Oleg Budza: IMF Assistance Should Also Be Directed to the Social Sector

The leadership of the National Trade Union Confederation and the members if the NTUC Confederation Board had a meeting with the mission team of the International Monetary Fund (IMF) led by Ben Kelmanson on Thursday, February 23.

At the meeting, Oleg Budza, NTUC Chairman, stressed that Moldova needs support for reform implementation, including financial assistance, as the resources  available within the country are not sufficient to ensure the necessary economic development. ‘It is critical, however, that investment be also targeted to the social sector – healthcare, water supply, education,’ pointed out Mr. Budza.

According to him, the arrangements supported by the IMF are a signal to foreign investors that they may invest in Moldovan economy.

‘As a rule, expenditure cuts are demanded, which in turn limit the people’s rights. They need to be made more efficient rather than cut, and IMF policies need to ensure a greater number of jobs, also given that the occupation rate in Moldova is the lowest, amounting to about 43%,’ said the NTUC Chairman.

In his turn, Ben Kelmanson said that the IMF program aims to bring stability to Moldova in order to build a basis for economic growth and job creation. A core focus of the program at this time is to build a sound financial system that would provide lending for economic development and creation of new jobs. ‘Our experience shows that often when a state undertakes expenditure optimization, social spending can be cut, and therefore we have set a minimum threshold on social spending and the Government must make sure that they do not get below that threshold,’ specified Mr. Kelmanson.

The IMF official also stressed that the greatest challenge is to advance in each area, so that eventually the progress in those areas creates synergy.

At the meeting, the trade union leaders have also drawn attention to the need to increase the minimal wage to the subsistence level and eventually set it at 50% of the average wage in economy, as well as to set a single minimal wage in economy.

In addition, the NTUC leadership commented on the pension system reform, which has raised discontent in society due to discriminatory terms and restrictions.

Other issues discussed by the trade union leaders were: stopping tax pressure on individuals, greater efforts by Government to curb informal wages and informal employment etc.

The IMF mission team is visiting Chisinau during February 14-28, to take stock of the recent economic developments and the progress in authorities’ program implementation in the context of the first review of Moldova’s IMF-supported program under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) arrangements.