved," Al-Atrash said.
The IMF's decision also affects loans from the World Bank and European
Union. A $30 million World Bank loan and a $15 million E.U. loan were linked
to the approval of the IMF loan.
The parliament's move is expected to spark more political rifts in Moldova
as Prime Minister Ion Sturza said earlier that his cabinet would resign if
no agreement is reached with the IMF.
On Thursday the opposition Communists introduced a no-confidence motion
signed by 56 lawmakers, more than the majority needed to hold a
no-confidence vote against the government.
The motion, which accuses the government of failing to manage the economy
and to reduce corruption, will be voted on next Tuesday. If it is passed,
the government will be forced to resign.
Sturza's cabinet has been backed by a reform-minded ruling coalition, which
had a fragile 51% majority in the 101-seat parliament. But rifts among
coalition parties and the failure of economic reforms have eroded support
for the government.
Moldova's currency, the leu, has plunged 50% against the dollar this year,
while inflation in the first nine months of this year was 28.6%. The average
monthly salary in Moldova is 180 leu ($1=MDL11.5) and wage arrears go back
years, with some pensioners paid in goods and services.
-By Cristi Cretzan; (401) 210-8197; ccretzan@fx.ro

November 5, 1999
Dow Jones Newswires
Moldova Govt Faces Collapse After Privatization Law Fails
BUCHAREST -- Moldova's government was on the brink of collapse Friday after
the parliament rejected a privatization law requested by the International
Monetary Fund, and the opposition communists put forward a no-confidence
motion.
Parliament voted against legislation that would have allowed the
privatization of the state-owned wine and tobacco industries, a condition
imposed by the IMF for the release of a $35 million loan.
Prime Minister Ion Sturza said earlier that his cabinet would resign if the
agreement with the IMF failed.
However, on Thursday the opposition Communists issued a no-confidence motion
signed by 56 lawmakers, more than the majority needed for a successful
non-confidence vote against the cabinet.
The motion, which accuses the government of failing to manage the economy
and to reduce corruption, will be voted on next Tuesday. If it is passed,
the government will be forced to resign.
The country's political woes may impede IMF support for the country. The
Fund's representative for Moldova, Richard Haas, said earlier this week that
dismissal of the government would suspend IMF loans for months, or even
years.
Sturza's cabinet has been backed so far by a reform-minded ruling coalition,
which had a fragile 51% majority in the 101-seat Parliament. But rifts among
coalition parties and the failure of economic reforms have eroded support
for the government.
Moldova's currency, the leu (MDL; $1=MDL11.5), has plunged 50% against the
dollar this year, while inflation in the first nine months of this year was
28.6%.
The average monthly salary in Moldova is MDL180 and wage arrears extend back
years. Moreover, some pensioners are paid in goods and services.
-By Cristi Cretzan; (401) 210-8197; ccretzan@fx.ro