Strong growth helps fiscal consolidation
Overview:
The economic rebound is proving rather stronger than expected. This has helped the government bring the fiscal deficit down much quicker than planned. Implementation of the IMF program is good (the 2nd review has just been completed). FX reserves are rising and the currency has strengthened. The central bank has tightened monetary policy to combat rising inflation. This positive macro-economic picture should not draw attention away from remaining structural problems, economic and political. Moldova continues to have a large current account deficit. This will worsen as domestic demand recovers. Structural reforms must strengthen the export base. Moreover, the constitutional crisis has yet to be resolved. Until a President of Moldova is elected the risk of yet more early elections is high.