Publication: Monitor Volume: 3 Issue: 62

The governments of Georgia and Moldova have both scored recent successes in improving their external creditworthiness and attracting new sources of investment. (Infotag, March 21; FWN, March 16; Itar-Tass, March 20, 26) The International Monetary Fund (IMF) on March 25 for the second year in a row awarded Georgia an annual loan of $76 million in support of the government’s economic reform program. The loan is divided into two equal tranches, the first of which is to be released on April 4. The IMF’s decision was preceded by the granting on March 19 of a $5 million loan by the London-based European Bank for Reconstruction and Development (EBRD), in support of Georgia’s bank restructuring efforts.

Meanwhile, Moldova received a favorable Ba2 sovereign debt rating in Moody’s Investors Service’s first-ever report on the country, which was released on March 25. The report followed parliamentary approval of Moldova’s state budget on March 21, which projects a fiscal deficit of 3 percent of GDP. Moody’s noted the fall of the budget deficit from a 1992 level of 23.5 percent to 3.4 percent in 1996. Moody’s also pointed to Moldova’s relatively low external debt, favorable prospects for further privatization and future growth, and the government’s close cooperation with international financial institutions. (FWN, March 26)

The Georgian and Moldovan economies have shared some similar economic misfortunes since independence, including two of the largest cumulative declines in official GDP (76 and 65 percent, respectively) recorded during the 1991-1996 period. Also, after recording high rates of inflation during 1992-1993, both countries managed to hold price increases to under 15 percent in 1996. However, while Georgia was the most rapidly-growing CIS economy last year (GDP is estimated to have increased by as much as 14 percent), Moldova reported a (preliminary) 8 percent decline in 1996 GDP, a drop topped only by the preliminary figures reported for Ukraine and Tajikistan. While the IMF and EBRD funding can be expected to help consolidate Georgia’s recovery, it is unclear whether Moldova’s new credit rating will provide the country with immediate growth benefits.

Moscow Extradites Husseinov.