ECO-BUS WEEKLY DIGEST March 14-19. Most important Economy & Business news by IPN
● MONDAY, March 14
Moldovans’ panic boosted profit of currency exchange facilities
During three weeks of panic, since Russia invaded Ukraine, the Moldovans bought at least US$90 million in different currencies and paid minimum 30 million lei extra as higher profit margin. In other words, the currency exchange facilities fully profited from the panic and earned super profit, said the economist of the Institute for Development and Special Initiatives “Viitorul” Veaceslav Ioniță.
“Usually, the currency exchange facilities have a profit margin of 9 lei per US$100 and 11 lei per €100.
IMF director concerned about suspension of Moldova’s trade with Russia and Ukraine
Managing director of the International Monetary Fund Kristalina Georgieva, in an interview for CBS TV channel, said they are mostly concerned about the immediate neighbors of Russia and Ukraine, the Central Asian republics, the Caucasus, Moldova, because they have trade relations with both Russia and Ukraine more than the rest of the world, and because of this outflow of people refugee wave in Europe.
“Beyond the immediate neighbors, there are two groups of countries we are very worried. The first group are countries that have yet to recover from the COVID-induced economic crisis. For them, this shock is particularly painful. And the second group of countries are those that are more dependent on energy imports from Russia, because there the impact on consumption, but also on inflation is going to be more prominent,” explained Kristalina Georgieva.
● TUESDAY, March 15
Experts: Military aggression against Ukraine influences fuel prices
Experts consider the rocketing prices of fuel prices are due to the growing demand on the international market and to the Russian invasion of Ukraine. Other experts think the oil prices are influenced also by the calculation formula applied by the National Agency for Energy Regulation.
Energy expert Sergiu Tofilat said the incapacity of the oil producing companies to cope with the demand and the security crisis in the region push the prices of gasoline and diesel fuel up. The phenomenon is provisional and the shock on the oil market is expected to diminish soon.
Operators ask to raise electricity tariffs by 0.70 lei
The Nationals Agency for Energy Regulation published the requests of electric power distribution companies, which ask for a rise of almost 0.70 lei in the current tariffs. Earlier, the Commission for Exceptional Situations suspended for a month the tariff review procedure and the electricity tariffs cannot be raised before April 1, IPN reports.
Premier Energy requested to increase the tariffs from 1.51 lei to 2.17 lei/kWh, while for the consumers from the northern districts – from 2.04 to 2.51 lei/kWh.
Farmers fear default due to rising prices of diesel fuel
Earlier, the costs incurred by farmers amounted to 6,000-7,000 lei. Currently, only the cost for diesel fuel totals 3,000 lei. “We will work at a loss. We could possibly be unable to work. Some of the suppliers do not offer anything if payments are not made in advance. (...) Besides the large fuel costs, we also incur large costs for fertilizers and this also affects us,” explained Vasile Myrzenko.
A solution proposed by the farmers is to subsidize the excise duties on diesel fuel and VAT. “If a liter of diesel fuel is over 25 lei and the price can yet rise to 30 lei, the value added tax will be 6 lei, while the excise duty about 2.7 lei a liter. This means about 8 lei a liter. If these intentions are implemented, we will perform spring field work with diesel fuel bought for about 20 lei/liter. This is also a high price for us,” said the executive director of the National Farmers Federation.
Number of apartments made available for occupancy in Chisinau last year up 20%
As many as 7,175 apartments and private houses were put in commission in the municipality of Chisinau in 2021, an increase of 19.6% on 2020. The total area of dwellings made available for occupancy last year was 523,500 square meters, IPN reports, with reference to the National Bureau of Statistics.
The number of apartments provided in 2021 was 6,507, up 22% on a year before. The area of these apartments was 444,200 square meters.
● WEDNESDAY, March 16
NBM raises value of leu to control price rises
The National Bank of Moldova on March 15 decided to increase the base rate applied to the main short-term monetary policy operations by 2 percentage points to 12.50 percent annually. The interest rates on overnight loans and deposits were raised by 2 percentage points to 10.50 percent and 12.50 percent, respectively. The Bank explained such a decision was taken due to the inflationary pressure.
Sergiu Gaibu: Regional conflict acted as catalyst for price rises
The war in Ukraine and the global energy crisis are the main factors that led to a substantial increase in prices in Moldova, said Minister of Economy Sergiu Gaibu. According to him, imports from the three countries that are directly or indirectly involved in the war (Russia, Ukraine, Belarus) are not so large to cause a shortage of products in Moldova.
Given the Russian military aggression against Ukraine, the Ukrainian authorities banned exports of wheat, sugar, salt and meat. The minister noted the halt in food imports from Russia, Ukraine and Belarus does not significantly influence the Moldovan market as the given imports can be substituted with goods from the EU.
Marcel Spatari: IMF forecasts economic stagnation in Moldova this year
The International Monetary Fund anticipates economic stagnation in the Republic of Moldova this year, said Minister of Labor and Social Protection Marcel Spatari. He noted the impact of the Russian-Ukrainian war on the country’s economy is significant. However, Spatari stated the authorities are optimistic about the foreign financial assistance intended for the Republic of Moldova. He voiced hope that the whole international community will help Moldova overcome the difficulties.
Marcel Spatari said the war on the border and the regional security crisis have a major impact on the state budget. IMF is skeptical about the economic performance of Moldova this year.
Fuel prices reached highest levels for current period, NAER
The retail prices of the standard oil products (gasoline “95” and diesel fuel) on March 15-16 reached the highest levels for the current period, said the National Agency for Energy Regulation (NAER).
The Agency noted the latest hikes in fuel prices were overcome and the retail prices of gasoline on March 17 will decline slightly. The fuel prices the next few days are expected to follow a download trend. The unstable situation in the region is permanently monitored and forecast are formulated maximally prudently.
Moldova will ask for additional financing from IMF for 2022-2023
A new mission of the International Monet ray Fund will come soon to the Republic of Moldova. The authorities will ask for additional financing for 2022 and for 2023. Prime Minister Natalia Gavrilița told a news conference that discussions are also held with other partners that finance budget costs, such as the World Bank and the European Union, so that these increase financing, IPN reports.
The additional financing is needed for covering the rising costs, for maintaining the purchasing power of the population by indexing pensions, for raising subsidies and salaries, for launching economic resilience programs in agriculture and other sectors, for taking energy efficiency measures.
Purchase of electricity from Kuchurgan Power Plant after May 1 in question
The Moldovan authorities are having discussions with representatives of the Kuchurgan Power Plant situated in Dnestrovsc, on the extension of the current power purchase contract, and also with other suppliers. In a news conference, Prime Minister Natalia Gavrilița said that owing to the war in Ukraine, it was decided to have additional discussions.
The official noted the Government continues to discuss with Ukrainian suppliers and accelerates the processes that haven’t been performed over the last 30 years to ensure the security of electricity supplies in the country.
As to the audit at Moldovagaz, Natalia Gavrilița said the procurement of audit services failed and the Government will now have negotiations with a number of audit companies so as to try and reach an agreement with one of them.
Fuel prices reached highest levels for current period, NAER
The retail prices of the standard oil products (gasoline “95” and diesel fuel) on March 15-16 reached the highest levels for the current period, said the National Agency for Energy Regulation (NAER).
The Agency noted the latest hikes in fuel prices were overcome and the retail prices of gasoline on March 17 will decline slightly. The fuel prices the next few days are expected to follow a download trend. The unstable situation in the region is permanently monitored and forecast are formulated maximally prudently.
● THURSDAY, March 17
Electricity grids of Moldova and Ukraine successfully synchronized with Continental Europe
Following an urgent request by Ukrenergo and Moldova for emergency synchronization, the Transmission System Operators (TSOs) of Continental Europe agreed to start on March 16, 2022 the trial synchronization of the Continental European Power System with the power systems of Ukraine and Moldova.
The Government of Moldova said this acceleration of the synchronization project ongoing since 2017 has been possible thanks to the previous studies carried out and the adoption of risks mitigation measures.
● FRIDAY, March 18
Sergiu Gaibu: There is no shortage of grain, but wheat export remains banned
There are no preconditions for the Republic of Moldova to remain without essential food products. The minister of economy assured that the country does not face a shortage of wheat, but the Commission for Exceptional Situations kept the ban on the export of wheat, wheat flour and sugar. Sergiu Gaibu said that even if the war on the border disrupted the imports from Ukraine, the Russian Federation and Belarus, there are alternatives to all the products imported earlier from these three states. Buckwheat is the only product that will be absent from store shelves for a period.
Electricity rates higher as from April 1
Starting with April 1, the electric power rates will be higher. The National Agency for Energy Regulation accepted Premier Energy’s request to increase the rate from 1.51 lei to 2.17 lei/kWh. For the consumers from northern Moldova, the rate was raised from 2.04 to 2.51 lei/kWh.
● SATURDAY, March 19
Vadim Ceban: No reason to expect lower gas rates in April
Moldovagaz president Vadim Ceban says there are no grounds to expect a downward revision of gas rates in April, as supply prices will stay high, plus the utility has incurred additional costs which it would need to recover.
He added that Moldovagaz has sustained additional expenses which need to be recovered now. “It would be a good idea if the gas cost compensation period was extended to cover April as well, but this is to be decided by the Government”.
New loans up by 50% compared to last February
The amount of new loans granted in February of this year added up to 4.024 billion lei, which is by 50.5% more compared to February 2021. The average interest rate for the new loans granted in Moldovan lei was 9.21%, in foreign currencies 4.13%, and for those attached to the exchange rate 3.95%, the National Bank reported.
