Issuing and sale of state securities to banks could lead to appearance of financial pyramid similar to that of 1998, economist

The new government should reestablish the relations with the IMF and other development partners as soon as possible so as to obtain foreign financial assistance and diversify the possibilities of covering the budget deficit that exceeded 1.5 billion lei, economist Veaceslav Negruta, of CASE Moldova Center, said Thursday at a news conference themed “Economic Crisis in Moldova. Defining a New Model of Economic Government”, Info-Prim Neo reports. Negruta said that the further issuing and sale of state securities to banks could lead to the appearance of a financial pyramid similar to that of 1998. Therefore, such a practice should be stopped. As to the fiscal anti-crisis measures that could be taken by the new government, the economist, who is a substitute candidate on the PLDM’s list, said that the space for maneuvers in this area is very limited. According to Negruta, the zero tax on reinvested profit could have been canceled if the real sector of the economy had not been affected by the crisis so seriously. But, in the present situation, this measures should be maintained even if the collections into the budgets of the territorial-administrative units are lower due to it. The VAT on capital investments in rural areas should be refunded in continuation as this will contribute to larger investments, more new workplaces and a lower number of migrants from villages to towns and abroad. The VAT on capital investments made in Chisinau and Balti should be also refunded. Negruta mentioned several measures that could, according to him, compensate for the budgetary losses resulting from the use of the zero tax on reinvested profit, including: increasing the excise rates, on luxury goods as well, extending the list of excised goods such as the articles made from crystal, reducing fiscal evasion in the alcoholic drinks sector by fixing the lowest selling price as for tobacco products, increasing certain local taxes and the road tax. He said that not only the world financial crisis hit the Moldovan economic entities, but also the fact that the state monopolized a number of economic activities. Many state-run companies are in a better situation today than the companies from the private sector. It is not normal when a low number of companies do well at a time when most of the companies are in a deplorable situation as there is no competition and, receptively, no progress, the economist said. The conference was organized by the Independent Analytical Center “Expert-Grup” and IDIS “Viitorul” as part of a project financed by the Black Sea Trust and Friedrich Ebert Foundation.