Economist Veaceslav Ionita forecasts increase in wage arrears

The state budget for 2006 will fail to accumulate about MDL 380 mln, fact which will cause the increase in wage arrears, economist Veaceslav Ionita says. According to him, the most affected will be the direct budgetary category of employees – civil servants, army, legal bodies, teachers, and indirect – pensioners and underprivileged persons. Veaceslav Ionita told Info-Prim Neo that in 2005, when the budget accumulations increased by 50%, authorities “cherished illusions” and dazzled by optimism approved the Law on wages for the budgetary sector, without taking into consideration the forecasts related to the subsequent evolution in this field. At present, such budgetary accumulations can not be registered, because population’s consumption rate is reducing as it contributes to 85% of the budget of the Republic of Moldova, the expert says. “There is no European country where the budget is created by consumption at such an extent. In the majority of countries, the budget is created on the ground of taxes levied from economic activities, but in our country the economic activity of both population and economic agents is missing, therefore the only field the state is taxing is the consumption”, Ionita underlined. The expert explains the increase in wage arrears of the budgetary employees by the fact that along with the increase of wages at the beginning of the year, the expenses for the maintenance of budgetary institutions were cut by 15%. At present, the only capital, expenses of which can be reduced are the wages of budgetary employees but because the law can not be annulled, the increase in wage arrears is impending, Ionita says. According to the cited source, until 2002, no consumption whatsoever existed because of the poverty. This fact caused the massive migration of the population and their remittances boosted consumption. During 2004-2005 the stage of abundant consumption was registered and as a result – impressive accumulations occurred. At preset, people do not buy household appliances anymore and because the population does not invest in production, but prefers to save money, the volume of remittances will drastically drop. At the same time, this fact will also be spurred by the migrants’ family reunification phenomenon, as well as by the fact that the population has negative expectations as regards the development of Moldova, as confirmed by the recent opinion polls. According to the forecasts of the expert, in December, the consumption will diminish by 20%, which means that the budget will lack 17%. This year, the budget did not evolve, being by 8% lower in real prices compared with the same period of last year. Ionita says that even according to the most optimistic figures, the budget will be executed at only MDL 9.7 bln compared with the official forecasts of MDL 10 bln. In the first 10 months of 2006, about MDL 7.5 bln were accumulated at the base component of the budget, the expenses amounting to MDL 6.6 bln. At the same time, authorities say that by MDL 246.6 mln more incomes were accumulated at the base component.