ECO-BUS WEEKLY DIGESTЬ March, 28- April,02 . Most important Economy & Business news by IPN
● TUESDAY, March 29
Government should offer society more information about its financial capacities, opinions
Representatives of civil society ask for more information about the socioeconomic situation in the country. Political commentators consider the authorities should ensure greater transparency in their activities and should more efficiently fight disinformation and fake news. For their part, representatives of the government said that amid the multiple crises experienced by the Republic of Moldova, the authorities are making maximum effort to manage the situation within their financial possibilities. Recently, Minister of Finance Dumitru Budianschi said the war in Ukraine has unfavorable consequences for the economic situation in the Republic of Moldova and the economic growth forecast for 2022 is of only 0.3%. The budget deficit projected at 15 billion lei at the end of last year can exceed 20 billion lei.
Business entities with high natural gas consumption can apply for subsidies
The business entities with a high natural gas consumption in the production process can already benefit from state subsidies for January-March 2022. They must submit an application through the Unified Electronic Reporting One-Stop Shop. The subsides are intended for businesses that grow vegetables, keep fowl, process and can fruit and vegetables, make dairy products, flour, bread and cakes, animal fodder, carpets and clothing, except for articles made from fir, leather goods etc.
Official reserve assets expected to decline, but for a short period of time, expert
In October 2021, the official reserve assets of the National Bank of Moldova reached a historical high of US$4.073 billion. Now they total US$3.421 billion, down US$652 million. This is the fourth significant reduction in the official reserve assets in the country’s history since the obtaining of independence. Economist Veaceslav Ioniță anticipates a slight diminution of the official reserve assets during a very short period of time. The expert said that owing to the external support, the reserves will be restored swiftly, IPN reports.
The economic policy expert of the Institute for Development and Social Initiatives “Viitorul” Veaceslav Ioniță said that the National Bank started to intervene in the currency market last March. But the intervention was minimal. There were four main factors that influenced the central bank’s intervention - the energy crisis and unprecedented rise in import prices of natural gas, the panic caused by the war in Ukraine, which generated massive purchases of foreign currency among citizens and businesses, the exercise loan-based consumption of the population in 2021 and the central bank’s fight against inflation, and the foreign partners’ support.
Diels fuel more expensive than gasoline
Diesel fuel will cost more than gasoline “95”. The National Agency for Energy Regulation for March 30 set the price ceiling for diesel fuel at 27.25 lei, up 0.28 lei on today, and the price ceiling for gasoline “95” at 27.17 lei, up 0.06 lei, IPN reports.
The highest retail prices of the main oil products are calculated based on the average value of Platts quotations for the 14 previous days correlated with the leu/dollar exchange rate plus the excise duty, the value added tax and the specific profit margin. “As a result, any decline or increase in prices on international markets is felt only in several days at pumps of filling stations in the Republic of Moldova,” said the Agency.
● WEDNESDAY, March 30
Government approves loan for modernizing heating system in Bălți
To implement the project, Moldova raised a €15 million loan, €14 million of which is a sovereign loan from the EBRD, while €1 million is a concessional loan from the Green Climate Fund. The money will go to implement the investment component (€8.5m) and to refinance the historical debt (€5.5m). The loan agreement is an interstate treaty valid to 15 years. The grace period is three years. Also, the Eastern Europe Energy Efficiency and Environment Partnership (E5P) will provide a grant of €2 million.
Farmers demand governmental program to support agriculture
Government to compensate 30% of excise duty on diesel fuel used in farming
The Government will compensate 30% of the value of the excise duty on diesel fuel used in agriculture. Farmers will also be provided with the circulating assets needed to purchase inputs.
At the same time, it will be possible to compensate up to 200,000 lei from the interest rate on the loans taken out for the supplementation of current assents and, additionally, up to 150,000 lei for the loans taken out for investment projects.
● THURSDAY, March 31
Agriculture minister about eventual food crisis: We have sufficient supplies of wheat and corn
Minister of Agriculture and Food Industry Viorel Gherciu said there are no reasons for concern about an eventual food crisis in the Republic of Moldova as the country has enough supplies of corn, wean, sunflower, sugar for satisfying internal demand. The ban on the export of wheat wasn’t lifted, but corn export was resumed as the stores of corn are sufficient until the new harvest, IPN reports.
The minister noted the risks related to the shortage of food products on store shelves are reduced. The country possesses the most important agrifood products to cope with the crisis generated by the Russo-Ukrainian war.
● FRIDAY, April 1,
Grain exports declined by 60% since war started in Ukraine, “Agrocereale”
Since the Russo-Ukrainian war started, Moldova’s grain exports have decreased by 60%, from about 250,000-300,000 tonnes annually to approximately 150,000 tonnes at present, Igor Grigoriev, president of the Association of Grain Exporters “Agrocereale”, stated in public debates staged by the Institute for Development and Social Initiatives “Viitorul”. Business entities noted temporary costs should be planned to partially solve the problem so that grain could be conveyed to ports in Romania.
Igor Munteanu, public policy expert of “Viitorul”, said the problems and solutions formulated by the business community will be included in the recommendations of the Business Agenda that will be presented to the authorities.
Finance minister: First tranche from IMF will come in May
The money from the IMF, the European macro-financial assistance and the loan from the World Bank are external resources on which the Government banks for covering the enormous budget deficit created this year, of over 20 billion lei. Minister of Finance Dumitru Budeanschi said the representatives of the Government agreed with the IMF experts to review the agreement and to increase the initially agreed sum by US$120 million. For its part, the parliamentary opposition is skeptical about the Government’s capacity to obtain foreign loans and says that the Executive for now has only borrowed money from the domestic market. The European Parliament last week approved €150 million in macro-financial assistance for the Republic of Moldova. The €120 million in loans and €30 million in grants will be paid out in three installments until 2024.
● SATURDAY, April 2
Igor Grosu: Dismissing central bank president would be inopportune
Speaker Igor Grosu says the government has agreed with the opposition that sacking Octavian Armașu from the presidency of the National Bank would not be a good idea given the current economic crisis and the forthcoming renegotiation of the IMF deal.
During his Thursday’s speech, Armașu told Parliament that the central bank has had to sell about $650M of Moldova’s foreign exchange in recent months to contain inflation amid concurrent crises induced by the pandemic, the energy crunch and the war in Ukraine. According to him, the remaining $3.4B should be enough to maintain Moldova’s macrofinancial stability.
Moldova’s external debt up by 6.8% last year
Moldova’s gross external debt increased during 2021 by 6.8% and totaled $ 9.014 billion as of December 31, which represented 65.9% of the GDP, according to preliminary data of the National Bank of Moldova. Long-term debt accounted for most of it: 69.6%, or $6.269 billion as of the end of 2021, while short-term debt represented 2.744 billion. Public external debt accounted for 30.3% of the total, increasing by 12.4% from the beginning of the year, and private external debt rose by 4.6% from 31 December 2020, making up 69.7% of the total.
Moldova’s current account deficit up 78.2% in 2021
Last year Moldova’s current account deficit increased substantially both in absolute value and related to GDP. The deficit was $1.59B, or 78.2% larger than last year. Related to GDP, the deficit increased to -11.6%.
The National Bank ascribes this to a considerable increase in the deficit of foreign trade in goods (+ 35.4% compared to 2020) and a decrease in the surplus of primary revenues, while the balances of secondary revenues and services were improved.
Moldovans spent 42% of income on food in 2021
Available income in 2021 amounted to 3,510.1 lei on average for one person per month. Half (50.8%) are salaries. Consumption expenses amounted to 3039.5 lei. Most of the money (41.9%) was spent on food, according to the National Bureau of Statistics.
Average revenues increased by 13.4% compared to the previous year. Adjusted for the average annual consumer price index, revenues increased by 7.8%. The next source of income after salaries are welfare benefits, which on average constitute 18.5% of the available income of the population. Self-employed activities contributed to the formation of revenues with a share of 15.5%. Income from individual agricultural activity represents 8.1% of self-employed activities. Remittances remain a significant source for household budgets, representing on average 12.5% of revenues, but are down 0.4 points compared to 2020. In villages people are more dependent on transfers from abroad than in cities, with the shares being 15.4% in rural areas and 9.5% in the case of the urban population.
Contract with EIB for Moldova Roads IV Program signed
The Moldovan authorities signed a financing contract with the European Investment Bank for implementing the Moldova Roads IV Program to the value of €150 million, said Deputy Prime Minister Andrei Spînu, Minster of Infrastructure and Regional Development. “The loan will be used to build and repair 150 km of national roads,” said the minister, being quoted by IPN. The project covers the M5 road, the Criva-Bălți road and the road that bypasses Cimișlia town, on M3 road. A feasibility study will be carried out and technical projects will be implemented for M2 road, the Chisinau belt road, on sectors 2 and 3.
Moldova’s connection to the TEN-T network is of major importance for stimulating economic competitiveness and the sustainable devolvement of the country and will contribute to implementing and developing the internal market, to increasing economic and social cohesion, said the authorities.
Authorities look for markets to sell Moldovan apples
About 120,000 tonnes of apples are currently kept in cold storage facilities in the Republic of Moldova, according to the Association of Fruit Exporters and Producers “Moldova Fruct”. It is important to identify markets to sell these apples as soon as possible. Moldovan apples have been exported to Romania for a period. In a news conference, Minister of Agriculture Viorel Gherciu said there were held meetings with representatives of Romanian shop chains and these confirmed that the first trucks with Moldovan apples reached them. Negotiations are now held to extend the exported varieties of apples. Initially, they wanted yellow types, but now are ready to also buy red types of apples, IPN reports. Next week, Minister of Foreign Affairs and European Integration Nicu Popescu will go to Egypt to discuss the signing of the Free Trade Agreement with his counterpart. The agreement envisions also the export of apples to this market, stated Viorel Gherciu.
He noted that the Indian market is open to Moldovan apples, but the existing supplies cannot be sold immediately as the quantities need to be agreed beforehand. The official said he will have a meeting with China’s Ambassador to Moldova with whom he will also discuss the diversification of agrifood products exported to the Chinese market.
