ECO-BUS WEEKLY DIGEST March 5 - 11 April. Most important Economy & Business news by IPN
● MONDAY, April 5
Taking out of loan from NBM by Government is illegal, “Expert-Grup”
The raising by the Government of a loan from the National Bank of Moldova (NBM) of up to 20 billion lei is illegal. Article 41 of the Law on the NBM stipulates a ban on lending to the state. In a position note, experts of the on Independent Think Tank "Expert-Grup", say the politicians should make use of legal and reliable sources for financing population and business support programs that are so necessary and expected, primarily due to the new restrictions and the state of emergency. According to "Expert-Grup", an eventual loan from the NBM, especially of such a size (about 10% of the GDP), will create inflationist pressure, will cause the depreciation of the national currency, will undermine economic growth, will lead to a reduction in the number of jobs and worsening of the living conditions of the population. Such a loan will oblige the central bank to print lei. This will lead to a rise in the volume of lei without coverage in the economy, causing pressure on the national currency. To stabilize the situation, the NBM will have to sterilize this excess of liquidity by making the monetary policy and sale of foreign currency from the foreign exchange reserves harsher. This will worsen the current economic crisis and will generate the loss of tens of thousands of jobs and the bankruptcy of thousands of enterprises.
● TUESDAY, April 6
Base rate on main monetary policy operations kept at 2.65%
The Executive Board of the National Bank of Moldova (NBM), in an extraordinary meeting on April 5, decided by a unanimous vote to maintain the values of the main monetary policy instruments. This way, the core rate applied to the main short-term monetary policy operations remained 2.65 percent annually. Interest rates on overnight loans and deposits also remained unchanged: 5.15 percent and 0.15 percent annually, respectively. At the same time, the required reserves ratio from funds attracted in Moldovan lei and in non-convertible currency were decreased by 2.0 percentage points to 28.0 percent of the calculation base, while the required reserves ratio from financial means attracted in freely convertible currency remains at the current level of 30.0 percent of the calculation base.
Ion Chicu criticizes economic initiatives of Igor Dodon and PSRM
Former Prime Minister Ion Chicu harshly criticizes the Party of Socialists’ initiative to table again the draft law to abrogate the billion law that was earlier declared unconstitutional by the Constitutional Court. He also considers unacceptable Igor Dodon’s initiative to borrow money from the National Bank of Moldova so as to help the citizens and the business community during the state of emergency. Chicu described these intentions as populist, noting they can spoil the country’s relations with the foreign financial partners and can affect Moldova’s image abroad. Even if the Constitutional Court ruled that the abrogation of the billion law that was adopted at the end of the previous session in the absence of the Government’s appraisal was unconstitutional, the PSRM announced it will propose a similar bill. Ex-Premier Ion Chicu said the PSRM’s initiative to remove the burden of repaying the stolen US$ 1 billion from the people looks like cheap populism.
Reaction of companies that were fined by Competition Council for cartel agreements
Representatives of the four companies that were recently fined for cartel agreements when setting the prices of phytosanitary products deny the accusations made by the Competition Council and say that these are groundless. Moreover, they accuse the Council’s head Marcel Raducan of a conflict of interests. According to them, the family members of Raducan are majority shareholders in a limited liability company specialized in phytosanitary products and fertilizers. In a news conference, Victor Cucu, manager of the company “DiazChim”, said the fine imposed on them is of over 28 million lei. “DiazChim” SRL has never been involved in any carter agreement and the Competition Council’s conclusions are groundless, being based on an absolutely subjective perception of the Council. The investigations were launched based on an order of July 16, 2020, which was signed by the Council’s head Marcel Răducan. The inspections were also carried out based on orders signed by Răducan.
Second stage of e-ticketing pilot project in public transport launched
The Chisinau City Hall has launched the second stage of the e-ticketing pilot project in municipal public transport in partnership with VISA and Victoriabank. This time, there will be tested two types of electronic payment technologies. The mobile terminals of ticket conductors in trolleybuses and buses accept contactless payments with cards of any bank, of different payment systems, with the smartphone or another device outfitted with contactless technology. Also, the Tap to Phone technology enables conductors on the public transport to use smartphones as terminals and the commuters can swiftly and safely pay for trips by card, telephone, smart watch, fitness trackers or another device. Mayor General Ion Ceban said the initiation of this project is a first step towers developing public transport in Chisinau by offering high-quality services to the citizens. With the support of the partners and the technologies implemented by VISA, this initiative can be later applied in accordance with the municipal public transport rules. During only several weeks of the start of the first stage of the project, about 15% (nearly 3,500) payments were made electronically. The authorities aim to raise the number of such payments to 30% during six months of the launch of the project.
Customs Service launches “e-Waybill”
The digitized module “e-Waybill”, developed by the Customs Service of the Republic of Moldova with support from the USAID-funded Moldova Structural Reform Program, has been launched, IPN reports. The paper waybill was replaced by the digital one and this will enable to save time, resources and energy, according to the developers. Customs Service director Sergiu Burduja in the launch said the digitized module “e-Waybill” comes to facilitate the customs functionary’s work by simplifying customs formalities when supervising goods transported within the customs territory of the Republic of Moldova. This will have a beneficial impact on the business environment too as the acceleration of the flow is of major importance. Moldova Structural Reform Program director Douglas Muir noted that USAID came with assistance in purchasing the software needed for this module, while the Customs Service received all the technical and physical assistance. The waybill will ensure the transit of goods on Moldova’s territory. Until now this document was used on paper only, in three copiers.
● WEDNESDAY, April 7
Role of a central bank in ensuring financial stability is fundamental, governor
The emerging economies need a special approach as they represent a very dynamic and volatile environment, with many changes, developments and simultaneous shocks. This way, the role of a central bank in ensuring economic growth is fundamental as the volatility and shocks generate costs, inefficiency and hamper economic growth, National Bank governor Octavian Armașu stated in a roundtable meeting staged by the Bank in partnership with institutions with economic analysis duties representing civil society. Octavian Armașu said the monetary policy decisions are a very important response to economic shocks and the discrepancies caused by these. The operations on the monetary market or the currency interventions are immediate. The modification of the bank’s mandatory reserves takes effect in a month, while the changes of the base rate have an impact on the economy in several months.
Ordinances by which two buildings were transferred to Platon annulled
Six ordinances of the Prosecutor’s Office for Organized Crime and Special Cases by which two buildings were transferred to Veaceslav Platon were annulled by the prosecutor general following complaints filed by SRL “Continental Business Invest” and SRL “SCM Development Mol”. The Prosecutor General’s Office said these are the “Fashion House” situated at 182 Ștefan cel Mare și Sfânt Blvd and the former ASITO Building situated at 57/1 Mitropolit Bănulescu-Bodoni St. In accordance with the court decision, these were transmitted for use to SRL “Interprimcolect” and “Pavrapid” SRL, whose effective beneficiary is citizen Veaceslav Platon. Therefore, the two buildings were restored to SRL “Continental Business Invest” and SRL “SCM Development Mol”, whose effective beneficiary is citizen Vladimir Russu.
Most expensive lot assigned by Chisinau City Hall for 700,000 lei
The most expensive lot assigned at the auction staged by the Chisinau City Hall cost 700,000 lei. This is a first floor and abasement that are 133,2m² in area, situated on Mitropolit G. Bănulescu - Bodoni St, which were proposed for an initial price of 100,000 lei. According to the Chisinau City Hall, 11 of the 17 lots put up for auction, with an area of 8.3m² to 295.6 m², were assigned for a total sum of about 1.7 million lei. The winners can use the lots for a period of five years. At the first auction of the kind, there were assigned six of the exhibited 22 nonresidential areas. The transactions came to 256,000 lei.
● THURSDAY, April 8
Commission on economy, budget and finance supports capping of nonbank loan cost
The cost of nonbank loans consisting of interest rates, commissions, taxes, penalties and delay interest could be capped. The Parliament’s commission on economy, budget and finance on April 8 approved the report on the amendment of the law on nonbank lending organizations. The legislative proposal was formulated following complaints from people who raised consumer loans from nonbank lending organizations. It is proposed that the maximum limit on the payments related to a contract for the provision of a loan or financial leasing to a private individual should not exceed ½ of the loan for a period of two years. Bill author Alexandru Slusari, PPPPDA MP, said the portfolio of loans offered by nonbank entities to private individuals in 2018 came to 7.2 million lei, while in 2019 to 8.3 billion lei. This shows that the consumption necessities that are not covered by current incomes, primarily the salary ones, increase and the level of the population’s profound poverty also increases.
President waits for recommendations on post-COVID rehabilitation of light industry
President Maia Sandu expressed her readiness to assist the business community in overcoming the crisis and recovering after the pandemic, noting there is great external willingness to provide support to deal with the challenges. In a discussion with representatives of the Employers Association of the Light Industry (APIUS), the official asked these to formulate recommendations concerning post-COVID rehabilitation of the light industry. “We realize that you are going through a very difficult period. I repeatedly said that I will be near the businesspeople who work honestly, create jobs for our citizens, pay taxes. It’s true that being trapped in the pandemic and political crises, we could not concentrate more on the problems faced by businesses. The priority now is to bring more vaccines and to vaccinate more people. This way we will help the economy the best,” stated Maia Sandu, being quoted in a press release of the presidential administration. She noted that to succeed, a majority of honest people in Parliament and a professional and devoted Government that would seriously deal witty the problems are needed.
● FRIDAY, April 9
Transfrontier project to develop green tourism
Green tourism in the Danube region of the Black Sea Basin will be developed ad promoted in the framework of a transfrontier project. The project “Development and Promotion of Green Tourism in the Danube Region of the Black Sea Basin (Cahul district, Republic of Moldova; Reni municipality, Ukraine, and Galați County, Romania)” is implemented by the Institute for Development and Social Initiatives “Viitorul” during December 2020 – June 2023. Its goals are to develop and promote transfrontier green tourism for the communities in the Black Sea Basin on the Galați-Cahul-Reni section of the Danube to obtain mutual socioeconomic benefits, IPN reports, quoting a press release of the Institute. “Viitorul” executive director Liubomir Chiriac, project manager, said the set goals and objectives are realistic. “We want to have economic activities of the tourism operators and many tourists in the Black Sea Basin,” stated Liubomir Chiriac.
Parliament adopts law to cap fuel prices in final reading
The legislative initiative of MP Alexandru Oleinic, which sets down new general norms for calculating and applying the prices of the main oil products, was given a final reading and passed by Parliament. The goal of the bill is to enable to set the oil prices in accordance with the fluctuations on the international and regional stock exchanges (Platts). The prices will be calculated separately for each type of product and imported lot, at an interval of 14 days. The author said the proposed amendments are aimed at limiting abuses by creating an economic environment based on the principle of market economy. The changes adopted by Parliament to the law on oil products market in July 2018, by which the importers and sellers of oil products are allowed to set the prices themselves, are unjustified.
New bill to abrogate “billion law” given first reading
Parliament passed again a bill to abrogate the law on the issuing of state bond of 2016, the so-called “billion law”. A similar law adopted last December was declared unconstitutional this March. The head of the commission on economy, budget and finance, Socialist MP Petru Burduja said that when the law on the issuing of bonds deriving from the state guarantees was adopted, its possible consequences weren’t taken into account. “The liabilities grow and reduce the executive’s possibility of implementing social and economic projects. Moreover, this is a tendency to increase the state debt and a method by which this burden was transferred on the state budget, which is on the citizens,” explained the MP. Deputy Speaker Alexandru Slusari, PPPDA MP, said the law of 2016 was a mistake and the PPPDA is for its annulment, but discussions on it should be held with the central bank, the Ministry of Finance and the foreign partners before the second reading.
● SATURDAY, April 10
Where damaged or dirty banknotes can be changed
The private individuals and legal entities who have used or damaged banknotes or coins that are authentic and with circulation power can be replaced at the National Bank of Moldova (individuals) or at the licensed banks of the Republic of Moldova, including at their branches (private individuals and legal entities), IPN reports, quoting the central bank. The bills or coins that are dirty, have words or drawings on them, are perforated or ripped are changed at their full value, as are the banknote that are reconstituted by sticking a part of an authentic bill with adhesive band, Scotch tape or other means on an area larger than 10 mm to 40 mm. The discolored bills, those without corners and the wrinkled banknotes can also be changed. The bills that lack more than 45% of the area or that were intentionally damaged are rejected.
