ECO-BUS WEEKLY DIGEST October 18-24. Most important Economy & Business news by IPN
● MONDAY, October 18
Plant with Swiss investment to be erected in Ștefan Vodă subzone of ZEL “Bălți”
The Swiss company Schoeni is investing €1.5 million in the construction of a 2,000 m2 plant for processing fruit and vegetables in the free economic zone ZEL “Bălți”, the Ștefan Vodă subzone, IPN reports.
In a press release, ZEL “Bălți” says the plant’s production capacity will be initially of 2,000 tonnes a year. In the long run, the production capacity and area will be extended for five times, up to 10,000 square meters, with a corresponding increase in investments and jobs.
Currently, work to create engineering networks in the Ștefan Vodă subzone is underway. The site for the construction of a plant is being prepared. The plant is scheduled to start operation the next growing season in May-June 2022. The enterprise will start to process vegetables (cabbage, beets, carrots, potatoes, onions), as well as berries (raspberries, strawberries) and fruit (apples, pears). Both frozen semi-finished products and finished products will be made and will be exported to Switzerland and the European Union under the brand “Schoeni Food”.
Deputy Prime Minister Andrei Spânu goes to Poland to discuss supply of gas
Deputy Prime Minister Andrei Spînu, Minister of Infrastructure and Regional Development, will be paying a working visit to Poland during October 18-19. The Ministry said that he will have discussions on the supply of natural gas to the Republic of Moldova there, IPN reports.
The Commission for Exceptional Situations last week declared a state of alert in the energy sector following the difficulties faced in the negotiations on a new contract for the purchase of gas held with the Russian gas giant Gazprom. The previous contract was extended for October and Moldova now pays US$790 per 1,000 cubic meters of natural gas.
Representatives of extraparliamentary parties accuse the country’s administration of opening talks with Gazprom too late and of ignoring the political aspects in the discussions with Russia. They also rumor that the rhetoric around the absence of a new contract for the supply of gas with Russia is aimed at inducing panic in society.
● TUESDAY, October 19
Vadim Ceban: Problem resides not in price of gas, but in provision of necessary volumes
Moldova’s debts to Gazprom and the implementation of the Third Energy Package are the main problems faced by the Moldovan negotiators in the discussions with representatives of the Russian gas giant. At the same time, the current energy crisis is determined not by the purchase price, but by the possibility of ensuring the volumes of gas needed by the country, said the president of the Administration Board of Moldovagaz Vadim Ceban. According to him, in October the household users and public institutions will not remain without natural gas, IPN reports.
Vadim Ceban said that in the negotiations with Gazprom, Chisinau insists on the extension of the previous contract for the purchase of gas, based on the old price calculation formula. According to the official, the deadlock reached in the negotiations is also due to the debt of US$450 million for gas accumulated by Moldovagaz, which is debt of the right side of the Nistru.
“The discussions on the signing of a new contract or the extension of the current contract started in June. We hoped to extend the contract for a three-year period based on the current price calculation formula. At the current stage, we are having talks, but problems are encountered, related to the debts and to the implementation of the Third Energy Package. The problem now does not reside in the price, but in the capacity to ensure the necessary volumes. There is a serious natural gas shortage in Europe and Gazprom is the only supplier that can satisfy the demand. The struggle is now for volumes,” Vadim Ceban stated in the talk show “In Depth” on ProTV Chisinau channel.
He noted that purchasing gas from Ukraine and Romania is a solution, but the goal is to sign a contract with the primary source so as to avoid paying an exorbitant price.
20.7bn lei revenues collected into social insurance budget in nine months
Revenues totaling 20.714,0 billion lei were collected into the state social insurance budget in the first nine months of this year. This is 78.5% of the annual plan of 26.400,5 billion lei, shows a report published by the National House of Social Insurance. The state social insurance contributions came to 11.735,5 billion lei, representing 77.8% of the projected annual sum. Compared with the corresponding period last year, the contributions grew by 15.4%, IPN reports.
The transfers from the state budget added up to 8.767,4 billion lei. Other revenues collected into the state social insurance budget totaled 211.1 million lei, with the common tax collected from the residents of IT parks accounting for 207.2 million lei of this sum.
The costs of the state social insurance budget came to 19.998,2 billion lei of the annual projected expenditure of 26.400,5 billion lei.
In the period, the total revenues exceeded the total costs of the state social insurance budget by 715.8 million lei. On October 1, 2021, the balance of the state social insurance budget was 716.3 million lei.
Moldova exports potatoes to North Macedonia
Abnormally low potato prices in Moldova this season have made this country, which is usually a net importer of potatoes, a significant exporter in September-October 2021, says EastFruit, an information and analytics platform for the growth of the horticulture business in Eastern Europe, Central Asia and Caucasus. According to the source, the first batch of Moldovan potatoes was recently exported to North Macedonia, IPN reports.
This is not the first surprise of the season on the potato market in Moldova. Earlier, EastFruit has repeatedly written about the rather striking supplies of Moldovan potatoes to Russia and Belarus when they are harvesting themselves and prices in their markets are usually the lowest! Moreover, both Belarus and Russia used to export potatoes to Moldova.
The EastFruit wholesale price monitoring explains the reasons for such a sharp market change: potatoes in Moldova are still the cheapest in the region. Even despite the rapid rise in prices in mid-October, wholesale potato prices in Moldova are lower than in Poland. Potatoes in Belarus now cost two times and in Russia almost three times as much as in Moldova!
However, potato prices in North Macedonia were even higher than in Russia. Therefore, it is possible that this delivery will not be the only one. In general, potato prices in the Balkan countries are quite high this season.
Natalia Gavrilița: Termoelectrica will be switched over to fuel oil
Heat supplier Termoelectrica will be switched over to fuel oil. Prime Minister Natalia Gavrilița told a news conference today that all over the world, the companies that can do it make such a move as fuel oil under the current market conditions is cheaper.
“Depending on the negotiated contracts and on the price of gas, we will take the necessary decisions as to the use of fuel oil or natural gas,” stated Natalia Gavrilița, being quoted by IPN.
The Commission on Emergencies decided to allocate fuel oil from the humanitarian aid received by Moldova from Romania. “This way, we will reduce costs for Termoelectrica,” stated the official.
She also said that besides the fuel oil provided by Romania as humanitarian aid, fuel oil will continue to be released from Moldova’s state reserves and will also be bought from the market.
● THURSDAY, October 21
Moldovans borrow heavier from banks
The value of loans released by banks goes up. The new loans provided last month came to 4.481,5 billion lei, up 36.2% on last September. The population usually borrows in Moldovan lei for a period of two to five years, IPN reports.
According to the National Bank of Moldova, the loans released in national currency, in the amount of 3.270,5 billion lei, represented 73% of the total loans. The loans in foreign currencies, totaling 1.169,6 billion lei when recalculated, constituted 26.1%, while the foreign currency loans, which came to 41.4 million lei, represented 0.9%.
The loans repayable in two to five years made up 57.3% of the total loans. Such loans provided to legal entities represented 37.6% of all the loans.
The loans in national currency released to private individuals constituted 46.9%, while the loans provided to nonfinancial commercial organizations – 47.4%, with loans intended for trade representing 49.4% of these.
The loans in foreign currencies raised by nonfinancial commercial organizations made up 88.9%, with trade loans representing 54.8% of these.
The nominal average interest rate on new loans released in national currency was 6.84%, on loans in foreign currencies – 4.06%, while on foreign currency loans – 4.17%.
Consumer loans made up 63.9% and were provided at an average rate of 4.38%, down 0.19 percentage points compared with a month before and down 2.77 percentage points on September 2020..
123 SMEs benefitted from guaranteed loans offered by EU
A number of 123 small and medium-sized enterprises in Moldova obtained loans totaling €28 million, benefitting from a 70% guarantee provided by the European Union through the agency of the EIB Group, IPN reports.
For Pentru Damiagro SRL, which has grown wheat, corn and sunflower during over 16 years, the necessity of investing in equipment was essential for increasing production capacities. “We raised several loans for purchasing agricultural machinery and tools. This helps us to use modern soil cultivation technology and to therefore obtain products of a higher quality and to be more competitive on the market,” the enterprise’s accountant Mihaela Belitei stated, being quoted in a press release issued by the PR agency Profile. Through the agency of the EIB Group, the family business enjoyed better lending conditions. The enterprise secured 30% of the loan, while the other 70% were guaranteed with European funds.
Loan guarantees were also offered to Djofra-M SRL, which makes glass fiber netting. The enterprise works with different raw material suppliers, but only 30% of the needs can be satisfied with domestic material, while the rest of the raw material is imported. The enterprise’s representative Natalia Groian said they needed to get a loan for paying in advance and reserving raw material so as not to cease operations due to the crisis of raw material. This way, they kept the 160 jobs and intend to create another 20 jobs by the end of this year as they plan to diversify production.
IMF staff and authorities reach staff-level agreement on US$564m economic reform program
The Moldovan authorities and the IMF have reached a staff-level agreement on a package of economic policies that IMF resources could support under the Extended Credit Facility and Extended Fund Facility (ECF/EFF) arrangements for 40 months, IMF Mission Chief Ruben Atoyan stated after completing the Article IV discussions and virtual meetings held during September 27 – October 15, IPN reports.
“Proposed access under the arrangement is SDR 400 million (232 percent of quota and about US$ 564 million). The staff-level agreement is subject to IMF Management and Executive Board approval. The Board’s consideration is expected in December, subject to the implementation of several prior actions, including on central bank independence, the correction of past policy slippages, and the adoption of credible fiscal plans,” said Ruben Atoyan, being quoted in a press statement of the IMF Office in Chisinau.
“Broad governance and structural weaknesses continue to impede sustained improvement in the living standard of Moldovan citizens amid an ongoing COVID-19 pandemic. Public spending is inefficient and poorly targeted, with low-quality and inaccessible infrastructure. A weak business environment constrains private investment and productivity while the rule of law and anti-corruption frameworks are ineffective. High emigration, particularly among the better-educated Moldovans, continues to retard human capital accumulation.
“The new ECF/EFF arrangements will help to sustain the recovery with an appropriate policy mix and to advance multi-year governance and institutional reforms to rebuild policy buffers and foster rapid, inclusive, and sustainable income growth. Reform priorities span areas covered in the IMF’s governance framework, including strengthening transparency and accountability, improving public policy predictability, strengthening financial institutions, and fostering deregulation and competition.
“The economy is rebounding from a deep economic downturn, with growth projected at 7½ percent in 2021, spurred by strong domestic demand. CPI inflation accelerated, driven by the recovery in demand and surging energy and food prices. The fiscal deficit is projected to reach 5 percent of GDP in 2021 owing to higher crisis-related spending. With the rising inflationary outlook, the current pace of monetary tightening by the NBM is appropriate and will likely need to be sustained in the near term.
Moldova to receive US$564 during next 40 months
The Government of Moldova and the International Momentary Fund agreed to launch a new economic reform program with access under the ECF/EFF arrangement to SDR 400 million or about US$ 564 million over the next 40 months, IPN reports.
“The reaching of the staff-level agreement is a catalyst for new financing from other development partners and gives increased confidence to investors and greater freedom in implementing social, infrastructure and economic programs to the Government,” Prime Minister Natalia Gavrilița stated in a news conference held jointly with the IMF Resident Representative in Moldova Rodgers Chawani on the occasion of the completion of expert-level discussions.
Speaking about the areas that will benefit from financial support, the Premier mentioned the modernization of the country, which means better infrastructure, highways and local roads of a higher quality, sewerage networks and wastewater treatment stations. She said that to go on, the agricultural sector should be modernized and the state should increase its participation in industrial, information and other kinds of investment projects. In essence, the goal is to improve the quality of the vital systems of society, such as education, healthcare, security, social protection, and justice.
“We will continue to fight smuggling and tax evasion by improving tax and customs administration and will rationalize costs so as to make sure that the budget funds are used for the citizens’ benefit,” stated the official.
For his part, Rodgers Chawani said the first tranche of US$81 million is to be disbursed until the end of this year. He made reference to the IMF Mission Chief Ruben Atoyan’s opinion that “public spending is inefficient and poorly targeted, with low-quality and inaccessible infrastructure. A weak business environment constrains private investment and productivity while the rule of law and anti-corruption frameworks are ineffective. High emigration, particularly among the better-educated Moldovans, continues to retard human capital accumulation.”
● FRIDAY, October 22
Moldova will use Ukraine’s expertise in gas import
Given the unprecedented energy crisis faced by many countries, a working group will be constituted to use Ukraine’s expertise in the import of gas. Such an agreement was reached by Deputy Prime Minister Nicu Popescu, Minister of Foreign Affairs and European Integration, in a meeting with Naftogaz CEO Yuriy Vitrenko, IPN reports.
The meeting was held during Nicu Popescu’s visit to Ukraine and the discussions centered on the current bilateral relations between the two countries. The strengthening of interaction in the energy sector for diversifying the gas supply sources for Moldova and for increasing security in the energy sector was the main topic of conversation.
The officials conferred on the technical solutions that can be implemented in cooperation with the Ukrainian authorities so as to make sure that Moldova is supplied with natural gas on a permanent basis.
Over 16,000 tones of fuel oil to be released to “Termoelectrica” from state reserves
The Materials Reserves Agency will provide 16,500 tonnes of fuel oil from the state reserves to “Termoelectrica” SA, as the Cabinet decided in a meeting on October 22, IPN reports.
Minister of Home Affairs Ana Revenco said the state intervenes to deal with the emergency on the natural gas market so as to ensure the country’s energy security and to protect the population.
Given the crisis situation on the natural gas market of Moldova, “Termoelectrica” switched over to fuel oil. As the company used up the own supply of crude oil by October 15, the Commission on Emergencies decided to release 16,500 tonnes of fuel oil from the state reserves so as ensure continuity of the electricity and heat production process.
“The utilization of the released fuel oil will enable to provide the population and the most important social institutions, such as kindergartens, hospitals and schools, with electrical energy and with heat during the cold period of the year. The use of this fuel will enable “Termoelectrica” SA to supply heat and electricity to customers at the same tariff and natural gas will be economized this way,” stated Ana Revenco.
Term deposits 4.3% up over a year
The new term deposits this September came to 2.804,1 billion lei, an increase of 4.3% on last September. The new deposits of private individuals represented 71.8%. 39.4% of the deposits were attracted in national currency, while 32.4% in foreign currencies, IPN reports, quoting the National Bank of Moldova.
Deposits repayable in two to five years represented 35% of all the term deposits. Private individuals’ deposits for such a term continued 25.4% of all the deposits.
The average rate on deposits in national currency was 3.19%, while on deposits in foreign currencies – 0.36%.
Compared with the previous month, the average rate on new term deposits in national currency rose by 0.06 percentage points. The legal entities made deposits at an average rate of 2.42%, the private individuals practicing entrepreneurial activities – at an average rate of 2.31%, while the private individuals – at an average rate of 3.63%.
On new term deposits in foreign currencies, the average rate decreased by 0.08 percentage points. The legal entities made deposits at an average interest rate of 0.41%, the private individuals practicing entrepreneurial activities – at an average rate of 0.5%, while the private individuals – at an average rate of 0.36%.
Compared with September 2020, the average rates on deposits in national currency and in foreign currencies decreased.
● SATURDAY, October 23
Energocom will purchase 5m cubic meters of natural gas initially
The central gas and electricity supplier Energocom SA will sign a contract for the sale of 5 million cubic meters of gas with Moldovatransgaz, says the decision of the Commission on Emergencies that ordered to allocate 1 700 000 lei for increasing the share capital of Energocom SA, IPN reports.
Energocom will constitute a working group that will examine the natural gas supply bids and will choose the winner. The price at which Moldovatransgaz will buy natural gas from Energocom will cover operational costs, taxes and duties, but will not include profit.
For its part, Moldovagaz will sign a balancing contract with Moldovatransgaz valid for the period of the state of emergency.
The Ministry of Labor and Social Protection, together with the Ministry of Foreign Affairs and European Integration, during five days will identify a solution for using the fuel oil donate by the Government of Romania to the Government of Moldova for overcoming the current situation.
The General Inspectorate for Emergencies of the Ministry of the Interior will host the Command Center of the Commission on Emergencies. At the suggestion of the Inspectorate’s chief, secretary of state at the Ministry of the Interior Alexandru Oprea was named manager of the Command Center.
Supply of gas to Moldova can be fully halted, Tass
The Moldovan-Russian negotiations on the supply of natural gas didn’t produce any result and there is a risk that the supply of gas to Moldova will be fully halted after November 1, IPN reports, quoting the Russian news agency Tass that makes reference to sources close to the negotiation process.
The quoted source said the Russian side proposed “an objective market price” with an additional discount of 25%, but the Moldovan side insisted on a 50% reduction on the market price. “Therefore, the signing of a new long-term contract for the supply of gas until November 1 is in question. There are big risks that the Russian gas supplies to the Republic of Moldova will be fully stopped after this date,” said the quoted source.
Tass also reported that the Russian side was represented by officials of the executive and of Gazprom and the repayment, during the next three years, of the debt for gas totaling US$700 million that was accumulated by Moldova, except for the Transnistrian region, the previous years was the only condition for benefitting from a 25% reduction.
“But the Moldovan delegation consisting of deputy prime ministers Vladislav Kulminski and Andrei Spînu insisted on the halving of prices, invoking the shortage of funds,” noted the source.
SA Moldovagaz and Gazprom on September 30 signed a contract for the supply of gas valid until the end of October. During the current month, Moldova will pay the market price of US$790 per 1,000 cubic meters of gas. Last year, Moldova imported gas at the price of US$148.87 per 1,000 cubic meters of gas. In the negotiations with Gazprom, the Moldovan authorities asked to reduce the price to US$200-300 per 1,000 cubic meters of gas. The figures weren’t confirmed officially.
Gazprom’s offer is not advantageous to Moldovan citizens, Andrei Spânu
The offer of Gazprom is not advantageous to the citizens of the Republic of Moldova. The asked price, which includes financial and nonfinancial conditions, including the repayment of the historical debt during a limited period of time, is higher than the offers on international gas markets, Deputy Prime Minister Andrei Spânu, Minister of Infrastructure and Regional Development, posted on Facebook, being quoted by IPN.
According to the official, the Republic of Moldova cannot accept to pay a gas price higher than the price paid by all the other countries of the region. “Our message in the negotiations was always the same: the Republic of Moldova wants to continue the discussions and to sign a long-term contract between Moldovagaz and Gazprom, which will be advantageous to both of the sides,” stated Andrei Spînu.
“We want a new round of discussions with Gazprom. At the same time, we will look for alternative suppliers so as to make sure that the country has gas and that we diversify the supply sources.”
In the discussions, the Russian side assured that Gazprom will immediately supply the necessary additional volumes for October, by 5 million cubic meters of gas a day. “We hope that these volumes will enter the Republic of Moldova in the nearest future,” said the official.
