Economic analysts say cuts in public spending are imposed by economic situation

The maintenance of a budgetary balance is now the most serious challenge for Moldova's economy, said economist Alexandru Fala, quoted by Info-Prim Neo. During a debate that followed the presentation of the Crisis Prevention Report for July-October 2009 prepared by IDIS Viitorul, he said the cuts in public spending proposed by the executive would have been proposed by any government, regardless of its political orientation, if they aim to overcome the crisis and stimulate economic growth. “Evidently, the government will have to take restrictive measures and reduce the expenditure or event raise some of the taxes because the reforms imply costs. We should realize that there is no alternative as our economy does not have capacities to generate resources and the foreign assistance is the only hope. The government negotiated a preliminary lending agreement with the IMF, we reached agreements with other potential backers and the foreign financial support could help our economy. Private investments will come, but they will be for a short term as the crisis scares the investors off,” he said. Fala also said that the IMF's view on the economic policies is not fully accepted by the Moldovan society. On the other hand, the IMF did not impose so strict conditions on Moldova, as on other countries. The VAT rate was not raised, while the zero tax on reinvested profit will be annulled only in 2012. The retirement age was not increased. The economist considers that Moldova is in a better position that other countries of the region as the inflation in our country is low and the prices are stable.