ECO-BUS WEEKLY DIGEST December 2-8. Most important Economy & Business news by IPN
● MONDAY, December 2
President Dodon confident Russian gas will continue to be supplied to Moldova
The contract for the supply of natural gas to Moldova concluded with Gazprom will be signed based on two possible scenarios. The document is ready and is to be signed during the next few days, while the two scenarios will be discussed in the meeting of the Supreme Security Council, quoted President Igor Dodon as saying in a news conference on December 2. After meeting Prime Minister Ion Chicu and Parliament Speaker Zinaida Grechanyi, Igor Dodon said the first scenario envisions transportation of gas through Ukraine. If Ukraine and Russia do not come to terms, the Russian gas after January 1, 2020 will reach Moldova through other connection points. There are now at least two points, through Turkish Stream and through the north gas pipeline, in Alekseevka.
Igor Dodon: We insist on termination of agreement to concede Chisinau Airport
The Chisinau International Airport was conceded with violations and should be transferred back under the exclusive management of the state, the Government of the Republic of Moldova, said President Igor Dodon, noting they will further insist on the termination of the concession agreement. After having a meeting with the Premier and the Speaker on December 2, Igor Dodon told reporters that the Supreme Security Council will be convened later this week and will discuss the steps taken by the Sandu Government to have the contract terminated. “We have different reports and want to verify them so as to see at what stage we are and what can be done further,” he stated.
Five new members to serve on Board of “Moldindconbank”
The Executive Board of the National Bank of Moldova approved five members to the Board of BC “Moldindconbank” SA. These are Nikolaos Barlagiannis from Greece, Nikolay Nikolov from Bulgaria, Ana Spînu from Moldova, Tamjid Hossain Basunia from the UK, and Gaël, Jean-Marie, Ghislain, Gérard du Breil de Pontbriand from France. According to the central bank, these have a rich professional experience relevant to the business model and activity of “Moldindconbank” and have the skills needed for managing the bank in accordance with the entrusted responsibilities.
Negotiations on Russian loan will be completed by year’s end, Igor Dodon
The conditions for a Russian loan should be as reasonable as for the loans offered for infrastructure objects by the Western partners, meaning an interest rate not exceeding 1.5%, says President Igor Dodon. According to him, the negotiations will be completed by the end of the year. “We cannot afford to take out (loans) under commercial terms, because this money needs to be returned,” said Igor Dodon, on Monday, after the traditional meeting he has at the beginning of the week with the Prime Minister and the Speaker of the Parliament.
Tax treatment of meal vouchers will lead to lower state budget revenues, study
The tax treatment of employer-issued meal vouchers as of 2020 means a sudden modification of the rules of the game, with a major impact on issuers and traders. It is also a negative signal that will affect the business community’s and potential investors’ confidence in the stability and predictability of regulations in Moldova. Moreover, the 24% tax on meal vouchers will contribute to lower state budget revenues, says a study commissioned by the American Chamber of Commerce in Moldova, the European Business Association, the Romanian Investors Association and the Chamber of Commerce and Industry France-Moldova to the polling company “Date Inteligente”. In a news conference at IPN, “Date Inteligente” director Mihai Bologan said the quantitative study covering companies that provide meal vouchers shows 62% of these companies will definitely stop issuing meal vouchers as of January 1, 2020 if the tax is imposed. Another 14% of the companies are not yet sure about this. “Asked if they accept the tax treatment of meal vouchers as of January 1, both the employers and the employees said they are categorically against. And the opinions converge: 95% of the employees and the employers are against the tax treatment. However, if they accept a tax on meal vouchers, some of the operators and the employers are ready to pay taxes on meal vouchers, but not higher than 12%,” stated Mihai Bologan.
● TUESDAY, December 3
4G mobile Internet is increasingly in demand among users
The total number of mobile broadband users accessing the mobile Internet through 4G networks has increased by about 55% in 2019, compared to the end of 2018, and totalled 1 million 578.5 thousand. Of these, 58.2% have accessed the mobile Internet via smart phones, and 15.6% via modems and cards, reports the National Regulatory Agency for Electronic Communications and Information Technology (ANRCETI). According to ANRCETI, the total number of 2G, 3G and 4G+ dedicated mobile broadband users has increased by 12% and exceeded 2,428,700. The data presented to the Agency by the 3 providers of mobile communications networks and services, Orange Moldova, Moldcell and Moldtelecom-Unite, show that traffic generated by mobile Internet users via smart phones increased by 41% to over 36 million GB. The traffic generated by dedicated access users increased by 5% to about 37.3 million GB.
Transport operators threaten to resume strike
The Employers Association of Road Transport Operators (APOTA) is asking Anatol Usatîi, the Minister of Economy and Infrastructure, to increase fares for passenger transportation or face a resumption of the operators’ strike at the week-end or at the beginning of next week. APOTA said in a letter that a round of negotiations has been held, in three meetings, including with the participation of Anatol Usatîi, after which several measures have been identified to reduce the costs of the transport operators. The measures aim to exclude abusive inspections, transparency of the ministry and the National Agency of Road Transport, the fight against unauthorized transport, etc.
Dumitru Alaiba: Security Council should discuss citizenship by investment law repeal
MP Dumitru Alaiba (ACUM/PAS) suggests that the definitive repeal of the citizenship by investment law should be discussed at the next meeting of the Supreme Security Council, set for Wednesday by President Igor Dodon. The MP has prepared an initiative in this regard, which he will submit to Igor Dodon, first thing on Tuesday. “I respectfully and strongly request to urgently include in the agenda an additional topic, namely the immediate repeal of the citizenship by investment law. This topic was previously discussed at the Supreme Security Council, and on June 18, 2019, PSRM and ACUM lawmakers jointly voted to repeal the law upon first reading. Consequently, this program was suspended for a period of four months, but not permanently annulled”, says Dumitru Alaiba’s request, which was published on Facebook.
Ion Chicu: We might have two more airports by 2021
Prime Minister Ion Chicu says that by 2021, two more airports could be opened in Moldova, in the north and south of the country. He argues that not only should the Chisinau International Airport be returned to state management, but also airport infrastructure should be developed. Ion Chicu says that in order to develop airport infrastructure, a competition for the Chisinau Airport should be created. “We have already started talking to specialists. This week we will also have a clear plan of action in this area. I think it is very possible, if not this year, then next year, I mean in 2021, to have at least one airport in the north, we are considering either Marculești or Balți, and one in the south – probably in Ceadâr-Lunga. It is up to professionals to develop a pre-feasibility study for us to understand where building them makes more sense economically”, stated the prime minister at the talk-show “Punctul pe azi” on TVR Moldova.
Over 35bn lei collected into national public budget in 11 months
The State Tax Service collected over 35 billion lei into the national public budget in January-November 2019, an increase of 5.6% or 1.9bn lei compared with the corresponding period last year. In a press release, the Service says 15.3 billion lei was collected into the state budget, up 4.4% or 644.1 million lei. The amounts collected into the local budgets came to 3.5 billion lei, which is by 0.7% or 26 million lei more than in the same period of 2018.
● WEDNESDAY, December 4
Seven persons suspected of appropriating funds from “Metalferos”
Seven persons were arrested following about 50 searches carried out at the metal waste company “Metalferos” and associated companies in the morning of December 4. These are suspected of appropriation of funds from “Metalferos”, quoting the Anticorruption Prosecutor’s Office. The suspects implemented a scheme to buy and sell ferrous and nonferrous metal through fictitious intermediation activities so as to artificially increase the purchase price and to artificially decrease the price of selling metal to intermediaries. They appropriated the difference. The damage was assessed at over 215 million lei.
We will insist on return of Chisinau airport to Government, Dodon
The concession of the Chisinau International Airport was discussed in the December 4 meeting of the Supreme Security Council. According to President Igor Dodon, the airport was conceded with violations and contrary to the state interests and they will thus insist on the return of the airport under the exclusive management of the Government. President Dodon told a news conference that on September 10 the Government initiated the annulment of the concession contract. Today it was established that the case hasn’t been yet examined and the former Government and the former minister of justice should be asked why. It went through the Chisinau City Court, the Chisinau City Appeals Court and was then sent back to the Rascani Court.
Women in Moldova have big business doing potential, but this is not realized, opinions
The women in Moldova have enormous potential for doing business, but this is not realized. If there are no discrepancies as regards gender equality, if the women and men benefit from equal treatment on employment, the economy and the productivity of companies will grow. The issue was developed at a conference centering on the women’s empowerment principles. Adam Amberg, head of the Cooperation for Development Section of the Embassy of Sweden in Moldova, said that we cannot speak about equality and results in the economy without corporate social responsibility and without a powerful commitment of the business community and a common effort of all the stakeholders. “The equal treatment of woman and men can improve the business and, respectively, the company’s profit. It is not only about empathy, but also about the efficient management of a company,” he stated.
Number of users of landline phones declines further
The number of subscribers to landline phone services in the first nine months of this year decreased by 2.5% compared with the end of 2018 to 1.80,6 million. The volume of voice traffic generated by the users of the service diminished by 13.3% to 880.9 million minutes, contributing to a 19.3% reduction in the sector revenues. According to the national ICT regulator (ANRCETI), the decline in the total number of subscribers was due to the decrease in the number of subscribers of SA Moldtelecom by 2.3% and of alternate providers by 4.1%.
● THURSDAY, December 5
Ion Chicu: Burden of servicing state guarantees to central bank could be reduced
Prime Minister Ion Chicu said the Government’s burden as regards the servicing of the state guarantees issued for covering the bank fraud could be reduced and about 600-700 million lei would be saved this way. The National Bank and the Ministry of Finance are to design a relevant mechanism. The issue was discussed in the recent meeting of the Supreme Security Council. “A very important decision taken by the Council envisions the steps that will be taken to reduce this burden on the budget,” Ion Chicu stated in the talk show “Key issue” on NTV Moldova channel. He noted the Government now pays about 1.3-1.4 billion lei yearly for servicing the state guarantees. “Half of the sum is the main part of the debt and the other half is the interest. We agreed that the National Bank and the Ministry of Finance will shortly suggest a mechanism to spare the Government from such large costs, at least those related to debt servicing. I’m sure we will identify such a mechanism.”
Changes made to law on local public finances
Parliament set two quotas on deductions from the income tax of private individuals: 100% for the budgets of villages or communes and towns and 50% for the budgets of municipalities-district residences and the municipalities of Chisinau and Balti, out of the total volume collected on the territory of territorial-administrative units. The given changes to the law on public finances were given a first reading. “Probably many of you know that the local autonomy is powerfully affected by the centralism of the government, which somehow tried to monopolize most of the real taxes,” said MP Igor Munteanu, one of the bill authors. According to him, the initiative is designed to strengthen the financial autonomy of the local public authorities by increasing the available incomes.
Parliament supports simplification of procedure for buying walnuts from population
The MPs voted in favor of the legalization of the activity and of the fiscal regime for the purchase of agricultural products from horticulture and phytotechny and of vegetal products, in particular walnuts. The legislative proposal to amend the Tax Code, the law on the public social insurance system and other documents was given a first reading. The changes apply to resident private individuals who collect agricultural and vegetal products from other private individuals in order to later sell them to companies and the sale value does not exceed 1.2 million lei during a calendar year.
Budgetary-fiscal and customs policy given first reading
The draft budgetary-fiscal and customs policy for 2020 and for a medium term was agreed after being given a first reading on December 5. The draft law allows deducting from any payments made to salary earners from which salary taxes were retained and from debts of up to 1,000 lei whose settlement period expired three years ago. The tax on the incomes of private individuals was maintained at 12%. The existing exemptions, some of the excise duties and other taxes were also kept by extending the tax basis.
MPs adopt general indicators of 2020 state budget
The state budget for 2020 was adopted following the first reading on December 5. It provides for revenues of 44.136,6 billion lei, an increase of 8.6% on 2019, and for an expenditure of 51.551,9 billion lei, up 11.2%. The budget deficit of 7.415,3 billion lei will be financed with internal and foreign funds. The social protection, education and healthcare are the first three groups that account for the largest costs in the state budget expenditure.
Moldova to get US$ 12 m from U.S.
The United States of America will offer Moldova two grants to the total value of about US$ 12 million within two agreements signed earlier by the two states. Deputy Prime Minister Sergey Pușcuța, Minister of Finance, said the money will be provided in the form of technical assistance. According to the Ministry of Finance, the Government on December 4 approved the augmentation of the total value of the Development Objective Assistance Agreement between the Government of Moldova and the Government of the U.S. for a more efficient and responsible democratic government by US$ 6.6 million to US$ 50.8. The objective of the program is to ensure efficient and responsible democratic government in Moldova by involving citizens in the decision-making process of the Government and to ensure a more transparent and responsible judicial system.
● FRIDAY, December 6
2020 state budget is adventure into which Moldova has never ventured, opinion
The state budget for 2020 that was given a first reading by Parliament on December 5 is an adventure into which Moldova has never ventured. The document is a great soap bubble and reflects wishful thinking, which refers more to wishes than to evidence and reason, political expert Viorel Cibotaru was quoted. Ex-minister of finance Natalia Gavrilița noted that when the foreign financing sources of the state budget are not known, it is a serious problem as this means that there is an uncovered amount. Editorialist Nicolae Negru said the 2020 state budget can be considered an electoral one. The fact that the budget envisions the possibility of obtaining financing from Russia and Belarus even if there are now no such agreements shows that an electoral technique is applied.
Young entrepreneurs get loans with reduced interest rate
About 130 young entrepreneurs benefitted from low-interest loans as part of the program “Youth Lending Facility” initiated by the Ministry of Finance. The program was extended to cover 28 districts of the country. The loans provided to young entrepreneurs during ten months totaled 85.3 million lei. Most of the beneficiaries invested the money in agricultural machinery, equipment for small-scale irrigation systems, mineral fertilizers, equipment for cold storage facilities, greenhouses, planting materials, seeds, connections to electricity networks and water supply systems, etc.
New operation system to be used on export of goods to Switzerland and Norway
The business entities that export goods of a preferential origin to Switzerland and Norway – goods produced or processed on Moldova’s territory - will be freed from the necessity of applying for certificates of origin – Form A. The Registered Exporter System will start to be applied as of January 1, 2020. The new system will enable to avoid the period of up to three days set for issuing the certificate of origin – Form A. The costs incurred to obtain this certificate will be excluded and the direct contact with persons will be limited.
95% of potatoes supplied to Moldova are noncompliant, ANSA
95% of the consignments of potatoes that come to Moldova are infected with the bacterium Clavibacter miciganensis. The infection is dangerous for the crop and can cause losses of 100% in production. The sale of infected potatoes affects the consumers from financial viewpoint as not much of the potatoes remains when the affected parts are removed. Specialists of the National Food Safety Agency (NFSA) will request the importers to inform consumers about the presence of the bacterium and, eventually, to sell the infected potatoes at lower prices. In a discussion that involved importers, NFSA director general Vladislav Cotici said that of 600 samples of potatoes examined since September, only slightly over 50 were compliant. A number of 24 consignments were sent back to the production country.
● SATURDAY, December 7
Official reserve assets higher in November
The official reserve assets at the end of November were US$ 3.055,54 billion, an increase of US$ 41.51 million on October 31, when these were US$ 3.014,03 billion. The rise was due to the registration of US$ 38.62 million in budget support grants from the European Commission in the name of the EU in favor of the Ministry of Finance. This is the equivalent of €34.85 million, €10.0 million of which represents the first installment of the grant component of the macro-financial assistance program.
State budget revenues and expenditure go up
The total revenues of the state budget during the first ten months of 2019 exceeded 32 billion lei and are by 7.6% higher than in the corresponding period last year owing to the 8.3% rise in the general and collected revenues. The State Tax Service increased the collected amounts by 3.9% on the same period last year to over 14 billion lei. “For us, the entrepreneurs’ attitude to tax collection activities counts a lot. That’s why we aim to intensify the consultative mission of the Service so as to help the entrepreneurs to work according to the legal framework,” said Minister of Finance Sergey Pușcuța.
The unemployed at almost 38,000 in third quarter
The official number of the unemployed in the third quarter of this year stood at 38,000. The unemployment affected mainly men and persons from rural areas. The unemployment rate at national level was 4%. Among young people, of the 15-24 age bracket, the jobless rate was 11.3%, while in the 15-29 age bracket – 8.4%. Among the inactive population, the pensioners represent over 45%. These are followed by persons who look after the family (housewives), with slightly over 13% and students with 12%.
