ECO-BUS WEEKLY DIGEST February 17-23. Most important Economy & Business news by IPN

● MONDAY, February 17

Parliament will take a decision as to moratorium on citizenship by investment, PM

Prime Minister Ion Chicu said Parliament is the one that will decide if the moratorium on the Citizenship by Investment Program that expires this week should be extended or not. If the law is annulled, the damages that are to be paid from the state budget will be rather large. After the meeting of senior state officials, the Premier told the press that a meeting was held last week following the assessment of all the risks and advantages of this law. “As you know, the Government, in accordance with the law, can no longer extend the moratorium. It is within the Parliament’s remit to do this now,” stated Premier Chicu.

Cabinet to examine bill on redirection of a part of NBM’s profit Feb. 19

The bill drafted by the Ministry of Finance, by which the National Bank of Moldova (NBM) will redirect a part of its profit to the state budget to cover the costs incurred by the people following the bank fraud, was discussed intensively and will be examined by the Cabinet on February 19, Prime Minister Ion Chicu announced after a meeting with the President and Parliament Speaker. Premier Chicu said that according to the situation for 2019, the redirected amount will come to 215-220 million. The sum totals 6 billion lei if multiplying this amount by the number of years during which the given debt is to be serviced.

Legislative proposal to support national producers in government procurement

The Party “Dignity and Truth Platform” (PPPDA) formulated a legislative proposal by which the national producers are given priority in the government procurement of agrifood products. This provides that the bids must not exceed the lowest price by more than 10%. “The amendment is justifiable. I remind you how many scandals and cases we witnessed with spoiled products, poisoning in kindergartens and schools. Regrettably, I must ascertain that the products that were in the epicenter of scandals weren’t of national origin. That’s why this initiative is important from all angles,” PPPDA vice president Alexandru Slusari told a news conference.

Why it is better to raise mortgage in currency when income is stable

The home loan is a loan by which a person can purchase or renovate a home with another property or the purchased home being used as collateral. The National Bank of Moldova published information about mortgage within the awareness-raising campaign conducted in concert with the National Commission for Financial Markets as part of the financial education campaign “Learn. Give sense to money”. Mortgage is provided for a long period and is repayable in even 25 years, in national currency or in a foreign currency, US dollars or euros. The effective annual interest rate on loans in foreign currency is usually lower and this makes the given loan apparently more attractive. If the leu depreciates, the monthly mortgage rates on the loan in foreign currency will grow, especially in case of a powerful depreciation.

● TUESDAY, February 18

Tax evasion cannot be solved by fines and inspections, “Expert-Grup”

The fines and fiscal inspections do not have an essential impact on the combating of tax evasion. The state should focus on the promotion of voluntary compliance by disseminating information about fiscal compliance. The people who see that the other members of the community pay taxes also tend to pay taxes. The findings presented by the Independent Think Tank “Expert-Grup” derive from a series of economic experiments conducted in Moldova and France. These involved over 500 persons from both of the states. In the presentation of the data of the survey, “Expert-Grup” executive director Adrian Lupușor said the study was carried out in partnership with the Academy of Economic Studies of Moldova and the Experimental Economics Laboratory based in Montpellier, France. The collected data clarify the policies that can lead to dishonest behaviors among the people. The conclusions concerning tax morale in Moldova show that having the suitable set of institutions, the people in Moldova are ready to obey the fiscal law at quasi-optimal levels. In the long run, the public authorities should center on the improvement of the quality of official institutions. For example, they should ensure increased transparency in the allocation of public funds and should reduce corruption among public servants.

ECHR passes judgment in second case of Dubăsari farmers

The European Court of Human Rights (ECHR) passed its judgment in the second case of farmers from Dubăsari district (Oprea and others against Moldova and Russia) whose lots of land were sequestrated by the separatist Transnistrian administration. The Court found Russia guilty of violation of the rights of ownership and use of the farmland and ordered to pay €63,000 damages to the 42 plaintiffs and €4,000 court costs. “The consequences of the abuses of 2004 committed by the secessionist administration that blocked access to the land and took this under its control continue to be felt. Apparently, the problem was solved by instituting mechanisms that ensure access to the privately owned land. However, it is not yet known how sustainable these are given that the Transnistrian administration often violates the undertaken commitments,” stated Alexandru Postica, director of the Human Rights Program of Promo-LEX Association.

● WEDNESDAY, February 19

Ion Perju: Today we can be sure of safety of food in Moldova

Minister of Agriculture, Regional Development and Environment Ion Perju said the safety of the food products in Moldova is now ensured and the quality of the products made in the country is high. According to the minister, the Moldovan products are also appreciated abroad owing to their quality. The national producers of fresh fruit and vegetables cannot afford to use additives as the process is rather costly. “Many cannot afford to use chemical additives in amounts in which the products become harmful to health. The central phytosanitary laboratory has all the capacities to test our products. So, today we can be sure of the safety of food inside the country. No matter how much and what we produce in the agri-food sector, food safety should be a priority either we produce for domestic consumers or for the foreign ones,” the minister stated.

Pavel Filip: PDM does not discuss formation of coalition on the left or on the right

The Democratic Party (PDM) does not discuss now the formation of a government coalition with parties of the left or with parties of the right, the party’s president Pavel Filip stated, referring to the recent reports that the PDM prepares for an eventual coalition with the Socialists. The information appeared after the Democrats and the Socialists met on February 17 and the meeting involved President Igor Dodon and Prime Minister Ion Chicu. “We are currently not discussing the formation of a coalition on the left or on the right. Not only once, we declared that the PDM is ready for discussions. The Democratic Party is a political organization with many supporters, sympathizers who voted for the PDM in the parliamentary elections for the promises we made, for the programs that were implemented and the projects we promised to the people,” Pavel Filip as saying.

Producers support capping of trade discounts, traders oppose

Local producers consider the trade discounts should be capped by law as the sellers in the process of negotiating contracts for the supply of products seek different price discounts from suppliers, which can even exceed 30% . The given situation often makes the producers, especially the small ones, to sell the products under the cost price and this can lead to their bankruptcy. The parliamentary commission on economy, budget and finance held public hearings on the bill that allows for the introduction of a 10% ceiling on trade discounts. Vitalie Gorincioi, who heads the Association “Moldova Fruct”, stated it is impossible to imagine how a small producer can survive when this has to offer trade discounts of 25%. “You go to shops and cannot find a jar of national juice. There are only imported ones there. Who do we support?” he asked.

Tourist voucher will no longer be mandatory

The documents that the tourism business entities are obliged to fill out will be reviewed. The standard model of the tourist contract will be removed so as to ensure greater flexibility and the tourist voucher will no longer be mandatory as this is considered outdated and doubles the information from the tourist services contract. By other changes approved today by the Government, the tour operators are freed from the obligation to issue travel insurance given that this is the duty of insurance companies whose services the potential tourists can use. The employees of tourist firms will no longer be obliged to have a diploma of studies in tourism or a professional qualification certificate. It is also annulled the obligation to have the tourist accommodation facilities classified by the level of comfort. His will be an optimal measure. But the classification remained mandatory for the public food units of accommodation facilities.

About 200 criminal cases refer to bank fraud

Approximately 200 criminal cases that concern the bank fraud were started during the last few years. A number of 28 criminal cases were sent to court. Eight of these refer to business entities, while the rest to private individuals. Conviction sentences were passed in eight of the criminal cases sent to court, Deputy Prosecutor General Ruslan Popov stated in the meeting of the parliamentary commission on national security, defense and public order that examined the PGO’s intermediary report on the investigation of the bank theft. “These about 200 criminal cases that refer to the bank fraud concern the thefts committed in the national banking system starting with 2009 until 2014, primarily at Banca de Economii, Banca Socială and Unibank. Some of these cases were connected to the main case, while others were investigated separately,” stated Ruslan Popov.

NFSA continues to find noncompliant products in schools and kindergartens

The schools and kindergartens in the municipality of Chisinau continue to allow noncompliant food products and products with the expired shelf life to be given to children. In the course of 2019, experts of the National Food Safety Agency (NFSA) identified fish with parasites, vegetables kept in improper conditions or milk and eggs with the expired use-by date in a number of education institutions in Chisinau. In a roundtable meeting, NFSA director general Vladislav Cotici said that in most of the inspected institutions, problems are encountered in the supply and receipt of food products. Food products with incomplete labels are accepted or the traceability of products is not respected. The inspectors withdrew over 300 kg of fish and over 500 kg of prepared food au and compiled almost 100 reports by imposing fines of 185,000 lei.

● THURSDAY, February 20

HiSky enters aviation services market of Moldova

People interested in aviation services have a new alternative – HiSky. The company, founded in Moldova, starts to work on the local and regional market on the basis of a partnership with the Romanian operator Cobrex Trans. HiSky will operate flights to six destinations in Europe – London (United Kingdom), Dublin (Ireland), Lisbon (Portugal), Paris (France), Bologna (Italy) and Dusseldorf (Germany). It’s for the first time for Moldova, when direct flights from Chisinau to Dusseldorf will be operated. Flights to this destination are planned twice a week: on Mondays and Fridays.

Minibuses could transport pensioners free on particular conditions

The chairman of the Board of the Employers Association of Motor Transport Operators Oleg Alexa said the municipality of Chisinau has enough resources in the budget to keep the trolleybus fare at 2 lei and the bus and minibus fare at 3 lei, but should equitably provide subsidies to all the categories of carriers. In a news conference, Oleg Alexa said the minibus route managers in Chisinau, which are private carriers, do not receive allocations from the City Hall and are thus discriminated compared with the municipal transport enterprises. A sum of 448 million lei is to be transferred from the municipal budget to the Urban Bus Company and the Chisinau Electric Transport Company this year. Of this sum, 381 million lei represents subsidies for transporting passengers who benefit from concessions.

Parliament votes to limit costs related to nonbank loans

The MPs gave a first reading to the bill that limits costs related to financial leasing or nonbank loans repayable in at most two years. These costs could not exceed the value disbursed in accordance with the lending agreement. In the case of loans of at most 50,000 lei provided to private individuals, the modification of the contract clauses to increase the payment obligations of consumers is banned. The nonbank lending organizations will be obliged to present reports to at least one credit bureau. For their part, the credit bureaus will be obliged to exchange information between them. To ensure increased transparency of lending costs, the nonbank lending organizations will have to publish the instruments for assessing the total cost of the loan on their websites.

Minibus route managers intend to mount protests if they are not called to dialogue

The managers of minibus routes in Chisinau announced their intention to stage protests next week and to suspend some of the routes if the municipality does not invite them to discussions on the adjustment of fares. The carriers consider the problem can be solved by two ways – the municipality either accepts the request to increase the minibus fare or keep the fare of 3 lei but provide subsidies to private carriers in the same conditions as those enjoyed by municipal transport enterprises. In a news conference, chairman of the Board of the Employers Association of Motor Transport Operators Oleg Alexa said the sum of subsidies that will be asked by private carriers depends on the City Hall’s demands towards them. According to carriers’ calculations, a trip by minibus should now cost 9.81 lei. For the minibus fare to remain at 3 lei, the municipality should subsidize the carriers with up to 70 million lei a year.

Civil Aviation Authority didn’t issue air operator’s certificate to HiSky

The Civil Aviation Authority said that it sent a letter to HiSky Company that on February 20 announced the launch of its activity, informing it about the refusal to issue an air operator’s certificate. It asked the company to present documents concerning the right of HiSky to sell tickets in its own name. In a press release, the Civil Aviation Authority noted that on November 14, 2019 HiSky applied for an air operator’s certificate and on December 23 the Authority decided to suspend the period for examining the application given that the applicant didn’t respect provisions of the Government’s Regulations concerning the presence of aircraft.

● FRIDAY, February 21

HiSky accuses CAA of non-professionalism and bad intention

HiSky Company that yesterday announced its launch on the aviation services market denied the accusations made by the Civil Aviation Authority (CAA) of Moldova, which said that the company works in the absence of an air operator’s certificate. “HiSky is bewildered at the press release issued by the Civil Aviation Authority in the evening of February 20, 2020. We ascertained that the CAA pronounces on aspects that reveal evident non-professionalism and even bad intention. We reiterate that HiSky Company will work on the aviation services market in partnership with the Romanian operator Cobrex Trans that was certified by the Romanian Aviation Authority and the EASA. In other words, the flights under this partnership do not necessitate an air operator’s certificate issued by the CAA of Moldova,” runs the press release.

Özka İnşaat to rehabilitate R34 Hâncești-Leova-Cahul-Giurgiulești road

The R34 Hâncești-Leova-Cahul-Giurgiulești road that is 83 km in length will be rehabilitated by the Turkish company Özka İnşaat A.Ş. The contract to the value of €56.5 million, with the money being lent by the EBRD, was signed on February 21. The road was divided into two segments, of 42.2 km and of 40.8 km. The works on the whole road will last for three years. They will start immediately after the contactor obtains a construction authorization. The procedures can take up to four months.

We negotiate project to develop animal-breeding sector with WB, Igor Dodon

The authorities are negotiating with the World Bank a project worth several tens of millions of dollars for developing the animal-breeding sector in Moldova. President Igor Dodon, in a new episode of the program “President Responds”, said the investment project is aimed at restoring the large cattle farms so that the necessary raw material, the milk, is no longer imported. “We have a problem. We do not have raw material. We do not have milk in the necessary quantities. We will not solve the problem only with the milk collected from people. We must restore the large cattle farms,” stated the official.

Liberalization of metal market worked for a month only, statement

The chairman of the Metal Employers Association Valentin Eșanu said the current director of the state-run scarp metal enterprise “Metalferos” acts as director on paper only as the company is actually controlled by a Democratic MP and by a former director who served during 2009-2014 and who is a relative of President Igor Dodon. The enterprise must be privatized, but only after the metal market is really liberalized. The liberalization of the metal market worked for a month only, he stated. In a news conference, Valentin Eșanu said ten phantom companies work on the metal market at present. They are controlled by groups of interest that purchase metal from collection points and then sell it to “Metalferos”. About 25,000-30,000 tonnes of metal go monthly through these companies. They buy the metal for US$ 170 per tonne and then sell it to “Metalferos” for US$200-210. Simple calculations show that these phantom companies monthly gain US$ 1 million on average by such schemes that were taken over by the current government. “Metalferos” signs contracts only with these companies. The other business entities that try to obtain such contracts are obliged to meet conditions that they cannot accept.

Farmers urge to return to soil protection measures

Climate change year after year affects the results in agriculture. Both the farmers and the authorities should be concerned about this. The National Farmers Federation of Moldova calls on the authorities to return to the soil protection measures specified in the first regulations concerning subsidization that were approved in 2008. The Federation’s chairman Valeriu Cosarciuc, in the General Assembly of the National Farmers Federation, said not many farmers respect the soil conservation rules to retain moisture. According to Valeriu Cosarciuc, the agricultural production last year was by about 2% lower than in 2018. It is regrettable that the imported agrifood products represent 20% of all the imports. Efforts should be made to substitute imports with local products and to create a market in Moldova.

● SATURDAY, February 22

Leu depreciated by 1.7% against U.S. dollar at end-January

The degree of covering the net demand for foreign currency from business entities by the private individuals’ supply of foreign currency this January was 96.8%, as opposed to 97.3% last December. According to the National Bank of Moldova, against the previous month the net supply of foreign currency on the part of private individuals in January declined by US$ 1.8 million. The net demand for foreign currency from business entities decreased by US$ 1 million. In January 2020, the Moldovan leu depreciated by 0.4% against the U.S. dollar to 17.4185 USD/MDL, as against 17.3450 USD/MDL in December 2019. At end-January, the leu depreciated by 1.7% against U.S. dollar.