DIGEST March 22-28. Most important Economy & Business news by IPN
● MONDAY, March 22
Attracted term deposits higher than last year
The new fixed-term deposits attracted this February amounted to 2.234.5 billion lei, a 17.4% increase compared with last February. Deposits in national currency represented 64.2%, while deposits attracted in foreign currency – 34.6%. The amount of attracted national currency deposits totaled 1.462 billion lei (-2.6% on a month before and +25.7% compared with February 2020). Foreign currency deposits reconverted to MDL came to 772.5 million lei (-3.1% on a month before and + 4.4% on February 2020). Deposits attracted in February were dominated by private individuals’ deposits that constituted 79.4% (50.8% in national currency and 28.6% in foreign currency).
Expert about depreciation of Moldovan leu
The current depreciation of the leu against the main currencies is a continuation of last year’s tendencies. As the inflation this year is expected to be very low, which means a slight rise in prices, this depreciation is somehow welcome. If particular deprecation of the leu persists, this will not significantly affect the level of prices. Contacted by IPN for details, Alexandru Fala, economist of “Expert-Grup” Independent Think Tank, explained that one of the main risks of the depreciation of the leu is the stimulation of the rise in the prices of goods. Respectively, the imported goods become more expensive, being sold at higher prices domestically too. When we expect a very slow acceleration of inflation, this deprecation does not have a significant impact and does not create serious risks and is even favorable. Alexandru Fala said the depreciation of the Moldovan leu is not determined by internal factors. In the Republic of Moldova, the official exchange rate is actually the exchange rate of the leu against the dollar, while the exchange rate against the other currencies is determined depending on this official rate and the international quotations against the dollar. To determine the official exchange rate of the leu against the euro, the exchange rate of the leu against the dollar and the exchange rate of the dollar against the euro or vice versa from international markets are first taken. The exchange rate of the leu against the euro and also against the other currencies is determined based on these two variables.
Who are foreigners employed in Moldova and what they do here
More than 2,200 foreigners from 89 countries have valid permits of stay in Moldova for work purposes. In a response to IPN, the Bureau for Migration and Asylum said that 80% of the foreigners who immigrate to the Republic of Moldova for work are issued with documents for migrant workers, detached or foreign workers engaged in investment projects of national importance and foreign assistance projects. Most often, the foreigners are employed in the building sector (erecting of buildings, road repair works, infrastructure projects), production of equipment or accessories (chains, isolated cables), public food (primarily bakery industry), aviation, education and sport. Most of the foreigners working in Moldova are from Turkey, Ukraine, Romania, Azerbaijan, Russia, and Italy. There is by one employee from Bangladesh, Burkina Faso, Columbia, Ethiopia, Iran, Malta etc. Last year, 1,371 foreigners received the right to work, while for 873 persons this right was extended. During the same year, a work permit was asked by 218 persons, while in 2019 – by 216 persons. The right to stay is annulled if the contract is terminated or the place of work is changed by the employee.
Card codes and passwords should no way be disclosed, NBM governor
When making cashless payments, the persons should not reveal any card code or password, not even to bank employees. More Moldovans now pay with bank cards, the governor of the National Bank of Moldova Octavian Armașu stated in the event to launch the Global Money Week that will take place during March 22-26. Octavian Armașu said that a person who is well informed from financial viewpoint, does not make over-indebtedness mistakes when raising a loan. They will choose the optimal variant for taking out a loan or will avoid raising a consumer loan. Moreover, they will be able to make the necessary steps from savings to investments. As part of the Global Money Week, there was launched a financial education platform entitled Moldova Banking Hub. Within this, pupils, students and teachers and also the general public are helped by NBM experts to better understand how the financial system of Moldova works. The participants have the opportunity to discuss with central bank experts on various topics in the financial and banking field. Those who want to take part in the events can register by filling out the form online or by making a request through the email educatia.financiara@bnm.md. The NBM joins in the Global Money Week every year. As part of the event, the public from almost 175 countries express their readiness to learn to orient themselves in today’s financial world, which is rapidly developing and plays an increasingly important role in the daily life.
Trade unions propose socioeconomic protection measures
Measures should be further taken to directly subsidize salary earners when the activity is suspended and the employees are made redundant or are in technical unemployment. The subsidy should be at least equal to the minimum guaranteed salary in the real sector of the economy – 2,935 lei, the National Confederation of Trade Unions of Moldova says in a letter addressed to acting Prime Minister Aureliu Ciocoi, chairman of the National Extraordinary Public Health Commission. According to the trade unions, this measure is aimed at maintaining the relationship between employers and employees and at enabling to easier return later to the normal activity of economic units. Also, when the activity of kindergartens and schools is restricted, a mechanism for supporting the parents whose children attend such institutions should be worked out. The young people are another category that was powerfully affected by the coronavirus pandemic. According to the Confederation’s chairman Oleg Budza, to keep the young people on the domestic labor market, the starting of own businesses should be promoted and supported broadly, including by providing preferential loans at a reduced interest rate and engaging young people in re-qualification and professional formation programs.
● TUESDAY, March 23
Termoelectrica warns that noncompliant equipment is dangerous
The unauthorized interventions in internal heating systems of buildings and replacement of equipment on the own responsibility pose a risk to the health of dwellers and can cause serious damage, Termoelectrica warned after two breakdowns in internal systems of apartment buddings caused by the use of noncompliant equipment were reported in the first half of March. It happened in Râșcani and Botanica district of Chisinau and both of the incidents resulted in the flooding of apartments as a result of the malfunctioning of the used equipment.
According to Termoelectrica director general Veaceslav Eni, the modification of the engineering heating and hot water supply system is dangerous and can result in damage. Therefore, Termoelectrica banks on the responsibility of consumers so that only authorized interventions in the heating system are performed and of the housing sector manager whose duty is to check and properly manage the engineering systems inside buildings.
Degree of covering net demand for currency in February at 94.7%
The degree of covering the net demand for currency from business entities by the net supply of currency from private individuals in February was 94.71%, as opposed to 93.7%% in January. According to the National Bank of Moldova, the net supply of currency from private individuals in February rose by US$6.6 million (+3.8%), while the net demand for currency from business entities – by US$ 5 million (+2.7%). The Bank intervened and bought currency totaling US$3.1 million on the local interbank market. The Moldovan leu in February depreciated by 0.9% on average against the U.S. dollar to 17.4505 US/MDL, as against 17.2916 USD/MDL in January. The European common currency continued to prevail in the structure of the net supply of currency from private individuals, with 78.7%.
Over 5,500 loans provided during three years of “First House” program
Three years after the launch of the state program “First House”, the number of dwellings bought through the agency of this program stands at 5,550. The total sum of loans provided by banks is of 2.8 million, while the active guarantees total 1.4 billion lei. According to the Ministry of Finance, the compensations provided from the state budget for partially covering the costs incurred by the beneficiaries for paying the mortgage within the program “First House” came to 42.3 million lei.
Of the 5,550 beneficiaries, over 3,800 are families, while 1,700 are unmarried young people. The average age of the applicants is 31.4 years. The average value of the purchased dwellings is 605,160 lei. Of all the bought homes, over 5,100 are situated in urban areas, while 359 in rural areas. Over 5,000 bought dwelling are apartment, while 472 are private homes.
● FRIDAY, March 24
Moldova to get US$685,000 for agricultural sector
The Republic of Moldova will benefit from US$ 685,000 from the Green Climate Fund for integrating the climate change policies into the strategic documents in the agricultural sector. In the project launch, Minister of Agriculture, Regional Development and Environment Ion Perju said the vulnerability of the agricultural sector resides in the major exposure to high annual average temperatures and severe weather phenomena that were often the last few years. “These phenomena cause decline in agricultural productivity, huge financial losses with a negative effect on the whole national economy. Therefore, the enhancement of resilience and adaptation to climate change of the agricultural sector is a pressing necessity,” stated Ion Perju. The project was launched in Chisinau on March 24 and will last for three years.
Remittances in first two months hit record level for Moldova
Transfers from abroad made in favor of private individuals in Moldova through banks in the first two months of this year came to US$219 million. This is an absolute record for Moldova, economic expert of the Institute for Development and Social Initiatives “Viitorul” Veaceslav Ioniță posted on his blog. According to him, the previous record was set in 2013, when remittances during two months came to US$203 million. This was preceded by the record of 2008, when the transfers came to US$194 million. A study by “Viitorul” shows that the Moldovans send home through banks maximum 80% of the money, the rest being transmitted through regular minibus routes, bank cards issued abroad or relatives and friends. In other words, the volume of remittances sent by Moldovans home rises by another US$55 million. At least one similar sum of US$55 million, which according to expert estimates is brought home by the Moldovans in person when they return home, should be added to this sum. This way, the total remittances from Moldovans that enter the country by all the possible ways during the first two months of the year amounted to at least US$330 million.
● WEDNESDAY, March 25
New Customs Code should be adopted and implemented so as to facilitate trade, conference
The facilitation of trade is closely associated with economic development and movement. Any investor that comes to the Republic of Moldova orients to the export to the countries of the region. Crossborder trade should not be a barrier. That’s why it is important to adopt the Customs Code and put it into practice so as to facilitate trade. The information system of the Customs Service should be adaptable to the economic developments and more human and financial resources need to be allocated for developing it in support of the economic evolutions, Secretary of State at the Ministry of Finance Dorel Noroc stated in the first conference dedicated to international trade facilitation e-TRADECON.
According to the official, the information systems of a number of countries are integrated and correlate between them and this is a new trend. The efficiency of customs management with emphasis on the modernization of infrastructure and integrity of customs service employees is important. Acting Prime Minister Aureliu Ciocoi voiced hope the event will become a good platform for communication between the development partners, the business community and the public authorities, especially in the context of the pandemic crisis. “Joining our efforts, we will be able to improve the quality of services provided to businesses, reduce costs, minimize the fraud and corruption related risks, improve the country’s competitiveness; and this event is a successful example of cooperation between public authorities and the private sector, aimed at enhancing the business climate,” said the official, noting he hopes the draft new Customs Code that was submitted to Parliament will be adopted in the variant proposed by the executive.
It is harder to start a small business in Moldova than in EU, “Expert-Grup”
In Moldova, there is no facilitated fiscal policy to support companies by the state during the first years of activity. The conditions of starting and running a small business are more difficult than in the EU and the countries of the region. This makes the development of businesses, especially by women, more difficult. By the competitiveness index, according to the report for 2019, the national economy ranks 86th out of 141, Sergiu Gaibu, programs director at the Independent Think Tank “Expert-Grup”, stated in a roundtable meeting centering on the assessment of the impact of support programs for economic empowerment. Sergiu Gaibu said the underdevelopment of the rural areas and the absence of other works than the agricultural ones are a significant limitation for the support programs for the women’s economic empowerment. The lack of appropriate infrastructure and of equipment for mechanizing work limits access and the interest of women in taking part in agricultural activities or starting an agribusiness. Also, the state does not provide financial instruments for start-ups, microenterprises and family businesses, while the resources of implementers for starting a business are limited. The vocational schools have an outdated curriculum and there is bureaucratic rigidity to adjusting this. The lack of appropriate infrastructure is another impediment to the delivery of assistance. There were cases when the lack of connection to the power supply made the holding of online courses impossible, said the expert of “Expert-Grup”.
National artists in film that promotes Moldova as a tourist destination
The Investment Agency has launched the foreign promotion campaign “Moldova: A place to find yourself”. A number of national artists are the protagonists of a film in English by which the Republic of Moldova is promoted as a tourist destination. Investment Agency director Rodica Verbeniuc said the film is an artistic creation of a preview type aimed at keeping the Republic of Moldova on the international tourist radar in a period of transition, until transfrontier circulation is restored. “We reposition the Republic of Moldova as a tourist destination on the global arena, with a new expression and a new feeling,” stated Rodica Verbeniuc.
Viorel Barbănouă, of the agency that promotes the commercial, noted that as the film’s message says, one day the people will want to travel and will travel. “That’s why it is very important to have our tourist offer, the most beautiful landscapes known for the period when all the restrictions are lifted,” stated Viorel Barbănouă.
As the film is for now in English only, a contest for the best translations into Romania and Russian was launched. Later, the movie will be promoted in Romania and the CIS. Serj Grey is the producer of the commercial. The video features singers Dara, Pasha Parfeni, members of the band “Cosmos în buzunar” (“Cosmos in the pocket”). The budget of the project is 217,000 lei.
● THURSDAY, March 26
Moldova could export composite and dairy products to EU if conditions are met
The EU’s legislations on animal health is being amended. When these changes take effect and the Republic of Moldova is listed in the EU’s decision, the country will be able to export composite products to the European Union, Secretary of State at the Ministry of Economy and Infrastructure Iuliana Drăgălin announced in an event. As regards the dairy products, Iuliana Drăgălin said the procedure for obtaining the right to export these to the EU envisions a broader range of measures that are to be implemented at the national level. At the moment, the European Commission is examining Moldova’s file for the given sector and this would be followed by an audit mission similar to the one planned for this April, for products of animal origin. The Republic of Moldova in 2019 exported dairy products to the value of US$5.8 million. Exports during the last four years declined annually by17% on average. The cheese products were the main exports in 2019 and during the last five years. Imports of daily products into Moldova have grown constantly. Imports rose on average by 22% yearly during the last five years to about US$58 million in 2019. This sum represents the potential for substituting the imports or the potential revenues that can be obtained by local processors if they have the necessary quantity of milk as raw material, said officials of the Ministry.
Businessman says his properties were appropriated by Veaceslav Platon
The founder of the Accent Group Holding Vladimir Russu said that he is the victim of a raider attack. By a decision taken by the Ciocana branch of the Chisinau City Court, his private properties were transferred for use to Veaceslav Platon or the companies owned by this, one of which is mentioned in the Kroll Report. The businessman said that helped by judges and prosecutors, Platon appropriated, by raider attack, two buildings from SRL “SCM Development Mol”, which belongs to him. This is the “Fashion House” situated at 182 Ștefan cel Mare și Sfânt Blvd and the former ASITO Building situated at 57/1 Mitropolit Bănulescu-Bodoni St. In a news conference at IPN, Vladimir Russu said that he and his company didn’t talk much to the press and didn’t make many statements. This led to all kinds of interpretations, including about the scandal concerning the so-called “white house” that belonged to his family. The real situation was distorted, his business being affected. Moreover, owing to the lack of information, the simple sale and purchase procedure was incorrectly covered by the press. As a result, he was presented as “the man of Plahotniuc” or “the man with Plahotniuc’s money”. This enabled those with experience in raider attacks to take such actions in relation to him.
● SATURDAY, March 27
Day labor in agriculture could be paid by vouchers
Day labor in the agricultural sector could be paid by vouchers. Parliament on March 26 gave a first reading to a bill to amend the law on occasional unqualified activities carried out by day laborers. The legislative proposal was submitted by MP Nicolae Ciubuc, ex-minister of agriculture. According to the bill author, the vouchers for day labor in agriculture, and not only, is widely used in such countries that massively employ day laborers as Poland, Italy, Belgium, the Netherlands, Hungary, and Lithuania. These countries started to experience with voucher-based labor in 2010 and achieved impressive results so far. The price of a voucher will be determined depending on the agricultural area. In ecological agriculture and rural tourism, a voucher will cost 6 lei, in high value agriculture – 8 lei, in conventional farming - 10 lei. The employers who will hire persons with disabilities will benefit from a 25% reduction from the price of the voucher. The highest number of days for which a day laborer can be employed was extended from 90 days to 120 days. To make voucher-based labor more attractive, day laborers could be exempted from paying tax returns.
Over 18,000 persons receive higher pensions following reexamination
More than 18,400 persons get higher pensions in 2021 after they asked for the reexamination of their pensions. These persons became entitled to an old-age pension after January 1, 1999 and continued to work for seven to ten years after retiring. The average pension after reexamination is 5,325 lei, as against 2,833 lei before the reexamination. The pensioners who continue to work will be able to have their pensions reexamined only in the course of this year, if they have an insurance period of seven years after retiring. They can file an application for the reexamination of pensions by two ways. The CNAS noted that under Law No. 156 of October 14, 1998 on the Public Pension System, the next pension reexamination stage starting with January 1, 2022 will cover the persons who worked for five to seven years after retiring. The last stage that will begin on January 1, 2023 will embrace the persons who worked for two to five years after retiring.
