Cash-strapped Moldovan government freezes public procurement

Cash-strapped Moldovan government freezes public procurement
By Iulian Ernst in Bucharest February 25, 2016

Moldova’s government has restricted spending to the lowest possible level, paying only public sector salaries, utilities bills and other expenditures absolutely necessary for public institutions to function. Repairs, purchases of goods and services and investments have been frozen, the public procurement agency said in a statement.

The decision was made during the visit of an International Monetary Fund (IMF) delegation to Chisinau. The new Moldovan government, appointed in January, hopes to resume the country’s cooperation with its foreign development partners after this was suspended last year amid political instability.

The government has not yet approved the 2016 draft budget, but it hopes to draw it up during the IMF mission’s visit to Chisinau. However, it is unclear how the budget will be drafted without financing from the country’s partners.

The European Union and Romania, which has put on hold a €150mn loan to Moldova, have both urged the government in Chisinau to implement key reforms and agree an action plan with the IMF.

“In the context of approving and implementing the temporary budget for 2016, and as a result of the fact that the resumption of the negotiations with the development partners for unblocking the external financing and closing a cooperation agreement with the IMF needs more time [than previously envisaged], the ministry of finance has informed the public procurement agency about freezing [unnecessary] budget expenditures” the public procurement agency said in the February 23 statement.

Moldova could sign an agreement with the IMF this autumn, the country’s finance minister Octavian Armasu said on February 17 ahead of the fund’s visit to Chisinau.

The fund previously specified that the mission is not aimed at pinpointing the next financial assistance programme for Moldova, but at updating its information on the most recent developments in the country. Moldova’s new government has a long list of preliminary targets to meet before starting negotiations for an agreement with the fund.