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Moldova Reaches Loan Agreements With Russia, IMF To Counter Outbreak Fallout

Moldovan Prime Minister Ion Chicu said the loans will help plug a rapidly growing budget deficit. (file photo)

Moldova's government has approved $470 million worth of loans from Russia and the International Monetary Fund (IMF) to reduce a growing budget deficit caused by the coronavirus outbreak.

The agreements were approved on April 21 in a government meeting held online.

Prime Minister Ion Chicu said the two loans will help plug a rapidly growing budget deficit that is expected to double because of the outbreak, reaching an estimated 7 percent of gross domestic product. Moldova has reported more than 2,600 coronavirus infections and 73 deaths so far.

The opposition has criticized the 10-year, $217 million loan from Russia at a 2 percent annual interest rate, saying that it would pose a long-term "danger" because of obscure provisions that would channel the money toward unnecessary projects that favor Russian companies.

Pro-Europe opposition leader Maia Sandu also warned that an article of the agreement signed in Moscow on April 17 guarantees the repayment of loans taken by private Moldovan firms from Russian banks.

Chicu rejected the accusations, saying that Moldova "has not made any of the pledges that Russophobes are vehemently accusing us of." He said the loan was "a classic financing agreement without any hidden clauses that would be detrimental to Moldova.”

Moldova has also signed a $254 million short-term loan agreement with the IMF. Both agreements need parliamentary approval.

Chicu said he sent a letter to the European Union on April 17 requesting the disbursal of a 30 million-euro ($32.5 million) tranche from the 100 million-euro ($108.5 million) macro-financial assistance facility earmarked for Moldova by the bloc.

Moldova, one of Europe's poorest countries, received an initial 30 million-euro tranche from the money in two installments in October and November.