[Intl-tobacco] IMF Suspends Lending To Moldova Over Tobacco, Wine Privatizations

[Robert Weissman]

April 19, 2000

 IMF Suspends Lending To Moldova Over
 Privatizations

 Dow Jones Newswires

 CHISINAU, Moldova (AP)--The International Monetary Fund has
 suspended lending to Moldova because its conditions on turning the
state-run
 wine and tobacco industries over to the private sector have not been met,
an
 IMF official said Wednesday.

 "The IMF may reconsider its position by the end of this year, but our
 conditions remain the same," said Hasan al-Atrash, the IMF representative
to
 Chisinau.

 Moldova's parliament refused Monday to approve privatization of the wine
 and tobacco industries, a key condition set forth by the IMF for granting a
 $35 million loan for this impoverished former Soviet republic. Only 16
 members of the 101-seat parliament voted for the measure.

 The loan would have brought another $150 million from other foreign
lenders,
 crucial for Moldova to prevent it from defaulting on its foreign debts.

 The lawmakers justified their refusal to vote for privatization by saying
the
 wine and tobacco industries, almost the only profitable sectors in the
country,
 are strategic, and the state should retain its monopoly. The industries are
 estimated to earn more than $200 million a year.

 Prime Minister Dumitru Braghis said the IMF's move will mean adjustments to
 the government budget. Braghis said the budget was drawn up assuming that
 the two sectors would be turned over to the private sector, resulting in
the
 promised foreign loans.

 The National Bank reserves are of $200 million, insufficient to support the
 national currency, the leu, and to pay back the $90 million owed this year
on
 Moldova's foreign debt.

 The government is also facing increasing pressure from students, state
 workers and pensioners who have not received their stipends and salaries
for
 months.

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