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Moldova Gets Big IMF Loan

Moldovan Prime Minister Vlad Filat warned of "a total collapse" in the absence of the credit.
CHISINAU -- Moldovan and International Monetary Fund (IMF) officials have signed an agreement for a $574 million loan that Chisinau says will help it bridge its ballooning budget deficit, RFE/RL's Moldovan Service reports.

Moldovan Prime Minister Vlad Filat said after the signing ceremony today that the IMF money is the only way for his country to avoid "a total collapse."

Already Europe's poorest country, Moldova's economy contracted by an estimated 7 percent last year, with the budget deficit reaching 16 percent of gross domestic product (GDP).

Filat pledged that his government will look after its poorest citizens but insisted that the austerity measures the IMF expects in exchange for the loan are "inevitable" if Moldova wants to have a "prosperous market economy."

Filat's government is facing social pressure after it was forced to raise prices for gas and electricity after an increase on January 1 in the price of natural gas by Russia, which Moldova is almost totally dependent upon.

Moldova hopes to get an additional $80 million loan from the World Bank and has been promised a $150 million credit from Russia.

Romania said last week it would give Chisinau 100 million euros ($140 million) in aid over the next four years.