December 20, 2017 / 11:31 PM / 2 years ago

IMF approves $22 mln loan tranche for Moldova

KIEV, Dec 21 (Reuters) - The International Monetary Fund said its board had approved the disbursement of a loan tranche to Moldova worth about $22 million.

The IMF and the ex-Soviet country agreed in November 2016 a three-year loan program worth $183 million, after negotiations had earlier been disrupted by a $1 billion corruption scandal that plunged the country into turmoil.

The fund, in announcing the disbursement on Wednesday, said the Moldovan economy had stabilised since the recent banking crisis and forecast growth of around 3 percent in 2018, but warned that substantial risks remained.

“Moldova continues to make important progress in strengthening macroeconomic and financial stability,” said the IMF’s deputy managing director and acting chair, Mitsuhiro Furusawa.

“Nevertheless, significant challenges remain for progress to become irreversible,” he said in a statement, advising the authorities continue efforts to clean up banks’ balance sheets, among other recommendations.

In 2015 Moldova’s negotiations with the IMF and the European Union on funding were disrupted by the disappearance of the equivalent of one eighth of national output from Moldova’s banking system, which triggered an economic and political crisis.

The shock to the banking sector caused the economy to shrink 0.5 percent in 2015, although it returned to growth in 2016, expanding 4.1 percent. (Reporting by Alessandra Prentice; Editing by Tom Brown)

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