ECO-BUS WEEKLY DIGEST March 29 - April 4. Most important Economy & Business news by IPN
● MONDAY, March 29
NBM closes Global Money Week, launches awareness-raising campaign
Global Money Week ends today. As part of this, there were presented useful financial concepts for managing the personal budget, initiating an online business and making investments. On the completion of Global Money Week, the National Bank of Moldova (NBM) launches an information and awareness-raising campaign entitled “Financial education – personal, social and economic benefit”. As part of this campaign, the Bank disseminates a series of videographers, podcasts and video guides that present financial concepts, useful advice and other information that should be known in the daily life in a succinct and accessible way. According to the governor of the National Bank of Moldova Octavian Armașu, the events that formed part of Global Money Week took place in a version adjusted to the current reality, based on a virtual dialogue. Those who wanted to take part in the organized activities could take part in a number of seminars, depending on the information needs. The students of secondary schools and lyceums could find out many interesting things within the National Bank’s financial education platform Moldova Banking Hub. Also, together with other participants of different ages, they could make an online visit to the exhibition hall of the NBM and see a special coin exhibition at the National Museum of History of Moldova.
Business entities are not motivated to reduce impact of waste on environment, experts
Even if a number of actions to manage waste were taken in the Republic of Moldova and the law on waste was adjusted to the European legislation, the recycling of waste and the Extended Producer Responsibility concept are not fully implemented, Adam Amberg, consultant at the Embassy of Sweden in Moldova, stated in the launch of the study “Implementation of Extended Producer Responsibility mechanisms to ensure waste recycling”. The study was carried out by the Independent Think Tank “Expert-Grup” in cooperation with the National Environmental Center and with the financial support of the Embassy of Sweden in the Republic of Moldova. The document aims to analyze the interaction of key players of the chain -producers/traders – consumers – recyclers – producers – state, the stimulation practices in this field and to propose mechanisms for stimulating the participants in this process to return and recycle waste deriving from consumption.
● TUESDAY, March 30
Presidential administration denounces carter agreements on fuel market
The presidential administration filed an application to the Prosecutor General’s Office, denouncing the cartel agreements existing on the fuel market, Sergiu Tofilat, adviser to President Maia Sandu on energy issues, posted on Facebook. According to Sergiu Tofilat, the oil companies do not even hide the fact that they coordinate the prices, while the administration of the Competition Council doesn’t take any steps, as the central bank did when the bank theft was committed. “In 2019, the president of the Competition Council Marcel Răducan said that he possessed direct and indirect evidence, that they will impose penalties, but nothing was done. We all feel the consequences of this anarchy every time the fuel prices are raised,” said the adviser. The application will also be sent to Parliament together with the request to initiate an external assessment of the Competition Council’s activity.
SSC turns attention to Moldova’s facilities in Ukraine
President Maia Sandu recommended the Government to explore the possibility of contracting a company for the financial audit of each facility that forms part of Moldova’s property in Ukraine and to agree the negotiation strategy with the Ukrainian side so as to solve the problems where there are disputes. The situation of Moldova’s Consulate in Odessa and the Sanatorium “Moldova” in Truscaveț should be examined the first and a report should be presented to the Supreme Securely Council (SSC) until April 15. After the Council’s meeting, Maia Sandu said a number of facilities that were or continue to be Moldova’s property have been taken over abusively. She instructed all the institutions that manage facilities situated on the territory of Ukraine to provide detailed information about the situation of these enterprises, namely their financial situation and legal problems they face.
● WEDNESDAY, March 31
Export of wheat from state reserves banned until April 12
The Government banned the export of wheat with the tariff position 1001 from the state reserves until April 12 inclusive. The decision was taken by the interim Cabinet by a unanimous vote following almost two hours of debates held behind closed doors in the evening of March 30. According to Minister of Agriculture, Regional Development and Environment Ion Perju, the decision was taken after considering the information and recommendations presented by the Supreme Security Council. Before withdrawing for debates, at the suggestion of Minister of Justice Fadei Nagachevski, the Government proposed banning the export of wheat from the state reserves until April 15, but the proposal was supported only by acting Prime Minister Aureliu Ciocoi.
Government allocates over 5m lei for ten villages affected by torrential rain
The Ministry of Finance will allocate 5.871,8 million lei from the Government’s Intervention Fund to the local public authorities of ten communities for alleviating the consequences of the exceptional situations that occurred last year. A decision to this effect was taken in the March 30 meeting of the Government. More exactly, the money will be allocated for repairing roads that were seriously damaged by the torrential rain accompanied by hail and high winds in the following villages: Coșernița of Florești district; Mileștii Mici, Țipala, Zâmbreni, Ruseștii Noi, Cigârleni and Puhoi of Ialoveni district; Baccealia and Tocuz of Căușeni district, and Cenac of Cimișlia district.
Difference between banking and nonbanking sectors, campaign
Both the banking sector and the nonbanking sector form the country’s financial system where those who have savings can invest these. Those who need financial resources can attract them. Information about the differences between the two sectors is provided in a video that was presented by the National Bank of Moldova in connection with the information and awareness-raising campaign “Financial education - a personal, social and economic benefit” that was launched this week. The banking sector includes the licensed commercial banks that in the Republic of Moldova are 11 in number. The nonbanking sector consists of investment societies, such as insurance companies, nonbank lending organizations, savings and loan associations. In the banking sector, the investments take the form of deposits and up to 50,000 lei of the deposited sum is guaranteed, which is the depositor gets the money back regardless of the economic developments or bank crises.
Tender contests to purchase electricity for 2021 over
The company “Moldavskaya GRAS”, which was registered temporarily in the Republic of Moldova, won all the tender contests staged by the electricity market operators. The price agreed as a result of negotiations is of 53.5 USD/MWh or by approximately 10% higher than in the previous period. The National Agency for Energy Regulation (NAER) said the supply of electrical energy in 2020 for all the domestic market operators was ensured by SA “Energocom” from the same generation source (ZAO “Moldavskaya GRAS), at the purchase price of 48.65 USD/MWh. The Administration Board of the NAER examined also the contracts for the purchase of electricity for the universal service providers and suppliers of last resort, distribution system operators and the national electricity system operator, namely: ÎS Moldelectrica, SA “Red-Nord”, SA “FEE-Nord”, ÎCS “Premier Energy” SRL and ÎCS Premier Energy Distribution SA.
Oil companies’ position on legislative proposal of MP Oleinic
The adoption of the bill proposed by Alexandru Oleinic – concerning the establishment of the general norms for calculating and applying the prices of the main oil products – will negatively influence the economic activity of oil companies, including the import of the main oil products. It will distort the competition environment on the domestic market and will lead to the worsening of the labor conditions. This is the reaction of the oil companies that are members of the Foreign Investors Association. In a letter addressed to the author of the proposal, the Parliament’s commission on economy, budget and finance, and to the National Agency for Energy Regulation, the signatories say that if the bill is passed, the import of oil products will decrease considerably and will endanger the oil security of the Republic of Moldova. The oil companies underline that the bill does not reflect all the factors that in a practical way should determine the retail price of the main oil products and the liquefied petroleum gas. “Moreover, a shortage of liquefied petroleum gas is annually witnessed in April-September. This way, so as to ensure the necessary quantities in the Republic of Moldova, this product is purchased from the Russian Federation, which sells liquefied petroleum gas at fixed prices, avoiding quotations. As a result, there can be situations when the purchase price of liquefied petroleum gas can significantly exceed the value of the Argus DAF Brest quotation, which is stipulated in the bill. In such conditions, the import of this product and is subsequent retailing on the market of the Republic of Moldova become inefficient and can lead to a shortage of liquefied petroleum gas in Moldova,” runs the letter.
Besides investments in units of transport, investments are also needed in staff, study
Chisinau lacks a public transport strategy. The strategy approved by the Chisinau Municipal Council in 2014 is rather a study. The municipality didn’t approve a plan for implementing the given strategy and money for putting the public transport strategy into practice wasn’t earmarked in the local budget. The data from the strategy are seven-eight years old and are no longer relevant. The issue was discussed in the public presentation of the public policy study “Optimization of the management of public transport in the municipality of Chisinau” that was carried out with financial support from Soros Foundation Moldova. Young researcher Cristina Voroneanu, a scholar of the Public Policy Program of Soros Foundation, said the public transport infrastructure in Chisinau is old. New trolleybuses were purchased in the capital city the last few years, while at the Urban Bus Company 112 of the 142 biases have been used long and are worn-out. According to the World Health Organization, life expectancy decreases by 1.8 years owing to exhaust gas emissions. In 2018, during 266 of 365 days, the values of nitrogen dioxide in the air were over the norm. In 2012-2021, the number of minibuses in the municipality of Chisinau decreased twice. The investments in the Urban Bus Company will not solve all the problems faced in the urban transit system. The municipality should invest in specialists, especially those who technical specialty. It is also hard to implement projects in the public transport as there are no data about the flow of commuters, including in particular areas and at particular hours, stated Cristina Voroneanu.
● THURSDAY, April 1
What are savings and what are safest methods of investing, NBM
The savings are money left after all the personal consumption costs are deducted from the income earned during a particular period of time. Usually, the people choose to invest these in real estate or in other assets or the savings are deposited at a bank, especially because bank assets bring additional revenues and a sum of up to 50,000 lei is guaranteed. Explanations over savings and investments are provided by the National Bank of Moldova (NBM) in an explanatory video. The people can also invest in state securities that can be bought through the agency of banks or at stock exchanges, but this is risky if the person does not have relevant knowledge. Evidently, the revenues earned on different types of investments are different. The most active financial assets are those in the form of shares, bonds, facultative pensions, life insurance or other instruments. Usually, the riskier is the investment, the larger is the revenue. That’s why the deposits that are considered safer yield lower revenues.
How to start a business online, information campaign
During the pandemic, many people began to produce goods and chose as a solution to sell them online. The National Bank of Moldova (NBM) in a video says sales online are performed everywhere in the world. They are safe and fast and can be made directly from the telephone, tablet PC or laptop. To start a business online, one needs to take several steps, the NBM noted. “You will first choose an area that will host the online business and also the payment infrastructure, such as the e-commerce platform, marketplace etc. Then you will decide how the buyers will pay – in cash, at post-terminal or through online banking, mobile applications or e-wallet. Later, you will define the method of storing, delivering and returning products. Finally, you will deal with such legal aspects as accounting, license, authorizations, taxes and others. The banks and nonbank service providers offer different possibilities. You have to only choose one provider and to make the necessary documents,” says the NBM’s message.
BNM: Inflation is good for the economy if it’s neither too low nor too high
Inflation is a general increase in the prices of goods and services. This is good for the economy if it’s neither too low nor too high. Information about inflation is presented in a video that is disseminated by the National Bank of Moldova as part of the information and awareness-raising campaign “Financial education - a personal, social and economic benefit” that was launched at the start of this week. Inflation appears when the demand is so high that the producers can hardly satisfy it and increase prices. Or a shortage of important economic resources appears, such as oil, whose price rises and determines increases in food prices, in transport fares and others. In all the cases, with the same sum of money a person can buy less than earlier.
Labor force in Moldova down almost 6% in 2020
The labor force of the Republic of Moldova, which is the employed population plus the persons out of work, in 2020 represented 867,300 people, a decrease of 5.7% (919,300) on 2019, shows the Labor Force Survey. The men represented a larger part of the labor force than the women, while the number of economically active persons from rural areas was higher than that of those from urban areas. The population aged 15 and over represented 40.3% of the labor force, a 42.3% decline on a year before. The employed population was 834,200 people, by 4.4% lower than in 2019 (872,400). The agricultural sector employed 175,900 persons or 21.1% of the employed. As many as 658,300 persons or 14.6% of the working people were involved in non-agricultural activates, 11.7% in the processing industry, while 7.2% in the building sector. 29.6% of the working population was employed in the municipality of Chisinau.
● FRIDAY, April 2
Record fine for carter agreements when setting prices of phytosanitary products
Chisinau (IPN)
Four companies were fined 91 million lei in total for taking part in harsh cartel-type horizontal agreements based on continuous concerted practice aimed at setting selling prices and other trading conditions when selling phytosanitary products and fertilizers of two types to third parties on the county’s territory. The Competition Council said this is the largest cartel identified so far and the imposed fine is the largest in the institution’s history and is probably the heaviest one in the country’s history too. In a press briefing, Eugen Cozmulici, head of the Council’s External Relations Division, said the four companies are: “Agrostoc”, “Bioprotect”, “DiazChim” and SA “Fertilitatea-Chişinău”. The imposed fine is the largest one stipulated by the legislation for such actions. It was determined that the given companies communicated and agreed the prices and some of the conditions of trading phytosanitary products to national agricultural companies.
NBM: Law bans provision of any financial assistance to state
The Law on the National Bank of Moldova bans the provision of any financial assistance to the state and its bodies. The central bank noted that any loan from the NBM will lead to the impoverishing of the population. Lending to the state or businesses is ensured by bank and nonbank financial institutions and the banking sector at present has enough liquidity. The details were provided following reports about an eventual loan intended for the state or the use of the foreign exchange reserves. “To overcome the economic crisis, to support business entities and the population in times of a pandemic, the executives of many countries resort to domestic and foreign loans. In the Republic of Moldova, the attraction of internal resources by the executive is stipulated by the law and the National Bank, as the fiscal agent of the state, regularly places state securities and bonds on the primary market,” the NBM said in a press release.
2020 was a challenging year for wine industry too, conference
The year 2020 was a challenging one for everyone. The COVID-19 pandemic closed the borders and limited entrepreneurial activity. The most serious hydrological drought was witnessed in 2020 and this also affected the wine industry. In 2020, the volume of processed grapes was by 40% lower, primarily in the case of grapes for distilled wines. The grape harvest was by 40% lower, being the lowest one in the last decades, with the harvest of 2010 being lower only, Cristina Frolov, director of the National Office of Vine and Wine, stated in the national conference “Winemaking and Winegrowing Year 2020. Sector Development Priorities”. According to Cristinai Frolov, over 40 million lei in 2020 was invested by the private sector in the development of the industry. 16% of the investments were covered with subsidization funds. The area of vineyards decreased by 36% the last few years. This means all the sector’s efforts should be aimed at rehabilitating vineyards. In 2020, for the first time in the last few years, there were planted by 150 ha of vineyards more.
Owing to lack of parking places, Central Market lost over 30% of buyers
Amid the competition with shopping centers and stores located nearby, which can be accessed by walking to them, the Central Market of Chisinau, owing to the lack of parking places, lost over 30% of the buyers. This negatively affects the economic situation of the municipal enterprise. The number of buyers declined and some of the business entities stopped renting selling places there. Currently, up to 60 kiosks and more than 1,000 trading places at counters are free, the enterprise’s director Ion Pantea said in the meeting of the Chisinau Council, referring to the decision to build a parking garage on the territory of the Central Market. Ion Pantea related that the Central Market, being situated downtown, is to provide parking places for the visitors. Initially, there was carried out an urbanistic study that envisions the creation of about 118 parking places, including 4% for persons with disabilities, on the streets Armenească, Mitropolit Vaarlam and Tighina.
● SATURDAY, April 3
Disposable incomes in 2020 were 3,096 lei a month per person
The population’s disposable incomes in 2020 represented 3,096 lei on average a month, an increase of 7.5% on a year before. Adjusted to the consumer price index, the population’s incomes rose by 3.6%. The salary earnings are the main source of income of the population. They represent 50.2% of the total incomes. According to the National Bureau of Statistics, the social welfare is the second source of livelihood by importance. The own-account activities also contributed to the formation of incomes. The individual agricultural activity represented 8.3% of the own-account activities, while individual non-agricultural activity - 6.3%. Money transfers from abroad remained a significant source for the budget of households, being by 0.5 percentage points higher than in 2019.
Economy Ministry anticipates gradual economic recovery, GDP growth of 6%
The economy in 2021 is expected to recover gradually. The GDP will rise by about 6% this year, while in 2022-2024 the economic growth will remain on an upward trend at about 4%, being in the proximity of the potential GDP, according to the medium-term macroeconomic projection of the Ministry of Economy. The projection says the industrial sector in 2021 will return to a positive trend. Owing to the expected rise in external demand in the region following vaccination against the novel coronaries, the situation of the exporting sectors will improve, including at Free Economic Zones, where the industrial activity is projected to rise by 3.9%. In the other years covered by the forecast, the industrial sector is expected to develop stable and positively, based on 3-4% growth. After a year of severe drought, the agricultural production this year is expected to grow by about 29% and by 3-5% the next few years, if the weather conditions are relatively favorable and investments in the sector go up.
