Independent expert predicts difficulties in executing 2009 state budget

An expert with the think-tank IDIS “Viitorul”, Veaceslav Ionita, predicts difficulties in executing the 2009 state budget. “What is particularly interesting when we get familiar with the draft budget for 2009 is the expected exchange rate, simply because the Moldovan budget is made by imports: VAT, excises and customs taxes on imported goods,” Veaceslav Ionita said in an interview for Info-Prim Neo. Ionita opines that in the situation when nobody knows what is going to become of the national coin next year, and as the exchange rate will be 9.12 lei per USD, as the Government is said to have planned, then the Government seems too upbeat as to collecting the VAT within the country. “Certainly starting the machinery of reprisals and fines will influence the companies to some extent, but I don't think it will be enough to reach the figures planned in incomes from the VAT,” Ionita specifies. As an expert with IDIS “Viitorul”, he says he has made forecasts for the lats 5 years as to the execution of the budget, but now it is hard for him to do so. “Unexpected things can happen to our leu. In this case we can have a budget not bigger than 17 billion lei, as is planned, but of 25 billion lei, that is quite another budget and configuration. In a week we're going to present 'Monitorul Economic' with forecasts about the execution of the budget. I will probably present two versions: one based on the forecasts of the Government and another for a crisis situation,” he pointed out. Ionita says he has met with Gagauz businesspeople recently complaining of problems at customs offices, of not being able to export his products, although he could do so earlier. “We didn't understand why, but we found the answer. The tax policy is made in a such a way that exporting goods from Moldova incurs losses to the state budget. This year the state budget is to lose over 500 million lei because of exports. We made this type of fiscal system and as a consequence the Government is interested in not allowing exports. When exporting the Government returns the VAT and now it hopes it will be compensated through other taxes: the natural entities' income tax, the legal entities' income tax, the so-called social taxes: the contribution to the social assistance and medical insurance funds. Fore every VAT ley returned, the Government recuperates only 0.66 lei from other taxes. So the paradox is that the more we export, the more the state budget loses,” Ionita added. [Info-Prim Neo's note:] The Government plans, in 2009, incomes to the budget of 17,73 billion lei, up 21 % compared with 2008. The indirect taxes will be 14.93 billion lei, up 26.6% compared with 2008, from which VAT – 11.8 billion lei (up 26%) excises – 1.7 billion lei (up 27.9%), taxes on foreign trade – 1.18 billion lei (up 30.4%). According to the Expenses Frame on Middle Term, the average annual exchange rate is planned to be 9.12 lei per $1 in 2009, and 8.18 lei for $1 in 2011.