Everyone Agrees the IMF is Swell


I must say that it’s really been an interesting week for Moldova. No, I’m not just talking about all the protests but what all the players behind the current political crisis have been saying.

Scattered across dozens of articles, you don’t see the pattern. It’s only when you stitch them together that you see what’s going on.

Yesterday, Jose Manuel Borroso, the former president of European Commission, gave an interview (link in Romanian) to Romanian state media pushing for Moldova to sign a pact with the IMF.

My translation:

I’ve visited Moldova many times and I know that the people of Moldova want to be closer to Europe [sic]. But for this to happen, they need to show stability, avoid extremes, and negotiate an agreement with the IMF.

Meanwhile RM’s new Prime Minister Pavel “Mr. Midnight” Filip’s finance minister, Octavian Calmic, said the same thing:

We will make all possible efforts to sign a new memorandum on cooperation with IMF. Prime Minister Pavel Filip will send IMF representatives an official invitation to the talks this week,” Calmic said.

Meanwhile, over in Romania, “technocrat” PM Dacian Ciolos is now hinging a $60 million loan to Moldova on the same condition (link in Romanian).

My translation:

According to the letter [that Ciolos sent the RM government], Moldova must implement seven different reforms in order for Chisinau to get the first $60 million euro payment out of a total of 150 million euros.
.
Chisinau inviting a delegation of the IMF is an extremely important requirement. The IMF must be permitted to give technical advice and the government of RM must sign a staff level agreement with the IMF.

Later, Ciolos specified (in Romanian) that RM will get the $60 immediately after the IMF visits Moldova.

Meanwhile Mr. Midnight himself spoke to the press (in Romanian) and said that, while he will invite the IMF to visit today, they won’t show up until March at the earliest. But RM really, really needs the IMF!

Maia Sandu, the least corrupt pro-EU politician in RM and the new favorite of the American government, also agrees that RM needs the IMF. She doesn’t really support the current RM government but nonetheless agrees that the IMF is the solution for this country.

Surely though, if the Moldovan economy is in shambles, isn’t it normal to ask for some outside financial help? Oh wait:

Moldova’s 3.6% growth surprises IMF
.
Economic growth in Moldova “came in surprisingly strong” last year but significant weaknesses and risks remain a concern, the International Monetary Fund has said.

Zoinks!

That’s right. Despite all the fiery rhetoric, the Moldovan economy is actually doing well. And 3.6% growth is slightly better than forecasts for Romania at just 3.5% growth for 2015. And Moldova would’ve done even better had the Russian economy not had so many problems as the result of sanctions (many Moldovans work in Russia and families here in RM depend on those remittances).

Not only that but the Moldovan currency has remained quite stable over the past month despite all the fiery rhetoric about instability and “extremism” and “Russian-sponsored coups” etc. And prices for every day stuff (food, etc) are holding fairly steady and the price of natural gas has dropped. How can this be?

Indeed here’s the IMF’s own report (PDF) showing just how confused the Wise Old Elves are that Moldova is managing to do well despite their generous and completely unselfish offer to help.

Inflation, at 12.5 percent in September, has risen above its target range of 5 percent ± 1.5 percentage points, yet remains notably contained given the scale of liquidity injections in problem banks. Aggressively high policy rates and reserve requirements have helped reduce pressure on the exchange rate, reserves, and inflation.

That’s right, the Moldovan Central Bank has been doing a great job. This despite the fact that Borroso, Ciolos, Filip and Nuland have been beating the drums for RM to get a new central bank governor too (along with signing a new deal with the IMF).

And the “problem banks” statement is referring to the fact that pro-European politicians ripped off $1 billion from Moldova. That’s what caused the “problem”. And it should be noted that stealing a billion isn’t like stealing 100 bucks. You don’t just stick it in your pocket and walk away. To flush out that kind of money from the economy, you need to launder it, and that only happened thanks to help from British banks. I’ll write a full story on that one day, but my point for now is you’ve got to wonder just how well Moldova would be doing today if that theft hadn’t happened!

All I know is that March is a long time from now, the protesters in Chisinau aren’t going anywhere, and Transnistria (effectively an independent country, but treated by the IMF as part of Moldova) told the IMF to take a hike the last time a delegation was in town.

It’s going to be interesting to see what happens!

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