ECO-BUS WEEKLY DIGEST December 27-January 2. Most important Economy & Business news by IPN
● MONDAY, December 27
Health Ministry about price of protective masks in drugstores
During the state of public health emergency declared nationwide, the protective face masks are sold at the purchase price or the delivery price with a profit margin that does not exceed 20%, the Ministry of Health said in a response to an inquiry made by IPN in connection with the major difference in the prices of disposable protection masks in national drugstores, which range from 12 lei ten pieces to 8 lei a piece. According to the Ministry, the prices of medical devices and protective equipment in the Republic of Moldova are not regulated and are not registered, as in the case of medicines. In 2020, by a Government decision, the medical face masks were added to the list of socially important products. The Ministry noted that during the past half a year, to ensure control and a comfortable price for the citizens, there was drafted a decision to amend Government Decision No. 603/1997 for approving the regulations on the formation of prices of medicines and other pharmaceutical products. The draft is being finalized.
Average monthly official salary for 2022 proposed at 9,900 lei
The Ministry of Labor and Social Protection suggests setting the average monthly official salary for 2022 at 9,900 lei. In a draft decision, the Ministry argues the proposal is based on the macro-economic indicators forecast by the Ministry of Economy for 2022-2024. Recently, the national commission for collective consultations and negotiations discussed proposals to raise the minimum guaranteed salary in the real sector that is now 2,935 lei. As of next February, this is to be increased to 3,500 lei. The dialogue will be resumed to consider raising the minimum salary again in May. The authorities agree with trade unions that this should be increased to 4,000 lei.
ANAT: Situation in tourism is difficult and operators risk going bankrupt
Representatives of the National Association of Tourism Legal Agents of Moldova (ANAT) warn that the situation in the field is difficult and many companies risk going bankrupt. On December 31, the period for reimbursing passengers for the services that weren’t provided due to the pandemic expires, while the bill that extends this period was given a first reading only and cannot take effect. In a news conference at IPN, the Association’s president Anna Colța said that it was a difficult year, as the previous years, with restrictions, with cancelled flights and other impediments. The business entities managed to work only for a month and a half with Greece. The flow of tourists decreased significantly. Last year, the largest provider of tourist services in Greece that operated on Moldova’s market and had a share of about70%, Mouzenidis Travel Greece, announced the cessation of its operations and the interruption of servicing of tourists with already paid tour packages without refunding the advances. The problem hasn’t been solved yet. In such conditions, the Association asked the authorities to extend the period for repaying the money to clients until September 30, 2022. “We were glad to find support in the Parliament of the Republic of Moldova following the public consultations we had on the parliamentary platform, as a result of which PAS MP Iulia Dascălu initiated a bill on the extension of the moratorium on Law No. 72 of 2020 until September 30, 2022. But I cannot understand why the bill proposed by Missis Iulia Dascălu wasn’t given a second reading. The bill was approved of and was adopted by the votes of 68 MPs after being given a first reading. But it wasn’t proposed for the second reading,” stated Anna Colța.
ANAT asks for extraordinary sitting of Parliament
Representatives of the National Association of Tourism Legal Agents of Moldova (ANAT) call on the authorities to convoke an extraordinary session of Parliament to give a second reading to the bill that extends the period for reimbursing travelers for services that weren’t provided due to the pandemic until September 30, 2022 and to adopt it. Or many companies will become insolvent or will spend all their earnings on paying lawyers, court courts and delay penalties, as they said. The period expires on December 31 this year. In a news conference hosted by IPN, the Association’s president Anna Colța said it is not clear why the bill proposed by Missis Iulia Dascălu wasn’t given a second reading. The bill was approved of and was adopted by the votes of 68 MPs after being given a first reading. But it wasn’t proposed for the second reading. Anna Colța called upon President Maia Sandu, Parliament Speaker Igor Grosu and the parliamentary group of the Party of Action and Solidarity to support the tourism industry and to help it break the impasse so as to be able to reimburse clients for the non-provided services. This money was transferred to foreign tourism service providers. One of them, Mouzenidis Travel Greece, which had a share about 70% of Moldova’s market, announced the cessation of its operations and the interruption of servicing of tourists with already paid tour packages without refunding the advances. The problem hasn’t been solved yet.
Over 4,000 tourists in Moldova paid in advance for cancelled vacations in Greece
More than 4,000 Moldovans (in October 2019 – March 2020) made payments in advance for vacations planned in Greece in the warm period of 2020. For these travellers, the Moldovan tour operators transferred over €1 million to Greek tourism service providers. Howsoever, the pandemic thwarted the plans. Services weren’t provided, but the money cannot be refunded for now. In a news conference at IPN, the president of the National Association of Tourism Legal Agents Anna Colța said the pandemic seriously affected the tourism industry. Owing to the travel restrictions, the tour operators managed to work only for a month and a half with Greece, which is popular with Moldovans as a tourist destination. “The flow of tourists decreased significantly. Moreover, on June 17, 2020, the largest provider of tourism services in Greece that operated on Moldova’s market and had a share of about70%, Mouzenidis Travel Greece, announced the cessation of its operations and the interruption of servicing of tourists with already paid tour packages without refunding the advances. The problem hasn’t been solved yet,” she stated. The tour operators are to refund the money for the non-provided tourism services until December 31 this year. But they cannot do this as the money was transferred to the provider in Greece. ANAT requested the authorities to extend the period until September 2022. The request was accepted, but the relevant bill was given only a first reading by Parliament.
● TUESDAY, December 28
Number of payments with debit cards almost twice higher
The number of cards that were in circulation in the third quarter of this year rose by 7.2% compared with the corresponding period last year. The number of cashless payments made in the country in the period grew by 43.3%. At the end of the third quarter, the number of debit cards issued in Moldova that were in circulation came to 2.31 million, according to the National Bank of Moldova. By the technical solution, the proximity cards represented 99.9% of the new cards issued in the third quarter and 90.5% of the cards in circulation. Of all the cards in circulation owned by private individuals, 53.7% were possessed by women. The social cards constituted 79% of all the cards.
Radu Marian: Improvement of business climate is priority of PAS group
The continuation of the enhancement of the business climate is the priority of the parliamentary group of the Party of Action and Solidarity (PAS) this coming year. Businesses can be developed in a proper economic environment, while developed businesses mean more jobs and higher pays. “To help the businesses develop, we will adopt laws that would reduce bureaucracy, would simplify the reporting procedures for state organizations. We will simplify the financial management rules for entrepreneurs. We will adopt a legal framework by which businesspeople could easier access financing, loans by introducing new instruments, such as crowdfunding. The improvement of the business climate means adoption of legislation that would encourage investments in the Republic of Moldova,” PAS MP Radu Marian, deputy head of the Parliament’s commission on economy, budget and finance, stated in a press briefing. The improvement of the activity of regulators is another priority next year. “The ensuring of clear game rules for those from the business sector is key for the economic development of the Republic of Moldova. This is done by the regulators, such as the Competition Council, the National Agency for Energy Regulation, the National Commission for Financial Markets and others,” stated Radu Marian. The PAS group aims to fill the vacancies in the administration of regulators. There will be also made structural changes. The Completion Council will be merged with the National Agency for Energy Regulation so as to create a solid, efficient and functional institution that would deliver results. “This way, the cases when responsibility was shifted from one institution onto another will be avoided. In general, there will be simplified the decision-making mechanism at regulators.” Radu Marian noted Parliament in 2022 will ensure thorough control of the regulators’ work.
Moldovans working in Russia risk being deported if they do not have necessary documents
As from January 1, the Moldovans who work in the Russian Federation risk being deported if they do not have the papers in order. The Russian news agency TASS said the foreigners who work illegally in Russia will be fined up to 5,000 Russian rubles (about 1,200 lei, e.n.). Besides being fined, they will be deported and will be banned from entering Russia. Fort each illegal worker, the employer will be fined 800,000 Russian rubles (equal to almost 200,000 lei). Representatives of the Russian Ministry of Internal Affairs said the provisional measures introduced by the President of Russia, which enable foreigners to regulate the legal status for working legally without leaving the Russian Federation, expire on December 31. The citizens of several states, including the Republic of Moldova, have the right to ask for a patent without taking into account the requirements concerning the time limit for submitting documents and the goal declared when entering Russia. The employers that engage foreigners in works can sign work contracts with these and are to notify the responsible local bodies within three days. Also, the employers should have a permit for hiring foreign workers.
● WEDNESDAY, December 29
Economic event of 2021: Moldova’s economy recovered after recession
The swift economic recovery this year after the recession of 2020 can be classed as the most important positive event of the economic year 2021. “During the first nine months, a growth of over 10% was recorded and the growth for the whole year is expected to be of 8-10%. We see the reanimation of investments, primarily of the private ones,” said Stas Madan, economic expert of the Independent Think Tank “Expert Grup”, who commented on the economic situation this year at the request of IPN. The rise in amounts collected as taxes and strengthening of the budget are among other important elements mentioned by Stas Madan. “The amounts collected into the national public budget were appropriate this year and enabled to finance important costs”. The expert said the ‘major’ budget deficit that tends to become a norm in Moldova too is one of the less satisfactory elements. “Even if we realize that the exceptional situations require exceptional measures, this situation should be followed attentively in the next period, including as regards the servicing of the public debt. For next year, we have a rather large budget deficit, of over 15 billion lei,” stated Stat Madan. The non-starting of important reforms in 2021, such as the territorial-administrative reform, is another less positive element. “Next year will be critical for the implementation of reforms as a new electoral cycle will begin in the second half of the year and the probability of doing reforms will be much lower. That’s why it is important for these processes to be maximally encouraged in the immediate period so that they can be carried out,” explained Stas Madan.
Bill on gas debt contains shortcomings that can generate corruption, NAC
The National Anticorruption Center (NAC) identified ambiguities and shortcomings in the process of appraising the Government decision on the audit of the debt owed by Moldovagaz to Gazprom. It noted these shortcomings can generate preconditions of corruption and should be removed. The first objection to the expertise report on the audit of the debt owed by Moldovagaz to Gazprom and final factors for the gas supplied to consumers on the right side of the Nistru is that these “final factors” that are to be subject to an independent audit are not defined. But this ambiguity concerning the circle of subjects covered by the audit can lead to the appearance of corruption risks related to the processes described in the normative document. The bill also does not clearly specify the procedure for choosing the company that is to perform the audit. The unclear provisions concerning the public procurement procedure for the audit service can generate corruption risks and integrity incidents on the part of functionaries of the Public Property Agency that is responsible for the implementation of the norm, said NAC.
Value of received remittances decreases, while of sent remittances increases
The remittances received in the third quarter of this year came to US$426.4 million, 2.2% down compared with the third quarter of last year. The sent remittances rose by 15.3% to US$133.0 million in the third quarter. According to the National Bank of Moldova, a remittance received in Moldova was US$570.9 on average, while a sent remittance was US$ 629.8. Some 83.5% of the remittances were received in Moldova by private individuals through the agency of money transfer systems, while 15.5% through the SWIFT network. The services provided based on bilateral agreements represented only 1%.
● THURSDAY, December 30
Period for applying non-rigorous customs control at three checkpoints extended
The Government extended the permission for business entities registered or not with the Public Services Agency to get through the checkpoints Pervomaisk-Kuchurgan, Goianul Nou-Platonovo and Novosavitskoe-Kuchurgan until June 30, 2022, without applying economic policy measures or prohibitions, on condition the goods remain on the territory that is not controlled by the unconstitutional authorities. According to Minister of Finance Dumitru Budianschi, the time limit needs to be extended as solutions for the registration of all the entities operating in the eastern districts of the Republic of Moldova with the Public Services Agency should be identified and mechanisms for implementing the provisions applied at border crossing points should be designed. The minister said that only one of the three checkpoints works as a joint point - Pervomaisk-Kuchurgan.
How the banking sector has fared in 2021, why prices have risen and the financial outlook for Moldova. IPN interview with the new Deputy Governor of the National Bank of Moldova, Tatiana Ivanicichina
Tatiana Ivanicichina: 2021 has been a challenging year. Despite the lack of a full-fledged government and external financing in the first seven months of the year, the state budget revenues from taxes and fees were higher than expected, thanks to continued economic recovery. The second half of the year was marked by the investment of the new Government, and, as a result, the relaunch of external financing, which was directed towards policies supporting the population and business environment, to cope with the volatile environment characterized by rising energy resource prices, as well as a new wave of Covid-19. Also, a new International Monetary Fund Program has been approved, which comes with a considerable financial support. It will continue to support the economy and population through Government policies. At the same time, a significant flow of financing through the EU’s Economic Recovery Plan will follow. Referring to the banking sector, it has been coping well with the effects of the pandemic crisis, remaining stable, well-capitalized and with sufficient liquidity. Thus, from the beginning of 2021, credits to the population increased by 22% compared to 2020. We expect from the coming year a relaunch of investment in the real sector of the economy and an increase in the foreign investors’ trust, which will support economic growth and, consequently, will turn into a higher standard of living of the population.
NBM monitors processes so as to intervene at appropriate time, new deputy governor
The National Bank of Moldova (NBM) is attentively monitoring the evolution of the consumer price index, internal and external macroeconomic situation, and, at the appropriate time, will come with the necessary measures to create adequate monetary conditions to achieve its fundamental objective, the new Deputy Governor of the NBM Tatiana Ivanicichina stated in an exclusive interview for IPN. She noted that despite the lack of a full-fledged government and external financing in the first seven months of the year, the state budget revenues from taxes and fees were higher than expected, thanks to continued economic recovery. The second half of the year was marked by the relaunch of external financing, which was directed towards policies supporting the population and business environment, to cope with the volatile environment characterized by rising energy resource prices, as well as a new wave of Covid-19.
Tiraspol limits farmers’ access to land in Dubăsari district. RPB’s response
The Reintegration Policies Bureau (RPB) describes as “surprising” the message of the chief negotiator of Tiraspol, by which this informs about the intention to limit, until June 30, 2022, the implementation period of the Protocol decision concerning the mechanism for using the farmland in Dubăsari district. “We invite Tiraspol to return to a constructive and consecutive dialogue centering on the sustainable implementation of the undertake commitments, the respect for the basic human rights and freedoms of the people from both sides of the Nistru and to exclude unilateral tactics aimed at imposing unacceptable conditionality,” the Bureau says in a press release that is quoted by IPN. Tiraspol invoked the alleged non-execution by Chisinau of the provisions of point 5 of the Protocol decision concerning the utilization of farmland situated in Dubăsari district, beyond the Tiraspol-Camenca road, of November 25, 2017. The RPB explained that the decision consists of two interdependent elements: restoration of “the mechanism of 2006” and ensuring of access to the farmland, and, if this problem is solved, informing of the responsible bodies of the Republic of Moldova about the annulment of all the restrictions imposed earlier by officials of the region so as to consider the possibility of reviewing the procedural measures imposed on those to blame. The Bureau noted the mechanism for ensuring access to the farmland was implemented partially and intermittently by Tiraspol as the problem of publicly owned land of the territorial-administrative units of Dubăsari district hasn’t been solved. The developments in the case of farmland owners and the attitude of factors from Tiraspol to these have been in the focus of the responsible national authorities that acted within the limits of the current normative framework, avoiding taking measures against the law and for political purposes. Therefore, the argument invoked by Tiraspol is unfounded and has purely political undertones as the Protocol decision does not have an implementation deadline.
Fifth part of sowed corn remained unharvested
Important quantities of corn remain in the fields at the end of December. Owing to high humidity, the producers couldn’t harvest the corn. According to the Association “Agrocereals”, about 20% of the sowed corn hasn’t been gathered. Igor Grigoriev, president of “Agrocereale”, Moldova’s largest association of grain exporters, has told IPN that humidity in the fields exceeds 18-20%, but the level appropriate for harvesting is 15-16%. If the corn is gathered when humidity is high, it should be taken to grain drying facilities, but these are not many in number in Moldova, are 30 to 50 years old and can process low quantities. This year, the crop harvest in Moldova totals 2.5 million tonnes, which is a record high. New types were sowed this year, with a yield of 14-15 tonnes per hectare. This is two-three times more than in the case of the traditional types, stated Igor Grigoriev.
Four ships with Moldovan corn blocked in ports in Turkey
Four ships with about 25,000 tonnes of Moldovan corn got stuck in ports in Turkey owing to inconsistencies in the accompanying documents. Turkey in November modified the market entry conditions for corn, but the National Food Safety Agency didn’t take these changes into account when issuing the accompanying documents, Igor Grigoriev, president of “Agrocereale” Association of Grain Producers and Exporters, stated for IPN. He noted the responsible Turkish authorities asked to indicate, when issuing the phytosanitary certificate, that the Moldovan corn that is to reach Turkey goes through Ukraine’s Reni. But the National Food Safety Agency didn’t do it. According to Igor Grigoriev, the four ships are blocked in ports in Turkey. “At the insistence of “Agrocereale” and of the chairman of the Parliament’s commission on agriculture and food industry Vladimir Bolea, steps are being taken to solve the problem. One of the four ships will be allowed to depart today or tomorrow. The situation of the other three ships remains uncertain,” stated the Association’s president. Contacted by IPN to comment on the situation, Radu Musteața, director general of the National Food Safety Agency, said he was having a meeting and was unable to talk.
Tatiana Ivanicichina: Exchange rate depends on developments in supply and demand, not on NBM
Some may believe that the National Bank of Moldova changes the exchange rate at its pleasure, but the exchange rate is actually determined by developments in supply and demand in the domestic foreign exchange market. The official exchange rate of the Moldovan leu is calculated against the US dollar based on the purchase/sale transactions by transfer of US dollars against Moldovan leu on the domestic foreign exchange market, the new Deputy Governor of the NBM Tatiana Ivanicichina stated in an exclusive interview for IPN. „So, the National Bank does not set the exchange rate "at its pleasure". This depends on developments in supply and demand in the domestic foreign exchange market, not on the NBM. The National Bank does not aim at establishing a certain exchange rate, the main purpose of the NBM is to maintain price stability,” said the official. In this regard, monetary policy instruments are applied, among which are the interventions in the foreign exchange market, when the NBM buys or sells foreign exchange in the market. These interventions have one purpose - to avoid exchange rate volatility. I will be more explicit: I think that nobody would like to see a rate of MDL 15 for USD 1 today, MDL 20 for USD 1 tomorrow and MDL 17 the day after tomorrow. Thus, to avoid sudden oscillations, interventions in the foreign exchange market are used, stated Tatiana Ivanicichina.
Franzeluța denies reports it intends to raise prices as from Jan. 1
The bakery Franzeluța refuted the press reports that it plans to increase bread prices as from January 1. “The disseminated information is not true,” the company said in a press release that is quoted by IPN. “The manipulative information that appears in the public sphere misleads the consumers. That’s why we come with a call to behave correctly, given the major goal to provide the citizens with objective information only,” runs the press release. The bakery’s administration respectfully asked to refrain from distributing any inaccurate information and comments, reiterating its readiness to provide all those interested with correct information about the operations of Franzeluța.
Non-bank lending sector recovers after 2020 stagnation
The non-bank lending sector has shown signs of recovery after a stagnation experienced in 2020, the National Commission on the Financial Market said in press release. Total loans, including financial leasing, recorded by non-bank lending organizations (NBLOs) and savings and loan associations (SLAs) in the first nine months of this year amounted to 12 billion lei or (+1.6 billion lei), showing a steady growth rate compared to 2020, which was significantly affected by the pandemic. In the structure of the loan portfolio, 10.9 billion lei were provided by the NBL sector and over 1 billion lei by the SLAs. The total value of the assets held by the entire non-bank lending sector increased by 1.4 billion lei, amounting to approximately 13 billion lei, as of September 30, 2021. At the same time, the equity of non-bank lending organizations amounted to more than 4.2 billion lei, increasing by 14.81%, and the own capital accumulated by the SLAs amounted to over 397 million lei, increasing by 10.88% compared to the same period of the previous year.
● FRIDAY, December 31
Gross external debt up 2.7% in nine months
The gross external debt of the Republic of Moldova since the start of this year has grown by 2.7% to US$8.664,18 million on September 30. This is over 66% of the Gross Domestic Product (-4.5 percentage points on December 31, 2020).The National Bank of Moldova’s data show the long-term debt represents 70.4% of the gross external debt. On September 30, this debt was US$6.099,72 million, up 1.5% since the beginning of the year. The short-term debt rose by 5.7% in January-September 2021 to US$2.564,46 million on September 30, 2021.
Interinstitutional group for implementing new wastewater pretreatment requirements
The municipality suggests that the Government should constitute an interinstitutional group for designing an action plan for efficiently and proportionally implementing the normative framework in the fields of environment and water supply and sewerage. A decision to this effect was taken by the Commission for Exceptional Situations of the municipality of Chisinau, which took cognizance of the informative note of SA “Apă-Canal Chișinău” (ACC) concerning the wastewater collection, treatment and discharge requirements. The interinstitutional group will consist of representatives of the local public authorities of Chisinau, of ACC, of non-household consumers and representatives of civil society. The action plan is needed for preventing exceptional situations following eventual disconnections of nonresidential consumers from the sewerage system for non-observance of the conditions of discharging wastewater, in accordance with the legal provisions. Recently, “Apă-Canal Chișinău” was fined 12 million lei for exceeding the maximally allowed concentrations of pollutants in wastewater in the public sewerage system. New regulations that oblige business entities to pretreat wastewater with increased concentrations of pollutants by setting up pretreatment stations take effect on January 1, 2022.
29 companies will get financing for ecologizing businesses
Twenty-nine applications submitted by companies that want to ecologize their business processes were accepted in the framework of the program to ecologize small and medium-sized enterprises (SMEs). These companies will get by up to 200,000 lei per company, which is at most 70% of the value of the investment project. According to the Ministry of Economy, 61 companies competed for grants, being assessed according to such criteria as eligibility and sustainability of ecologization actions. The selected companies operate in the service sector (11 businesses), the agrifood sector (9) and the industrial sector (9). The ecologization actions proposed by the companies included treatment of wastewater, management, collection and processing of waste, reduction of energy consumption, management of water resources by installing a treatment station, ECO and BIO citification services, air filtration ventilation systems, etc. The interested companies can fill out a form on the website of the Organization for the Development of the SME Sector.
