ECO-BUS WEEKLY DIGEST June 13-19. Most important Economy & Business news by IPN
● MONDAY, June 13
Moldova and Qatar sign two bilateral agreements
The Republic of Moldova and Qatar have signed two bilateral agreements: on the abolition of short-stay visas for the holders of ordinary passports and on economic and technical-scientific cooperation in the field of agriculture. The documents were signed in Qatar, in an official meeting of Prime Minister Natalia Gavrilița and her Qatari counterpart Sheik Khalid bin Hamad Al-Thani. The agreements will stimulate the economic contacts between the two states, IPN reports, quoting the Government’s press service. The sides agreed to cooperate in the agrifood sector by exchanging experience and by stimulating cooperation in the private sector. The Moldovan official noted that despite the regional situation generated by the Russo-Ukrainian war, the attraction of foreign direct investment remains a priority objective whose achievement will ensure stability and the reestablishment of the development course in all the areas. In the meeting, the interlocutors discussed a wide range of subjects referring to Moldova’s’ cooperation with Qatar and the investment opportunities of Moldova, including the energy sector of the Republic of Moldova and methods of cooperating for strengthening the country’s energy security, including by creating strategic reserves, investments in renewable energy and diversification of access to different sources of energy in the long run.
IMF Deputy Managing Director in Chisinau: We demonstrate our strong support to Moldova
Kenji Okamura, Deputy Managing Director of the International Monetary Fund (IMF), following a meeting with President Maia Sandu in Chisinau, said that the IMF will continue strongly supporting Moldova and its people. He noted that he came to Chisinau to demonstrate strong support to Moldova in advancing reforms. “It is a great honor for me to meet President Maia Sandu here in Chisinau. I am very pleased to be here, the first IMF Management visit in this century to Moldova,” stated Kenji Okamura. He noted that he has two big motivations that brought him here. “First, to see firsthand your extraordinary hospitality to Ukrainian refugees despite the very difficult times. Second, to demonstrate our strong support to Moldova in advancing reforms to cope with your challenges,” said the IMF Deputy Managing Director.
Number of persons with several debts increased, Veaceslav Ioniță
The number of persons who say that they have debts decreased, but the number of those who owe money to at least two sources grew significantly. The persons who borrowed money from three sources are in a dangerous situation, said economist Veaceslav Ioniță, expert of the Institute for Development and Social Initiatives “Viitorul”. In May, the number of persons whom said that they have debts declined from 28.9% to 25%. The largest number of people said they borrowed money from banks and, in descending order, from nonbank institutions, relatives and friends. Only a small percentage borrowed money from pawnbrokers. Last year the Moldovans borrowed officially almost 700 million lei a month. Currently, the value of debts rises by 325 million lei a month. The Moldovans raised loans totaling 33 billion lei and 23.8 billion lei of this amount was borrowed from the banking sector, while 9.2 billion lei from the nonbanking sector. According to Veaceslav Ioniță, the situation of those who have debts and cannot repay them has worsened. In May, 30.3% of those who borrowed money had problems with debt repayment. “Owing to the crisis, we have witnessed a situation when the people are afraid to raise loans, while those who took out loans experience serious difficulties in repaying them,” stated Veaceslav Ioniță.
Fuel prices continue to rise
Gasoline COR 95 on June 14 will cost 33.77 lei/liter, up 0.22 lei on today. Diesel fuel will be sold for at most 31.34 lei/liter, up 0.43 lei. These are the price ceilings set by the National Agency for Energy Regulation. According to the Agency, owing to the changes on the world oil market, the correlation between the Brent crude oil quotations and the Platts quotations for derivatives (gasoline and diesel fuel) became less probable, being dictated exclusively by the supply and demand in a particular region. Moldova does not have own refineries and the use of the Brent oil price quotations in economic analyses or calculations is relevant strictly for forecasting a market trend, not yet for exact calculations. For the purpose, it is right to use the Platts quotations for gasoline and diesel fuel. According to the data published by the Agency, the average Platts quotation for gasoline expressed in lei on May 27, 2022 was 17.60 lei/liter, while on June 10, 2022 it was already 20.62 lei/liter or by 17.1% higher. In the period, the highest price of diesel fuel grew from 27.29 lei/liter to 30/91 lei/liter or by 13.26%.
Debts to Moldovagaz for first quarter total 112 million lei
The debts for the natural gas supplied to household users, legal entities and budget-funded organizations by SA Moldovagaz total 112 million lei for the first quarter of this year, the company’s director Vadim Ceban has said. To avoid disconnections from the supply of natural gas, Vadim Ceban calls on the consumers to pay the bills on time, IPN reports.
“Force of Farmers” announces protest for June 21
The public association “Force of Farmers” on June 21 will mount a protest in the capital city to demand that the current government should implement measures to support the agricultural producers. The protests can be avoided if real progress is made in the negotiations with the state authorities, Ion Plămădeală, chairman of the association’s Administration Board, who is a farmer from Leova, stated in a news conference at IPN. Ion Plămădeală noted that the current government in the election campaign promised to take measures to support the farmers. “Not only once they spoke about financial resources for the immediate refund of excise duties on diesel full, for the partial covering of cost of fertilizers and about many other support measures for the agro-industrial sector that can be implemented as a matter of urgency. But 11 months havce passed after the parliamentary elections. The association “Force of Farmers” ascertains with regret that the strategic sector that actually accounts for almost half of the exports of the Republic of Moldova, provides over 1/3 of the jobs in the economic sector and contributes 21% to the formation of the Gross Domestic Product continues to be fully neglected,” he stated. “Amid the soaring prices of diesel fuel, fertilizers, pesticides, seeds and amid problems related to the storage and sale of agricultural products, when the given markets were monopolized, we had a number of meetings with the minister of agriculture and food industry, the head of the responsible parliamentary commission and other decision makers. We presented our concept of the mechanism for fully refunding the excise duty on diesel fuel and for partially covering the cost of fertilizers, including for famers, except for agro-holdings.”
“Force of Farmers” seeks measures in support of farmers
The public association “Force of Farmers” calls on the Moldovan administration to fully refund the excise duty on diesel fuel purchased by farmers in 2022 by de-bureaucratizing the repayment mechanism and by partially covering the cost of diesel fuel, fertilizers and pesticides given that these products have grown during over six months. In a news conference at IPN, Alexandru Slusari, the executive director of the public association “Force of Farmers”, said that the protest announced by the association for June 21 is a strictly economic event. The prices of diesel fuel grew three times, of pesticides and fertilizers - four times, while of spare parts - two times. Alexandru Slusari called on the representatives of parties not to politicize the famers’ protest of June 21, which will take place in Chisinau. Any attempt by parties that will have bad intentions will be ended by the protesting farmers.
● TUESDAY, June 14
Andrei Spînu: Maintaining current contract with Gazprom is an optimistic scenario for Moldova
The war in Ukraine keeps Moldova’s relations with Gazprom in the shadow. Deputy Prime Minister Andrei Spînu said that no response was provided to the last three letters sent by the Moldovan authorities to the Russian gas company. The Minister of Infrastructure and Regional Development considers the maintaining of the current contract with Gazprom is the most optimistic scenario for Moldova, while the need for Moldova to purchase natural gas from the international market would be the worst development. The official noted that even if the natural gas rates are now high, the current contract with Gazprom is the most advantageous solution. Discussions with Azeri officials are being held to consider the possibilities of buying natural gas from Azerbaijan. “We have the best offer on the natural gas market at the moment, even if we realize that the price is high for many citizens. We now see that the price of gas in summer is higher than it was in winter sometimes. The Republic of Moldova has real chances of purchasing natural gas from Azerbaijan. We can ultimately diversify the gas supply sources. I do not want to name periods, but I can assure you that the Republic of Moldova during the next few years will have diversified sources of gas,” Andrei Spînu stated in the program “Black Box” on TV8 channel.
IMF commends government for its strong fiscal and monetary actions amid very difficult circumstances
Kenji Okamura, Deputy Managing Director of the International Monetary Fund (IMF), said he was pleased to commend the government for its strong fiscal and monetary actions amid the very difficult circumstances of war and inflation. After the meeting with Prime Minister Natalia Gavrilița, the official said the energy subsidies and pension increases implemented by the Prime Minister’s government helped support the most vulnerable Moldovans. He also applauded the government’s unwavering commitment to its vital governance reforms. In a press briefing, Kenji Okamura said that he was honored and deeply moved on his first visit to Moldova - a country with which the IMF has a rich and longstanding partnership. “Today, I would like to pay tribute to the heroism of Moldova and its people. Despite enormous challenges, you are playing a historic role, leading by example and opening your homes and hearts to Ukrainian refugees. Moldova deserves strong support from the international community. We at the IMF are proud to stand with Moldova, support your government’s efforts, and work to deepen our excellent cooperation,” stated the official. According to him, on May 11, the IMF Executive Board approved additional financial assistance to Moldova to help your country address the challenges from the war in Ukraine, encourage additional external financing, and provide needed support to the most vulnerable.
● WEDNESDAY, June 15
Experts: Transnistrian region is an important instrument in negotiations with Gazprom
The fact that Russia cannot supply the Transnistrian region with natural gas bypassing the right side of the Nistru is the weak point of the Kremlin. This situation can be used for the benefit of the Republic of Moldova in the negotiations with Gazprom, said energy experts according to whom the termination of the contract with the Russian gas company will mean depriving the breakaway republic of Transnistria of means of supports. Energy experts said an eventual ending of the contract for the supply of gas between Gazprom and Moldovagaz is not to Moscow’s advantage. The absence of Russian gas means the absence of sources of income for the Transnistrian region and the situation can be used by the Moldovan authorities as an instrument in the negotiations with Russia. “The Kremlin needs to further supply natural gas to the Transnistrian region. The regime in Tiraspol, after receiving gas gratis, sells this at symbolic prices so as to be able to get at least some revenues. There are two big buyers – the Moldovan Thermoelectric Plant that produces energy and sells it outside the region at market prices and the Rybnitsa Steel Works that produces metal and sells it at market prices. The money earned this way gets into the budget of the separatist region. In 2019, 50% of the budget of the separatist region represented revenues from the resale of gas received on credit. Furthermore, the region’s population pays derisory prices for public utilities. The whole economy of the region survives owing to the fact that Gazprom offers them gas gratis. The fact that this gas is supplied based on the contract signed with Moldovagaz is the weak point of the Kremlin. If Chisinau terminates the contract, Transnistria will remain without gas. This is one of our instruments in the negotiations with Moscow,” energy expert Sergiu Tofilat stated in the program “Emphasis on Today” on TVR Moldova channel.
Oleg Tofilat: Price of train tickets can rise, but insignificantly
The price of train tickets can increase, but inessentially, said the director of Moldova’s Railways (CFM) Oleg Tofilat. He noted that passenger transport is not a component that ensures the functionality of the company and the administration therefore does not bank a lot on the revenues from higher ticket prices. According to the director, emphasis is now placed on the increase in freight transportation. Oleg Tofilat said the rise in ticket prices is not a priority at the moment. The efforts of the administration of Moldova’s Railways are aimed at the popularization of this means of transport among the citizens and the improvement of freight transportation capacities. This process brings CFM much higher revenues than passenger transport. “We will possibly adjust the price of tickets, but it won’t be something spectacular. At present, we are interested in increasing the number of passengers, of sold tickets rather than in modifying the price. Passenger transport accounts for 1% of the revenues of Moldova’s Railways. The modification of ticket prices is a challenging process with a minimum effect. The price of tickets does not have a weight in the economy of Moldova’s Railways. We must focus on the increase in freight transportation and extension of transit corridors as such moves can bring hundreds of millions of lei a year,” Oleg Tofilat stated in the talk show “Freedom with Dorin Galben” on TV8 channel.
IMF: War in Ukraine led to increased external financing needs in Moldova
The spillovers from the war in Ukraine and international sanctions on Russia and Belarus, including trade disruptions, higher and more volatile energy prices, and the continued influx of a large number of refugees, have had a significant impact on Moldova and led to increased external financing needs, Kenji Okamura, Deputy Managing Director of the International monetary Fund (IMF), stated at the conclusion of his visit to Moldova, IPN reports, quoting the IMF Office in Moldova. The official said that the discussions with refugees from Ukraine during his visit helped him to better understand their difficult situation. “I have visited several parts of the country and witnessed the generosity of the people of Moldova and their warm hospitality to the refugees which deserve high praise. I call on the international community to continue supporting Moldova’s integrative approach to refugees and its efforts to forge ahead with reforms, while dealing with a series of crisis,” said Kenji Okamura. He commended the Moldovan authorities for their prudent fiscal and monetary policies and swift response to the spillovers from the war in Ukraine and inflation. “In my discussions, I welcomed the authorities’ strong ownership of their ambitious governance reform agenda and their transparent response to the energy crisis. These reforms are critical to improve fostering inclusive and sustainable growth,” noted the IMF Deputy Managing Director.
IMF mission on visit to Chisinau
An IMF mission led by Ruben Atoyan will visit Chisinau during June 15-21. This is a working mission rather than a formal program review, IPN reports, quoting a press statement by the IMF Resident Representative in the Republic of Moldova Rodgers Chawani. The purpose of the visit is to update staff on the macroeconomic situation and discuss fiscal, monetary and other policies in the context of the existing Extended Credit Facility (ECF) and Extended Fund Facility (EFF) Arrangements for the Republic of Moldova. Such staff visits are standard practice in program cases outside of the formal cycle of program reviews. Recently, Kenji Okamura, Deputy Managing Director of the International monetary Fund, concluded his visit to Moldova. He met key officials and travelled to the regions to appreciate Moldova’s current situation and existing challenges.
Bomb threat at Chisinau Appeals Court
The employees and visitors of the Chisinau Appeals Court were today evacuated after a person called the police and said that an explosive device had been planted in the building. The Chisinau Police Division said the Botanica Police Inspectorate was notified through the 112 emergency service. The call was made by a man. All the specialized services were at the scene immediately. The police cordoned off the area and evacuated all the employees and citizens who were inside the building. Recently, a bomb hoax was reported at SA “Moldtelecom”. The caller turned out to be a man aged 20 from Orhei.
Restrictions in activity of nonbank lenders
The persons who in the past were managers or owners of nonbank lending organizations that were struck off the Register will not be able to hold such posts in new lending organizations. The Government endorsed a legislative proposal to amend the framework that regulates the activity of nonbank lenders. A new qualification criteria – reputation – will be used in the case of the member of the executive board or the manager of the branch or secondary office. This refers to good faith, integrity and professionalism. Besides constituting branches or secondary offices, of which the National Commission for Financial Markets is notified, the nonbank lending organizations will be able to liquidate local offices. The Commission will be authorized to close a nonbank lender for a period of up to two years. The article concerning mandatory auditing was modified. This way, the individual financial situations of nonbank lenders will be audited also for other purposes, not only for than those stipulated by law. This audit could be conducted separately or concomitantly with the audit of the financial situations by the same or by another audit entity. The lenders will be obliged to present the auditor’s report on the annual financial situations to the National Commission for Financial Markets.
Government endorses ban on sale of energy drinks with alcohol
The Cabinet on Wednesday approved the bill that bans the fabrication and distribution of energy drinks with alcohol. The goal of the bill is to reduce consumption of energy drinks containing alcohol by banning the fabrication and distribution of such beverages. The legislative proposal was drafted by MPs of the Party of Action and Solidarity. According to them, the consumption of this type of drinks increases. This way, 200 tonnes of such drinks were consumed in 2020, while last year the quantity trebled to 600 tonnes.
● THURSDAY, June 16
Bulgarian farmers waned about competition from Moldovan producers
“The fruit and vegetable market of Bulgaria can be flooded by Moldovan products,” the local press reported, beiung quited IPN. It is noted that the Bulgarian farmers are threatened by a new foreign competitor on the market, which will join in the Turkish, Macedonian, Greek, Albanian and other producers. The concern is generated by the fact that the European Commission recently proposed a regulation allowing for temporary improved market access (tariff-free) for the remaining seven products from Moldova which are still subject to tariff rate quotas when entering the EU. These are the plums, table grapes, apples, tomatoes, garlic, cherries and grape juice. The EU officials said this is a demonstration of EU’s solidarity designed to help Moldova deal with the loss of its main markets and transit hubs for these key agricultural products resulting from Russia’s unjustified war of aggression against Ukraine.
● FRIDAY, June 17
Maia Sandu: Inflation is high and solution is to increase people’s incomes
Increasing citizens’ incomes is the solution for coping with the inflation high witnessed in Moldova, said President Maia Sandu. According to the official, the Republic of Moldova cannot control the prices of energy resources that influence the prices of products and services. The Government has prepared a program of subsidies for the cold period of the year and this is intended for persons with low incomes. President Sandu said that Moldova’s full dependence on imported energy resources determines a higher rate of inflation. There are no preconditions for a decline in the prices on the international market if the war in Ukraine continues. “The rise in the prices of energy resources is a thing that we cannot control. The price of natural gas continues to grow. A new rise was seen on the market the last few days. As a result, the calculation formula is impacted and the purchase price for the Republic of Moldova increases. Owing to the war, there are no signs showing that the prices could return to normality in the near future. We are energy-dependent and are very unprepared as not much was done to ensure energy security the last 30 years,” Maia Sandu stated in the talk show “Black Box” on TV8 channel.
NAER confirms eligible producer status for 25 photovoltaic plants
Twenty-five producers that run or intend to run power plants based on photovoltaic technology received the status of eligible producer from the National Agency for Energy Regulation. The 25 power plans have a total capacity of 18.45 MW. The applications for this type of technology started to be submitted on April 15, 2022. The national businesses expressed the biggest interest. Over 170 applications to confirm the status of eligible producer, with a total capacity of over 120 MW, have been received so far. On Friday, NAER examined 26 applications and accepted 25 of them. The other applications will be processed at one of the next meetings, depending on the available quotas and the quotas allocated by the Government. The Agency’s decisions take effect when the guarantees of good execution are paid, within 15 days of the adoption of the decision. If the guarantees are not submitted, the decisions on the provision of the status of eligible producer are annulled.
