OREANDA-NEWS. December 23, 2013. This is stated in the country assessment of Moldova held by EBRD and described in the Transition Period Report for 2013. In 2012 GDP declined by 0.8 per cent in response to weakening external demand in the EU and unfavorable weather conditions.

In the first half of 2013 real output increased by 4.9 per cent year on year, supported by growing remittances, and a recovery in industrial exports and agricultural production. Inflation has remained below its recent peak of 9 per cent in 2011, and within the central bank’s target range of 3.5 6.5 per cent. This has allowed the central bank to reduce the policy rate by 650 basis points since October 2011, to 3.5 per cent in September 2013.

As the current account deficit narrowed, the central bank was able to accumulate reserves, estimated at around five months of imports in August 2013. The budget deficit has remained contained, at around 1.5 per cent of GDP in the first half of 2013, and general government debt has remained low, with few immediate rollover risks.

The relatively strong external position allowed the authorities to maintain stability while official inflows declined. The International Monetary Fund supported program, which was initiated in 2010, expired in April 2013 without final review. While the arrangement achieved its main objective of stabilizing the economy after the 2008 09 crisis, several policy measures adopted during the period of political instability in the spring of 2013 are likely to turn the fiscal policy pro cyclical; in particular, the proposed introduction of a flat tax in the agricultural sector.