Economic decline in Moldova this year will be larger than forecast

The reviewed decrease in the Gross Domestic Product this year is 8%, as against 5% as predicted earlier. Minister of Economy Valeriu Lazar told a news conference on October 1 that the most serious mistake that determined this decline is the adoption of a too optimistic budget for 2009, while the promoted budget policy were rather risky, even hazardous, Info-Prim Neo reports. “Even if it was obvious that the revenues collected into the budget were much lower than the projected ones, the expenditure was raised. This is the price paid by the budget for electoral promises made by the former ruling party. In times of crisis, a minister responsible for financing adjusts the costs to the revenues,” Lazar said. Valeriu Lazar also said that the fact that the salary fund is increasing is also a danger as it was initially agreed with the IMF that it should not exceed 10% of the GDP, while investments in the real sector, including the state capital investment, decrease. “The situation in normal economies is different. The real sector benefits from support, the state investments in programs stimulating consumption are increased,” the minister said. The official also said that the structural reforms have been postponed. Instead of supporting the economic entities, the state imposed restrictions on them. The import is excessively regulated, while the exports of wine material, sunflower seeds, grain and nonferrous metals have been monopolized. On the other hand, there were initiated social polices even if the budget does not contain money for them. Another problem is the administrative pressure exerted on courts in economic cases, which resulted in many cases lost at the ECHR (120 million lei unpaid). Among the measures that must be taken to remedy the situation, Valeriu Lazsr enumerated the formulation of a program of anti-crisis measures which is now being finalized, removal of the constraints imposed on businesses, improvement of the budget policy, building of a competitive market economy by implementing essential structural reforms and attracting foreign assistance for reviving the national economy. Asked when the Moldovan economy would begin to recover, Valeriu Lazar said that several years will be needed for this. The economic decline might stop in 2010.