Brussels to Freeze Funding for Moldova Until New Goverment Formed

CHISINAU (Sputnik) — The European Union has frozen funding for Moldova until a new government is formed that the International Monetary Fund (IMF) feels comfortable negotiating with, head of the EU delegation in Chisinau and Finnish Diplomat Pirkka Tapiola said Tuesday.

In mid-June, an IMF monitoring mission canceled its visit to the republic amid the resignation of the country's government.

"This time, our decision is to freeze financial support. The European Union wants to see the creation of a new government, and the new government should immediately contact the International Monetary Fund to apply for a new grant agreement. Now… we consider two aspects: the banking crisis and macro-financial stability of the [Moldovan] republic," Tapiola was quoted as saying by the Romanian Ziua News online portal.

Last month, long-time Moldovan Prime Minister Chiril Gaburici sought the ouster of the country's top officials, including the head of the National Bank, and then resigned following a financial crisis. Just days before leaving his post, Gaburici warned that if Chisinau could not reach a new agreement with the IMF, the country would default.

In 2009, at the peak of the global economic crisis, Moldova survived a deep recession, but was offered international financial assistance. The situation improved over the next two years but lending conditions worsened, and the bailout, multiplied by government over-regulation required under the terms of the loan agreement, weighed down the economy.