IMF Wraps 2025 Article IV Talks With Moldova

Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation with Moldova. [1] The authorities have consented to the publication of the Staff Report prepared for this consultation. [2]

Moldova's recovery from multiple shocks is underway with growth projected at 2.7 percent in 2025 and 2.3 percent in 2026, supported by a good harvest, strong domestic demand, and substantial EU financing. Household consumption and investment are benefiting from robust wage and credit growth, while industrial production has expanded strongly, partly driven by food processing. Weak exports are holding down growth and widening the current account. Inflation is expected to return to the target range imminently.

The economy is expected to grow moderately in the medium-term, as higher investment and productivity-enhancing reforms boost potential output, while labor continues to be a drag. However, risks remain tilted to the downside for growth and to the upside for inflation. Key risks stem from the war in Ukraine and other geopolitical developments and delays in EU Growth Plan implementation or misallocation of related funding.

Executive Board Assessment

Executive Directors agreed with the thrust of the staff appraisal. They welcomed the ongoing recovery and continued progress toward EU accession, despite multiple shocks. While noting the improved outlook, Directors highlighted that Moldova faces longstanding challenges, high uncertainty, and risks from regional and geopolitical developments and possible delays in reform implementation. Accordingly, they emphasized the need for prudent policies to safeguard macroeconomic stability and ambitious structural reforms to strengthen governance, enhance growth, and build resilience. Noting the authorities' interest in a new Fund arrangement, Directors highlighted that continued Fund engagement would reinvigorate the reform momentum and support EU accession.

Directors agreed that a temporarily higher fiscal deficit is appropriate to support the transition to investment‑led growth. They emphasized the importance of enhancing capital spending execution and public financial management and mobilizing revenue to sustain higher capital spending, particularly as concessional financing declines. Directors welcomed the planned public wage reform, underscoring that related costs should be covered by additional domestic revenues. They supported the authorities' focus on simplifying taxes and removing exemptions, particularly on VAT.

Directors recognized the National Bank of Moldova's timely response to address rising inflation following the energy shock in early 2025. They stressed that monetary policy should remain cautious and state‑contingent, with future rate changes conditional on the path of inflation and growth. Directors noted that reserve requirements on bank deposits remain high and recommended that they be reduced after inflation risks subside. They also encouraged measures to further strengthen central bank independence and governance to safeguard policy credibility. Maintaining exchange rate flexibility, while preserving sufficient foreign exchange buffers, is important to absorb shocks.

Directors welcomed efforts to improve the regulatory and supervisory framework for banks. While highlighting that the banking sector remains sound, they welcomed the recent macroprudential tightening and underscored the need to continue to closely monitor strong credit growth and rising housing prices. They also called for continued progress in enhancing risk‑based supervision, crisis management, and AML/CFT frameworks, in line with FSAP recommendations.

Directors encouraged the authorities to advance structural reforms to boost growth and improve competitiveness. Noting Moldova's vulnerability to electricity supply shocks and price volatility, they called for further efforts to strengthen energy preparedness and security. Directors urged decisive progress on governance and anti‑corruption reforms to improve the business climate and safeguard public resources. Measures to improve labor market participation, address skills mismatches, and improve infrastructure and the investment environment are important to unlock growth. Directors highlighted that timely and effective implementation of the EU Growth Plan and other actions connected with EU accession are central to supporting reforms.

It is expected that the next Article IV consultation with the Republic of Moldova will be held on the standard 12‑month cycle.

[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the www.imf.org/en/countries/mda page.