ECO-BUS WEEKLY DIGESTЬ March, 21-27. Most important Economy & Business news by IPN
● MONDAY, March 21
Volume of illegally paid salaries decreased two times over four years, expert
The number of those who are officially remunerated in the Republic of Moldova rose by 10% during the past four years, while the volume of illegally paid salaries decreased two times. In July 2018, almost 79% of the Moldovans said the salary they get monthly is official, while in February 2022 the figure rose to 88%, said economic expert Veaceslav Ioniță, of the Institute for Development and Social Initiatives. “As the state reduced the fiscal burden, it became more severe in terms of illegal payment of salaries and introduced more verification methods, imposing also fines, we see that the number of those who are remunerated illegally has declined two times. Over the past four years, the responsibility of business entities, of citizens grew, state influence increased and, as a result, we have an essential, visible rise in the number of those who have an official salary,” stated the economist. By age categories, the working people aged between 18 and 29 represent 31%. Of the Moldovans aged between 30 and 44, only half have a stable, remunerated job. Among those aged between 45 and 59, the figure stands at 44.7%. Those aged over 60 work in proportion of 10.9%.
New terms deposits decrease in value
The new term deposits this February came to 2.186,8 billion lei, an increase of 2.1% on last February. The new deposits of private individuals represented 71.7%. 63.4% of the deposits were attracted in national currency, while 36.6% in foreign currencies, IPN reports, quoting the National Bank of Moldova. Deposits repayable in six to twelve months represented 40.7% of all the term deposits. Private individuals’ deposits for such a term continued 35% of all the deposits. The average rate on deposits in national currency was 4.98%, while on deposits in foreign currencies – 0.37%.
National Bank, Ministry of Finance partner up to improve public financial literacy
The National Bank and the Ministry of Finance have signed an agreement that aims to improve the financial literacy of the general population by promoting basic concepts such as financial independence, financial planning, and responsible spending and saving practices, among others. The agreement was signed by NBM head Octavian Armașu and Finance Minister Dumitru Budianschi. “Together we will succeed in achieving financial inclusion in the Republic of Moldova, which largely depends on individual financial attitude and making well-thought-out and well-informed personal financial decisions”, said Octavian Armașu.
●TUESDAY, March 22
Government of Poland to offer €20m interest-free loan to Moldova
The Government of Poland decided to provide a €20 million interest-free loan to the Republic of Moldova for coping with the faced difficulties, the President of Poland Andrzej Duda announced in a news conference held jointly with President Maia Sandu in Chisinau. Andrzej Duda noted that his main preoccupation, as President of Poland, and the main preoccupation of Maia Sandu, is for the states they lead to survive the current hard times and to cope with all the difficulties. Problems are faced everywhere in the world and these do not derive from particular decisions. He expressed his confidence that Moldova will be able to overcome the hard times with the assistance of European organizations. He assured Maia Sandu that he will personally discuss with European officials for the European markets to open wider to Moldovan products. The Polish official said that he will support Moldova’s efforts to obtain the candidate status and then the EU membership. It’s time for the EU to say “yes” to all the nations that are ready to become part of the EU, noting that from political viewport, Moldova is fully supported among the EU leaders.
Material Reserves Agency authorized to sequestrate goods
The Materials Reserves Agency will be able to take decisions to sensitize bailiffs and to sequestrate goods and money of economic operators that allow for unauthorized consumption of state and mobilization reserves or store goods in a smaller amount than the agreed one. This is provided in a bill that was unanimously endorsed by the Parliament’s commission on national security, defense and public order. Under the bill, the sequestration decision will have an effect until the diminished stores are fully restored even if the economic operator challenges the Materials Reserves Agency’s decision in court. The sponsors of the legislative proposal said that the state budget during the past five years alone was caused damage totaling 4 609 206 lei because the Materials Reserves Agency didn’t have the legal power to sequestrate goods and money.
Vadim Ceban: Moldova could buy gas for over $1,000 in April
Moldovagaz president Vadim Ceban expects that the price of Russian gas in April could exceed $1,000 for one thousand cubic meters. Ceban posted on his Telegram account that, according to the calculation formula agreed with Gazprom, in the first and fourth quarters of each year, 70% of the buy price depends on the basket price of oil and 30% on the spot prices of gas. In the second and third quarters, i.e. from April to September, another formula applies, where the buy price is composed, at a ratio of 70:30 percent, of the average monthly price of gas for the previous month and the basket price of oil. At the same time, in early March, due to the war in Ukraine, gas prices in Europe renewed their all-time highs. The historical record for TTF, Europe’s largest gas hub, was set at $3,892 at the March 7 auction. Prices have fallen sharply since then, but not enough to offset the abnormal rise at the beginning of the month. European gas prices on March 22 are just over $ 1,100.
“True, gas prices in Europe are falling, but it is difficult to imagine how much they need to drop to cover the surge seen at the beginning of March”, said Vadim Ceban.
● WEDNESDAY, March 23
PAS proposes bill that enables to import water ionizers at lower prices
A bill that allows importing water ionizers at lower prices was introduced into Parliament. The ionizers are now brought into Moldova but in a small number and with high taxes or are smuggled into the country, bill sponsor Iulia Dascălu, PAS MP, has told IPN. The combined nomenclature of goods does not include the position of ionizers. During the last three-four years, only 50 ionizers were imported into Moldova and a large part of these are in private sport halls, even if a number of state institutions asked for water or alkaline ionizers. When they are cleared, the ionizers are declared water filters on which a VAT rate of 20% is paid, plus other taxes that add up to 14%. This way, the ionizers are sold at prices that are at least 34% higher than in Romania. The bill provides that the ionizers will be imported into Moldova with a VAT rate of 8%, plus 6% customs duties. This way, the taxes will constitute 14%, not 34% as now. The given appliances could be imported also by state institutions so that these reach schools, kindergartens and medical institutions, noted Iulia Dascălu.
Works on Vulcănești-Chisinau power line to be declared public utility of national interest
The works to build the 400 kV Vulcănești–Chisinau overhead power transmission line (OHL) and the Vulcănești Back-to-Back Substation will be declared public utility of national interest. The Cabinet approved a bill to this effect on March 23. Minister of Infrastructure and Regional Development Andrei Spînu in the Cabinet’s meeting said that this project will ensure Moldova’s energy security by interconnection with the internal power market of the EU through electricity grids and will build up the internal power transmission networks. The project envisages the construction of a 400 kV overhead power transmission line with a length of approximately 158 km in the direction of Vulcanesti – Chisinau, which will cross the territory of 35 localities in 9 regions of the country, including UTA Gagauzia and the municipality Chisinau. Together with the back-to-back conversion station in Vulcănești, the OHL represents a major project of asynchronous interconnection of the energy system in the Republic of Moldova with that in Romania and, implicitly, with the European Network of Transmission System Operators of Electricity (ENTSO-E) and the Integrated Power System/United Power System (IPS/UPS).
Guaranteed minimum income indexed by 14%
Effective as of April 1, the guaranteed minimum income is indexed by 13.94% to 1,363 lei per month, the Government decided on Wednesday. The value of the guaranteed minimum income is used in establishing benefits and is subject to indexation each year on April 1. The indexation rate is calculated based on the rate of inflation at the end of the previous year. It is estimated that the number of social aid beneficiaries as of April 1 will constitute 52,000 households, and the number of beneficiaries of cold season benefits will constitute 214,000 households.
U.S. grants additional $36M to Moldova for economic growth and consolidation of democracy
The United States government will provide additional funding of $35.73 million to Moldova for economic growth and the consolidation of democracy. The money is offered in the form of a grant under two agreements signed on September 28, 2016. The Moldovan Government at is Wednesday’s meeting authorized the start of formal negotiations on amending the Assistance Agreement for the Strengthening of Participatory Democracy and the Assistance Agreement on the Sustainable Development Growth Objective, whose implementation period ends in 2025. The amendment to the first agreement will add $19.4 million in funding, raising its total value to $96.3 million. The funds will be used to increase participation of citizens, consolidate receptivity of public institutions and reduce vulnerabilities of institutions and democratic practices.
Balti FEZ attracted over $250 million investment in 12 years
In 12 years since its creation, the Balti Free Economic Zone (Balti FEZ) has attracted more than $250 million in investment, and its resident companies have paid $27 million in taxes, creating over 10,000 jobs. During an event organized by the Economic Press Club, the president of ZEL Balti Marin Ciobanu noted that the Zone accounts for 33% of Moldova’s industrial output and 15% of exports. As regards prospects, Marin Ciobanu wishes to see the Marculesti Airport operate in northern Moldova with the help of a large investor. Alexandru Bordeianu, vice-president of Draexlmaier Company, resident of ZEL Balti, said that the company’s activity depends on the fluctuations on the international market. He cannot say that they are directly affected by the situation in Ukraine, but they have clients that receive parts from the region. Respectively, if the client is affected, they are also affected.
Moldovan authorities on trucks stranded in Poland
The Ministry of Infrastructure is unaware of the exact number of Moldovan trucks blocked at the Polish-Belarus border, but the authorities say they are in constant contact with the Polish government that is looking for solutions to solve the problem. “You all know what the cause of this problem is. The citizens of Poland have physically blocked the transit of trucks, and not only from Moldova, but the entire transit. We are closely monitoring the situation and also discussing with the carriers. We hope to find a solution to the situation soon. I don’t know how many trucks there are from the Republic of Moldova, but I know that multiple carriers have this problem”, Infrastructure Minister Andrei Spînu told a press conference. The National Transport Agency ANTA says that numerous Ukrainian and Polish civil society organizations have mobilized at all border crossings between the two countries, posting pickets and blocking the crossing of vehicles carrying goods bound for Russia and Belarus, regardless of the country of registration of the trucks.
Demand of gas payments in rubles does not apply to Moldova, says deputy prime minister
Deputy Prime Minister/Minister of Infrastructure Andrei Spînu says the Russian demands that payments for gas supplies be made in rubles only does not apply to Moldova. According to him, the agreements between Moldovagaz and Gazprom have always allowed for payments in various currencies. Spînu told a press conference on Wednesday that Moldovagaz pays for Russian gas in euros, dollars or rubles. “The latest payment, too, included a part in rubles, because, as you all know, Gazprom pays Moldova for gas transit, and so it made the payment in rubles. Those rubles were paid back to Gazprom. Our agreement already provides for several options. At the same time, the statement that I have seen several hours ago does not apply to Moldova”. Spînu referred to the announcement made by Russian President Vladimir Putin that Russia will no longer accept payments in “compromised currencies”, such as euros or dollars, demanding that “unfriendly states” pay only in rubles.
● THURSDAY, March 24
Liquefied petroleum gas costs almost 17 lei liter
The price of liquefied petroleum gas rose to nearly 17 lei a liter. Unlike the price ceilings for gasoline and diesel fuel, the National Agency for Energy Regulation does not set the highest retail prices for liquefied petroleum gas. Last summer, the price of liquefied petroleum gas grew by over 1 leu to almost 13 lei a liter in September. Since autumn until the beginning of this March, the price increased to nearly 15 lei and by 2 lei more the past two weeks. The National Agency for Energy Regulation sets price ceilings only for gasoline “95” and diesel fuel. For March 24, the ceilings are 27.02 lei and 26.16 lei, respectively.
Regimes of investment platforms will not be changed, minister
Minister of Economy Sergiu Gaibu said the regime of investment platforms will not be modified in connection with the crisis in Ukraine. The Ministry is working on a series of bills to improve the normative framework concerning the activity of foreign investors in the Republic of Moldova. According to the minister, Moldova undergoes changes as regards the economic relations and the investments in such a situation are also affected. Moldova, as a country and as an economy, needs to adjust to these realities. The investors have particular concerns related to the current crisis and to the economic policy in the near future. The Ministry of Economy aims to further ensure a favorable and friendly climate. “The investors, the foreign and local ones, are very important for our country and the concessions and guarantees will be kept so that the concerns of the residents fade away. I think that despite the difficulties and crisis, new opportunities will appear and the authorities will adjust the platforms to the new national and international conditions,” stated Minister Gaibu.
Travel agencies must refund clients by Sept. 30
The deadline for refunding the money for tourism services collected before March 17, 2020 was extended until September 30, 2022. The MPs gave a final reading to the relevant bill. As a result of the extension of the time limit, travel agencies and local tour operators will have time to overcome the financial difficulties caused by the crisis and to honor their obligations to clients. The lawsuits by which reimbursement is asked following the termination of contracts for the provision of tourist services signed before March 17, 2020 and those filed between December 31, 2021 and the date of the coming into force of the law continue to be examined.
Parliament ratifies lending agreement with EBRD for energy rehabilitation of buildings
The Republic of Moldova can raise a €30 million state foreign loan from the European Bank for Reconstruction and Development for the energy rehabilitation of the housing stock. The agreement on the financing of the Moldova Energy Efficiency Project was ratified by Parliament. The loan will be disbursed in two tranches of €20 million and €10 million respectively. The total value of the project is €75.5 million, including the EBRD loan, a loan of the European Investment Bank and the grant component. The implementation period is 2022-2025. Priority will be given to the public buildings with low energy efficiency and those that are managed by the central and local public authorities, with emphasis on social facilities.
Funds from EU Parliament expected to arrive in July
The Government is expecting that the €150 million aid approved today by the European Parliament will be effectively available in July. This was stated by Finance Minister Dumitru Budianschi during a press conference. “We hope that this program will arrive in Moldova sometime around July, when all the approval procedures are completed”, said Budianschi. Of the €150 million, €30 million is non-reimbursable and the rest is a loan. The European Union today voted to make available €150 million in macrofinancial aid to cover part of Moldova’s budget deficit evaluated at 1.2% of GDP. To effectively get hold of the money, the Moldovan government needs to demonstrate significant progress in implementing the IMF macroeconomic program. The assistance will be offered in three installments until 2024.
● FRIDAY, March 25
Public transport fares in Chisinau proposed to be raised to 6 lei
The municipality suggested a reference fare of 6 lei for trips by public transport in Chisinau. The fare will be lower in the case of season tickets that will now be issued for periods of one month to half a year, IPN reports, quoting the methodology presented by the local authorities. The fare of 6 lei is proposed both for trips by bus and by trolleybus in the capital city and in the suburban settlements. In the case of a one-month season ticket, the price of a trip will be 3.9 lei, of a three-month season ticket – 3.3 lei, while of a six-month season ticket – 2.7 lei. The municipality plans to extend the list of persons who benefit from free trips by adding primary school students and to offer travel concessions to minors from one-parent families and families with many children and to education system employees who work in institutions based in Chisinau, except for personnel of higher education establishments.
Fuel prices up again after declining during several days
The National Agency for Energy Regulation set the price ceilings for gasoline and diesel fuel for March 26-28. The price of diesel fuel will be by 0.41 lei higher and will cost 26.63 lei a liter, while a liter of gasoline “95” will cost 27.04 lei, up 0.07 lei. In mid-March, the Agency said the retail prices of the main types of fuel – gasoline “95” and diesel fuel – reached the highest levels and pump prices started to stabilize. For comparison, a liter of gasoline “95” at the beginning of last September cost 20.23 lei, while a liter of diesel fuel –16.42 lei.
● SATURDAY, March 26
Finance minister dismisses opposition’s proposal to reduce VAT as populist and unfounded
The parliamentary opposition’s initiative to reduce the excise duties and VAT rate on oil products is not viable from economic viewpoint and is aimed at the persons who accept a populist approach, said Minister of Finance Dumitru Budianschi. According to him, the lowering of the excise duties and VAT rate would cause an imbalance between the country’s revenues and expenditure. Parliament will soon debate a bill to amend the state budget and the budget deficit is to be raised by at least 6 billion lei. The minister does not support the Bloc of Communists and Socialists’ proposal to halve the excise duties on fuels and to annul the VAT on their import. He considers this is a populist initiative that diminishes the state budget revenues. “If we reduce the excise duties or the VAT rate on oil products, those who afford to pay 30 lei a liter will also benefit from reductions. I’m in favor of targeted support as any reduction of costs implies the reduction of a benefit. If we today reduce any source of income, the expenditure will also decrease. Do they want us to reduce costs for subsidies, salaries? The opposition is the one that says we should reduce taxes and also demands to raise salaries. A balance is not ensured this way. These are unfounded and unfeasible proposals designed for persons who accept a populist approach,” Dumitru Budinaschi stated in a talk show moderated by Ileana Pîrgaru on RliveTV.
Moldova could buy gas via EU common platform
Moldova will be able to buy gas through the European Union’s common purchase platform that has been announced on March 25 by the European Council among other measures aimed at diminishing European dependence on Russian gas.
Besides Moldova, the platform will be open to two other EU associate members: Ukraine and Georgia.
EU leaders agreed that member states would work together on voluntary common purchase of gas, LNG and hydrogen. “We will join forces, pool our demand and use our collective bargaining power when purchasing gas,” wrote European Commission President Ursula von der Leyen on Twitter.
