ECO-BUS WEEKLY DIGEST March 30-April 5. Most important Economy & Business news by IPN
● MONDAY, March 30
Avia Invest reacts to request made by Civil Aviation Administration
The concessionaire of the Chisinau International Airport, Avia Invest SRL, expressed its bewilderment at the request made by the Civil Aviation Administration of Moldova given that the size and method of calculating the airport charges were approved by order of the Administration in 2007. The reaction came after the Civil Aviation Administration announced that Avia Invest SRL refused to present the cost basis for airport charges. In a press release, Avia Invest says that since the Chisinau International Airport was founded in 1995 and until present, all the airport taxes were set by the state authorities, namely the State Civil Aviation Administration and later by its successor, the Civil Aviation Administration.
Exemption from taxes on salary paid to employees in technological unemployment
The business entities that had to stop work as a result of the anti-epidemiological restrictions imposed by the authorities during the state of emergency will be exempted from paying income taxes and taxes on the salary paid to employees in technological unemployment. The decision was announced after the March 30 meeting of senior state officials. President Igor Dodon said that for the enterprises that stopped work as a result of the decision taken by the Commission for Exceptional Situations, during the state of emergency the state, by co-participation, will help maintain the jobs and pay salaries by fully refunding the income tax of the private individual, the social contribution and medical contribution, which is 44-45% of the salary fund.
Most unsuccessful variant of supporting businesses was chosen, PPPDA
“The authorities chose the most unsuccessful, inefficient and unreal variant of support that reveals the state’s unwillingness to financially contribute to solving the problems faced by the business community and salary earners,” said the vice president of the Party “Dignity and Truth Platform” (PPPDA) Alexandru Slusari, referring to the measures announced by President Igor Dodon in the morning of March 30. As regards the remuneration for persons in forced unemployment, the MP said the issue will be developed when the draft law is made public. However, he expects that the Government will try again to bypass Parliament and will take the given decision through the agency of the Commission for Exceptional Situations.
EU offers €140m for most immediate needs in EaP member states
As part of the global response to the coronavirus outbreak, the European Commission stands by Eastern partner countries and has reallocated €140 million for the most immediate needs in the Republic of Moldova, Armenia, Azerbaijan, Belarus, Georgia, and Ukraine. In addition, the Commission will also redirect the use of existing instruments worth up to €700 million to help mitigate the socio-economic impact of the coronavirus crisis. At the request of the partner countries, the Commission will respond to immediate needs by supporting the supply of medical devices and personal equipment, such as ventilators, laboratory kits, masks, goggles, gowns, and safety suits. The European Commission is working with the World Health Organization (WHO), and is deploying €30 million to ensure these necessary supplies are jointly purchased and effectively distributed to the health systems of the six countries in the coming weeks. In addition, the funds will support national health administrations to train medical and laboratory staff and carry out awareness raising measures to the wider population.
Contract for supply of electric power renewed
The contract for the supply of electrical power signed with ZAO Moldavskaya GRAS, which expires on March 31, was extended until June 30. Under the new contract conditions, the average purchase price of power as of April 1, 2020 for SA “Energocom” and the average supply price of electricity will be by about 9% lower than the average price applied based on the existing contracts that are valid until March 31, 2020. In a press release, the administrant of SA “Energocom” says that ZAO Moldavskaya GRAS, in accordance with the technical, economic and financial criteria, is currently the only electric power producer that can independently satisfy all the power needs of the regulated power suppliers, distribution system operators and the transmission system operator in the respective period.
● TUESDAY, March 31
Psychologists advises how to avoid fear and crises in times of pandemic
The fear and panic caused in society because of the COVID-19 infection, the state of emergency declared in the country and the ban on leaving home if only in cases of strict necessity are a turning point from which the population should profit. According to psychologist Oxana Gumennaya, to avoid crises, strains and negative feelings, each person should have a well-planned program with exact long- and short-term activities. Currently, all those who work should examine the area of activity in which they work and adjust it to the situation. “The crisis will pass and we must admit this. Most probably, the transfer to the Internet will be one of its effects. It’s time to improve our skills to work over the Internet and to investigate the area,” Oxana Gumennaya stated.
Epidemiologist: “Quarantine” should be written on each gate where there are persons who returned from abroad
The measures to contain the COVID-19 pandemic were taken too late and do not include all the methods of combating the virus, former epidemiologist Mihai Rudetski was quoted. “All those who return home should be placed under institutional quarantine in Vadul lui Vodă or at “MoldExpo”. According to my information, these persons organize copious meals with relatives, children. The word “quarantine” should be written on each gate of houses where there are persons who came from Italy, France, Spain,” stated Mihai Rudetski. MP Alexandru Slusari said that from pandemic viewpoint, logical measures are being taken, but from economic viewpoint the relevant measures are implemented with big delays.
Private individuals can pay income tax without penalty by May 29
The private individuals - citizens of the Republic of Moldova, foreigners and stateless persons, including members of societies and shareholders of investment funds – should submit tax returns and pay the income tax for 2019 by May 29. The income tax rate remained 12% of the tax basis. The annual personal exemption is 24,000 lei. Penalties will be imposed for late payment of the income tax after May 29. The declaring and payment of the income tax, property tax, land tax and local taxes for 2019 by individual entrepreneurs or peasant farmsteads whose annual average number of employees during the fiscal period does not exceed three units and that are not registered as VAT payers will be made by April 25.
Disposable income of a person in 2019 up about 500 lei
The disposable income of a person in 2019 was 2,880 lei an average, which is by almost 500 lei more than in 2018, IPN has learned from the National Bureau of Statistics. The incomes of the urban population were by 1,064 lei on average higher than those of the rural population. Salary gains represent the most important source of income, constituting 50.2% of the income. These are followed by social benefits (18.7%) and independent activities (15.2%). Transfers from outside the country remain a significant source for the households’ budget. These represent 12.5% of the total income.
Contracts for purchase of electricity approved by NAER
The National Agency for Energy Regulation approved the contracts for the purchase of electricity between SA “Energocom”, ICS “Premier Energy”, ICS “ Premier Energy Distribution” SA, IS “Moldelectrica”, SA “Red Nord” and SA “FEE-Nord”. The price of 1 kWh of power is US$0.0499 or by 9% less than in 2019. The contracts are valid for a period of three months, between April 1 and June 30 inclusive.
Patent holders will not pay patent tax while markets are closed
About 8,000 patent holders will not pay the patent tax while the markets are closed, President Igor Dodon announced after the meeting of the Single Command Center for managing the COVID-19 pandemic. According to President Dodon, the patent holders focused on markets and now that the markets were closed, these cannot work.
● WEDNESDAY, April 1
Authorities should avoid transforming epidemiological crisis into economic one, expert
In case of a significant impact of the epidemiological crisis that would lead to the stagnation of the national economy, the central consolidated budget’s revenues from taxers, contributions and mandatory insurance premiums would decrease by 2.3 billion lei if the purchasing power of the Moldovan leu remained the same as last year, noted economic expert Viorel Gîrbu, who stated for Infodebit that the national authorities should make effort to minimize the impact of the epidemiological crisis, avoiding its transformation into a long-lasting economic and social crisis. This is important not only because fiscal incomes could not be collected this year, but also because the enterprises or event strategic sectors of the national economy will return to the level before the crisis in a rather long period of time.
Hospitality industry will pay VAT rate of 15% instead of 20%
The VAT rate for the enterprises of the hospitality industry was cut from 20% to 15% for the duration of the state of emergency. This is provided in the law on the institution of measures to support the citizens and entrepreneurial activities during the state of emergency and to amend particular normative documents for which the Government assumed responsibility before for Parliament on April 1. According to Deputy Prime Minister Sergiu Pușcuța, Minister of Finance, the deadline for paying local taxes for the first quarter of this year for business entities that stopped work in accordance with the decisions taken by the Commission for Exceptional Situations was extended until July 25. Under the law, employers’ costs associated with the payment of salaries and allowances to employees in technological unemployment will be subsidized. The subsidy will represent 100% of the taxes and contributions related to salaries and allowances.
Age limit of applicants for “First House” program extended
The age limit of private individuals who can take part in the governmental program “First House” was increased from 45 to 50, while the initial own contribution was cut from 10% to 5% of the house’s purchase price.Deputy Prime Minister Sergiu Pușcuța, Minister of Finance, said the persons who own a house, but this is small in size and they want to improve the living conditions by purchasing a larger house can also apply to the program. Also, the persons who raised home loans before the “First House” program was launched will get compensations.
Tobacco products on sale could be displayed in visible places for one more year
The Government put off for a year the implementation of the article that bans the display of tobacco and related products in visible places in commercial areas accessible to the public. The ban was to be applied as of May 20 this year. By the bill for which the Government assumed responsibility before Parliament on April 1, Article 25, paragraph (5) of the law on tobacco control was amended by substituting the year “2020” with “2021”.
● THURSDAY, April 2
Economist: Bribe in health system is estimated at 1bn lei a year
The responsibility for the failure of the health system of Moldova is borne not only by the state and the authorities, but also by the citizens who avoid paying taxes and purchasing health insurance. According to economist Veaceslav Ioniță, a healthcare system for which only 9% of the state budget revenues are allocated cannot be called a health system. “When we founded the system for financing the healthcare in 2004 and started to allocate 4% of the salaries, everyone said that this is too much. Specialists said that if less than 11% is allocated for this system, it can be called as one wants, but not healthcare system. We have never been ready to pay for healthcare. Not the Government, but we paid for it. The allocations were increased to 9% and were then stopped. This is our problem,” Veaceslav Ioniță stated.
NBM approves concept for developing payments sector in Moldova
The concept for developing the payments sector in Moldova, which was approved by the Executive Board of the National Bank of Moldova (NBM), incorporates projects to modernize the Bank’s automated interbank payment system and to implement the instant payments scheme that were stipulated as operational objectives in the NBM’s strategic plan for 2018-2020. In a press release, the NBM says the projects are designed to develop the payment system in Moldova and to modernize the payment services so as to offer the financial community of Moldova a payments system with modern infrastructure that matches the expectations and demands of payment service providers and modern payment instruments that meet the payment needs of individual and corporate consumers.
Ion Chicu: Proposed measures should take effect as soon as possible
The measures stipulated in the bill for which the Government assumed responsibility should take effect as soon as possible. These are aimed at supporting the people and entrepreneurs in the crisis situation. The bill also contains amendments, in particular to the budgetary-fiscal legislation, which allow implementing the planned measures and ensure greater predictability for businesses as regards the regulations for the immediate period, Prime Minister Ion Chicu stated in Parliament, where he was to present the bill. The official said that among the proposed measures is the provision of minimal unemployment benefit of 2,775 lei. Also, the minimum monthly guaranteed income for families with low incomes was increased from 1,107 lei to 1,300 lei for the duration of the state of emergency. The VAT rate for the enterprises of the hospitality industry was cut from 20% to 15%. The social welfare for families that expires in the period will be extended until the state of emergency is lifted.
● FRIDAY, April 3
MP wants to know name of author of amendment that “destroys state budget by tax evasion”
MP of the Party “Dignity and Truth Platform” (PPPDA) Igor Munteanu requests Prime Minister Ion Chicu to make public the name of the person who proposed the amendment that “destroys the state budget by tax evasion”. He referred to the amendment that enables to import cigarettes duty free, noting this is tax evasion of millions of lei and this money will fail to be collected into the state budget. “If there is a state of emergency, I want to see exceptional measures towards a criminal intention shown by the authors of this wonderful assumption of responsibility. And don’t mislead the people by saying that the provision hasn’t yet generated losses. The criminal intention is punished in accordance with the law,’” stated Igor Munteanu.
Fuel prices decline further
A number of filling stations posted lower fuel prices on April 3. A liter of diesel fuel costs by 0.55 lei on average less, while of gasoline by about 0.25 lei less. The price of liquefied petroleum gas was decreased by 0.10 lei a liter. The last time the fuel prices were diminished two weeks ago. A liter of diesel fuel costs 14.24 lei, as against 14.79 lei earlier. The gasoline of type “95” is sold for 16.47 lei a liter, as opposed to 16.72 lei a day ago. The liquefied petroleum gas sells for 9.77 lei, down from 9.87 lei until recently.
PPPDA asks to allow street trading in seasonal vegetables and berries
The Party “Dignity and Truth Platform” (PPPDA) requested the Government and the Commission for Exceptional Situations to oblige stores that sell food products during the state of emergency to exhibit seasonal vegetables and berries on sale by ensuring the presence of at least 50% of national products on shelves. The party’s vice president Alexandru Slusari told a press briefing that street trading in seasonal produce should be allowed in particular periods of time, by respecting all sanitary norms, based on certificates of origin issued by the mayor’s office. The PPPDA also requests to allow trading in seasonal vegetables and berries at the place where these are grown.
Finance minister provides details about bill approved by assumption of responsibility
Deputy Prime Minister Sergey Pușcuța, Minister of Finance, said the criticism leveled at provisions of the bill for which the Government assumed responsibility comes from those who didn’t try to understand the essence of the proposals. In a press briefing, he provided details about the bill. “As regards the taxes on the use of subsoil, following those changes the sums that are to be collected into the state budget for subsoil use will grow two times,” stated Sergey Pușcuța. “As to the eventual reopening of duty-free stores in the Transnistrian region, you should read attentively the bill. I assure you that you will find not even one point that refers to the Transnistrian region. The bill contains nothing of the kind.”
Authorities are considering stopping grain exports
President Igor Dodon said the authorities are seriously examining the opportunity of stopping grain exports for a period. At the current stage, the grain reserves allow ensuring the food security of the state. “Evidently, we should restrict the export, if not fully, at least partially, until the new harvest. Most of the countries that are large grain exporters did so,” Igor Dodon stated in a new edition of the program “President Responds”.
NBM diminishes required reserves ratio
The required reserves ratio in Moldovan lei and non-convertible currency for the period between April 16 and May 15, 2020 was set at the level of 34.0 percent of the calculation base. A decision to this effect was taken unanimously by the Executive Board of the National Bank of Moldova (NBM). According to the Bank, the extraordinary meeting of the NBM Executive Board was convened to agree monetary policy measures that can partially mitigate the impact of the effects of the COVID-19 pandemic on the national economy.
