ECO-BUS WEEKLY DIGEST April 13-19. Most important Economy & Business news by IPN
● MONDAY, April 13
State to pay interest rates on loans equal to remuneration fund for three months
The authorities will provide additional support to business entities that take out loans equal to the value of the remuneration fund for three months, by covering the interest rates on bank loans with state budget funds. The state will pay the interest rates for business entities that will apply for loans in the immediate period, more exactly until December 31 this year, for paying salaries to employees or for circulating capital. The decision was announced after the working meeting of President Igor Dodon with Parliament Speaker Zinaida Grechanyi and Prime Minister Ion Chicu.
Administration Board of SA “Moldovagaz” has new members
The Administration Board of SA “Moldovagaz” has a new composition, following a decision taken by the company’s Supervisory Board. The new composition includes the secretary of the Economic Council working under the President Vitalie Țurcanu, “Chișinău-gaz” director Ilie Tutunaru and head of the Economic Analysis, Planning and Tariff Policy Section of SA “Moldovagaz” Alexandru Shevchuk. In a press release, the company says that the Russian side on the Board is represented by Mihail Yuriev, Nicolai Vasiliev, Denis Emelyanov, Elena Tkachuk and Anton Bubeonov, who hold high-ranking posts in the administration bodies of “Gazprom”. Vitalie Țurcanu, Nicolai Vasiliev and Denis Emelyanov were named vice presidents of the Administration Board of SA “Moldovagaz”.
Slusari to Dodon: Have you seen many entrepreneurs borrowing money for salaries?
MP of the Party “Dignity and Truth Platform” (PPPDA) Alexandru Slusari said the authorities’ decision to pay interest on the loans taken out to pay salaries is a blunder. “You were an economist earlier. I thus ask you: have you seen many cases when business entities borrowed money for paying salaries?”, asked Alexandru Slusari. “The best solution is for the state to pay directly technical unemployment benefit for three months for all the employees who stay at home because they are forced to, in the amount of minimum 50% of the salary. Another 30% could be paid by the employers that will this way keep the labor force and could think about loans or foreign grants for readjusting the business in a more relaxed way. You know very well that the necessary funds can be allocated from internal resources and also from external resources. Or, if you propose something else, it would mean interest schemes,” Alexandru Slusari posted on Facebook.
● TUESDAY, April 14
Road transportation in international traffic suspended
The road passenger transportation in international traffic through regular, special, occasional and taxi services, except for the special routes authorized by the Commission for Exceptional Situations, was suspended. A decision to this effect was taken by the Commission for Exceptional Situations in its April 13 meeting. If this provision is not respected, the road transport operators risk having their registration suspended for a period of at most three months or being struck off the Register of Road Transport Operators. For organizing road transport routes for repatriating Moldovans, the Ministry of Foreign Affairs and European Integration will compile lists of applicants. The lists will primarily include children, students, persons receiving medical treatment and other citizens in difficulty. The list will be transmitted to the National Road Transport Agency that will coordinate transit corridors with the transited countries.
ODIMM to launch new contest of small grants for female entrepreneurs
To enable all the female entrepreneurs who didn’t manage to file applications to take part in the fifth contest of small grants held within the Women in Business Program, a new contest will be launched soon, the Organization for the Development of Small and Medium-Sized Enterprises (ODIMM) has said. The fifth contest of small grants involved 154 applicants from Moldova. The ODIMM received the applications online between March 11 and April 11, 2020. The winners will benefit from a grant of at most 165,000 lei. The grants are provided to women who have run an enterprise during 0 to 24 months. The financial support can be used to purchase equipment, devices and development services.
Ten beekeepers have their honey certified organic
Ten Moldovan beekeepers managed to obtain certification for the organic honey they produce by taking part in a project financed by the USAID-funded Moldova Competitive Agriculture Project. Contacted by IPN for details, president of the National Association of Beekeepers of Moldova Ştefan Condratiuc said that to obtain such certification, the beekeepers initially launch the process of adjusting to the ecological requirements: change the honeycombs, paint the beehives with natural solutions, introduce organic food for bees, etc. Ştefan Condratiuc noted that organic beekeeping in Moldova is possible by ensuring a 3-km radius of the pollution source. Fields that meet this condition are identified and the certification procedure is initiated. But not many beekeepers apply as the certification procedures require harvesting honey one or two times a year. That’s why they prefer other areas where harvesting consists of even four stages.
NAER identifies deviations in work of “Moldovagaz”
The National Agency for Energy Regulation (NAER) discovered deviations from the regulations, including actions that caused pecuniary damage that is to be reimbursed and corrected in the immediate period, in the work of “Moldovagaz”. Quoting a press release of the Agency. The NAER examined the activity of “Moldovagaz” during 2016-2018. It established that in 2018 the company increased the revenues from the sale of natural gas by 282.29 million lei following the incorrect application of the regulated prices of natural gas for non-domestic end users in 2018. Consequently, “Moldovagaz” is to recalculate, in the same amount, the incorrect sums for the given category of consumers. Also, the Agency’s specialists identified additional revenues of 109.36 million lei collected after honoring the obligation to service the external debt planned earlier in the state budget. In this connection, the Agency will take the given sum into account when calculating the tariff deviations.
● WEDNESDAY, April 15
Oleg Serebrian: Moldovans who work legally in Germany weren’t fired
Moldova’s Embassy and Consulate General in Germany received fewer requests for repatriation from Moldovan citizens in connection with the COVID-19 pandemic. Moldova’s Ambassador to Germany Oleg Serebrian said this is due to the fact that the Moldovans work legally in Germany and a part of them have families there. “Many of our nationals work legally in Germany, have families there and there are also mixed marriages, work based on Romanian passports, have fixed-term employment and this is an eventual explanation,” the diplomat stated in the talk show “Emphasis on Today” on TVR Moldova channel. He noted that the Moldovans who return home these days do not necessarily represent the diaspora and include persons in a special situation. Many of them are tourists, patients who went to Germany to receive treatment, students, occasional visitors. As to the rumors that the Moldovan citizens remained without jobs, Oleg Serebrian said these are probably citizens who worked illegally, not those who were employed legally.
Government follows incorrect path in containing pandemic, MP
The vice president of the Party “Dignity and Truth Platform” (PPPDA) Alexandru Slusari said the government follows a wrong and dangerous path in its effort to overcome the socioeconomic crisis that more extensively embraces Moldova. According to the MP, the measures proposed by the “Dodon government’” stimulate unemployment and destruction of whole sectors of the economy and, implicitly, generate social revolt. Alexandru Slusari noted the small and medium-sized businesses will be the worst hit. “We do not want such a scenario. It is not yet late to prevent it, especially because Moldova can soon obtain approximately 8 billion lei from foreign sources in the form of loans and grants, while the Ministry of Finance is expected to borrow 1.2 billion lei from commercial banks these days,” the MP posed on Facebook. The PPPDA filed a document to the Government and the Commission for Exceptional Situations, proposing its measures, such as: to amend the national public budget by maximally reducing the costs of the central public authorities; to abandon the largest part of the planned investments; to introduce a permanent bonus of 100% of the salary for doctors and medical personnel who directly come into contact with infected persons during the pandemic.
Moldovagaz reserves right to challenge in court NAER’s conclusions
SA “Moldovagaz” reserved the right to dispute in court the National Agency for Energy Regulation’s decision concerning the results of the planned inspection carried out at the company in 2016-2018. The supplier says the Agency’s findings are unfounded. In a press release, “Moldovagaz” says it will not recalculate the value of natural gas supplied to non-household consumers during January 1, 2018 – March 16, 2018, in the total amount of 282.29 million lei, as the natural gas regulated tariffs and prices are not retroactive in character. The sum of 109.36 million lei that appeared after fulfilling the obligation to service the external debt, which was earlier paid from the state budget, cannot be classed as tariff deviation as some of the non-domestic consumers didn’t fulfill their payment obligations and the mentioned debts weren’t fully cleared as a result.
Moldova’s Post Office resumes international postal traffic
Moldova’s Post Office has announced the resumption of the international postal traffic. All types of road parcels to ten destinations will be accepted and delivered at the same charges, quoting a press release of the company. The ten destinations are: Austria, Belarus, Bulgaria, Greece, Macedonia, Poland, Romania, Russia, Ukraine, and Hungary. The list of destinations will be updated immediately after other operators express their availability.
● THURSDAY, April 16
Ion Chicu: State budget revenues have halved in value
Moldova’s financial resources are close to the limit. Prime Minister Ion Chicu said the pensions and salaries to public sector employees are now paid from the revenues collected by the Customs Service during the first two months of this year and from a transfer received from the International Monetary Fund. “The state budget revenues as of March 17 have halved in value. We can now pay pensions, salaries exclusively from what we collected additionally during the first two months of this year. Over the first two months, the Customs Service collected by 27% more revenues than in the corresponding period last year. We survive on those resources. We do not print money. We live on what we collect,” Premier Chicu stated in the program “Key Issue” on NTV Moldova channel.
In times of pandemic, about half of population does not work, poll
In times of the COVID-19 pandemic, approximately half of Moldova’s population does not work, 20% work from home, while 33% work at the place of work, shows a poll commissioned by the Institute for Development and Social Initiatives “Viitorul” to CBX-AXA. When presenting the study, economist of “Viitorul” Veaceslav Ioniță said 48% of the working citizens said they have a safe and stable job and are not worried about losing it. 8% of those surveyed said they could lose their job and 17% said they lost their job the current month. 26% didn’t answer. 88% of the respondents noted they received the salary on time, while 12% said they didn’t get the salary.
Consumers affected by April 11 interruptions in power supply will be compensated
The electricity consumers who were resupplied with electric power after 1pm on April 11 can ask for compensations. The electricity transmission system operators will calculate and pay compensations for not respecting the admissible limits of the planned and unplanned interruptions based on complaints received from end-users through phone calls to the 24/24 service, email, mail, applications submitted to the commercial offices or other offices of the system operator/electric power supplier. The calculated compensations will be included in the bill for the next month. The Agency notes the allowed length of an unplanned interruption for electric power consumers from urban areas is of six hours.
● FRIDAY, April 17
Post-crisis solutions COVID-19: how can we facilitate the recovery of the economy with the support of external partners? Op-Ed
Dumitru Vicol, Mihai Mogîldea
Forecasts: One month after the establishment of the state of emergency in the Republic of Moldova, the consequences of the COVID-19 crisis are more sizeable, both among the population, as well as the economic agents and employees. In a recent interview, Prime Minister Ion Chicu mentioned that the state lost 40% of its budget revenues because it did not collect money from taxes. Following the meeting of the Supreme Security Council on April 7, President Igor Dodon stated that the forecasts of the Ministry of Finance indicate, in optimistic terms, a reduction of GDP by 3% and a decrease of the planned budget revenues by 7.3 billion lei. On April 14, the IMF revised the forecasts for Moldova's economic growth from + 3.8% in 2020 and 2021 to a recession of -3% in 2020 and an increase of + 4.1% in 2021 in the baseline scenario. Respectively, the 2-year cumulative economic growth was revised down by 6.5 percentage points compared to the aggregate value for emerging countries of -3.8%. If the current forecasts for 2020 and 2021 will be confirmed and we assume that the economy would grow steadily to 3.8% per year in the absence of the crisis, the country's GDP should accelerate 4.5% per year over a 10-year period from 2021 to recover the value of GDP lost during the crisis and reach the GDP performance that would have increased steadily to 3.8%. Alternative scenarios would be 34 years at a 4% increase or 6 years at a 5% increase
Negative economic impact of epidemiological crisis can increase next months, expert
The epidemiological crisis experienced currently by Moldova poses multiple threats to the national economy, whose magnitude cannot be known exactly for now. The real impact will be dictated by the way in which the situation in the national economy is managed in the second quarter and, in particular, in the third quarter of this year, economic expert Viorel Gîrbu stated for Infodebit. “To prevent a large-scale economic and social crisis, it is imperative to eliminate any restrictions imposed on economic activity as swiftly as possible,” stated Viorel Gîrbu. He noted that agriculture and the building sector were the worst hit by the economic restrictions imposed in connection with the epidemiological crisis.
Programs for subsidizing interest rates and refunding VAT approved
The Government approved the program for subsidizing interest rates, which is designed to facilitate the enterprises’ access to loans during May 1 and December 31, 2020. Assistance is provided to enterprises that raise loans, no matter for what purposes. The program is part of a bill that also includes the VAT refund program and envisions the reduction of the VAT rate for the hospitality industry from 20% to 15%. The monthly subsidy will be equal to the monthly interest rate paid on loans taken out under the interest rate subsidization program. The highest value of the loan or loans for which a subsidy is provided represents the cumulative sum of the salary payments declared by the beneficiary to the State Tax Service for December 2019, January 2020 and February 2020.
State budget amended, deficit set at 15,975bn lei
The Government approved amendments to the 2020 state budget law in connection with the economic effects of the measures imposed in the process of administering the epidemiological situation. The budget deficit after the rectification will be 15.975 billion lei, which is 7.52% of the Gross Domestic Product. The state budget revenues will thus decline by 6.338 billion lei or 14.3% compared with the budget approved for 2020, and will represent 37.798 billion lei following the diminution of taxes and duties and grant inflows.
New time limit when displaying of cigarettes in stores will be banned
After suggesting postponing the ban on placing tobacco products in visible places in stores for a year, the Government proposed a new deadline. The measure is to be applied in three months of the lifting of the state of emergency. Prime Minister Ion Chicu on April 17 said the time limit was reviewed on the insistence of the minister of health. If the state of emergency is not extended, the shops as from May 15 will have three months at their disposal to comply with the legal provisions. Besides this, the bill approved by the Government provides for the refund of the excise duty paid by the national business entities on produced or imported goods (raw material) that are later supplied to companies that manage duty-free shops. The Ministry of Finance explained that if the excise duty on national products supplied to duty-free stores is not refunded, excise duties are collected two times - at the production stage, for raw material that is purchased or imported, and at the sale stage, by companies that manage duty-free shops. The given provision is to take effect on May 1.
Executive discuses emergency loan with EU
The Government is discussing an emergency loan with the European Union. The money will be used to support the business community (300m lei), to pay unemployment benefit (168m lei) and to increase the social support fund (200m lei). According to the Government’s press service, the National Employment Agency will receive an extra 10 million lei for organizing programs designed to increase the employment possibilities of those out of work. The Cabinet also negotiated a loan of US$ 58.4 million with the World Bank. A sum of US$ 33 million will go to the healthcare sector and will be used to contain the COVID-19 pandemic, while US$ 24 million will go to increase the unemployment fund and to cover other social costs.
Half of airport tax of €9 to be transferred to state fund
50% of the airport tax of €9 that is collected monthly for modernizing the airport will be transferred to the population support fund, as it is provided in a bill that was approved by the Government on April 17. The sources of financing the population support fund will also include the portability tax, in the amount of 50% of the monthly payment for the operation, management and maintaining of the centralized databases for the implementation and ensuring of number portability, and the tax for the provision of mobile phone services, in the amount of 2.5% of the revenues earned from sales related to such services. The fund will also include the transfers obtained from the additional mandatory payment of 0.1% of the sum paid by private individuals when buying foreign currency in cash and traveler’s checks in foreign currency for cash at currency exchange facilities and licensed banks.
● SATURDAY, April 18
IMF to grant emergency loan of about US$235m
The Executive Board of the International Monetary Fund approved the allocation of an urgency loan to the Republic of Moldova in the amount of about US$235 million, Prime Minister Ion Chicu announced by a posting on Facebook. “Together with the loan provided by the Russian Federation, the loan of the IMF will enable to finance over half of this year’s budget deficit,” said Premier Chicu. He noted the authorities are waiting for the EU to decide on the allocation of macro-financial assistance for Moldova. In this regard, I today signed a letter addressed to the European Commission. A friend in need is a friend indeed!” Premier Chicu posted on Facebook
Agreement signed for first tranche of Russian loan of €200m
The agreement for the provision of the first tranche of the Russian loan of €200 million was signed in Moscow, President Igor Dodon announced. “This is the first concrete financial support provided to our country from abroad in this period of crisis. The money will be transferred to Moldova’s state budget for satisfying the country’s needs, including for financing infrastructure projects,” President Dodon posted on Facebook. Under the agreement, the first tranche of €100 million will reach the country within 30 days of the coming into force of the agreement. The second tranche is to be transferred by October 31, 2020. The Moldovan side is to repay the loan during ten years and the first payment is to be made on March 15, 2021. The interest rate for Moldova is 2% a year.
COVID-19 emergency response project negotiated with WB
The Government and the World Bank negotiated a new COVID-19 emergency response project. The total cost of the project that is to be financed with lending resources of the International Development Association is of €52.9 million. The project’s development objective is to prevent, detect and respond to the threats posed by the COVID-19 pandemic. In a press release, the Ministry of Finance said the proposed project will have two components. The emergency response to COVID-19 component will include the following subcomponents: confirmation of cases, strengthening of healthcare system, informing activities and social and financial support for households. The second component refers to the management, monitoring and assessment of implementation. The project will be implemented by the Ministry of Health, Labor and Social Protection through a specially created unit. The implementation deadline is April 30, 2022. The loan repayment period starts on October 15, 2025 and ends on April 15, 2050. The cumulative interest rate (including service tax) is 0.75% a year.
Details about emergency assistance provided by IMF
Mitsuhiro Furusawa, IMF Deputy Managing Director and Acting Chair, said Moldova’s economic outlook has deteriorated sharply due to the COVID-19 pandemic. Real GDP is expected to fall and public finances are under significant pressure from declining tax revenues and emergency health and social spending. The statement was made following the discussion of the Executive Board of the International Monetary Fund that approved a disbursement of about US$ 235 million to help Moldova contain the COVID-19 pandemic. In a press release, the IMF says the economic impact of the COVID-19 pandemic remains highly uncertain with risks heavily tilted to the downside. The IMF support will help finance the health and macroeconomic stabilization measures, catalyze donor support, and shore up confidence in Moldova. The Executive Board of the International Monetary Fund approved a disbursement under the Rapid Credit Facility (RCF) equivalent to SDR 57.5 million (about US$78.4 million, 33.3 percent of quota) and a purchase under the Rapid Financing Instrument (RFI) equivalent to SDR 115 million (about US$156.7 million, 66.7 percent of quota) to meet Moldova’s urgent balance of payment needs stemming from the COVID-19 pandemic.
