Although the purpose of capping cash transactions for legal entities at 100,000 lei per month and for private individuals at 100,000 lei annually is a noble one, the impact can create bottlenecks, especially in rural areas that live on agricultural activities, said the director of “Agrocereale” Association of Exporters and Importers of Agricultural and Cereal Products Iurie Rija, referring to the draft law to restrict cash transactions.
First of all, the bill doesn’t show how the buyers of phytotechnology and horticultural production, which have the source of income called AGRAC, should act. Until now, the turnover ceiling was 1,200,000 lei (either it was cash or transfer). The new law imposes a ceiling that is 12 times lower - 100,000 lei. For example, for the buyers of walnut kernel, the amount of 100,000 lei is equivalent to a little more than a tonne per year, but each of these collects and sells with cash about 15 tonnes of kernel.
According to him, cash is first of all used because the transactions take place in rural markets, where the subject of bank transfers is something abstract. Most likely, buyers will be forced to go to banks as not every ATM machine can release the necessary amount (120,000 - 150,000 lei monthly during seasonal activity of five-six months a year). The banks, for their part, have their rules: to book the amount two days beforehand with the charging of a 1% commission or up to 200 lei per withdrawal. In case of withdrawals from ATMs, it will be necessary to go to at least two ATMs given that not every machine can provide large amounts, especially in districts. Thus, the banks are most probably not ready to work according to the new rules either and the application of the law will most likely inhibit the procurement and marketing of phytotechnology and horticultural products in the Republic of Moldova.
Iurie Rija noted that the effort to establish economic traceability is welcome yet. But there are certain obstacles here too. Under the new rules, suppliers will be able to sell products worth only 100,000 lei annually, a considerably lower amount than the usual volumes, and any sale exceeding this limit will become illegal. The situation can have a devastating impact on the entire production and distribution chain, affecting even more seriously the local economy and the entry of foreign currency into the country.
According to the expert, there are not many ATMs in rural areas, as half of them are located in Chisinau, and this is another problem. Of the 1,160 ATMs existing in the country, only 111 are available in villages, which is only 10%. This means that the people will have to make trips and to waste money and time.
“Let’s also take a look at the commissions levied by banks on legal entities. Even if the last two years were harsh for agriculture and most of the economic agents could survive with difficulty, at the limits of profitability, the banking sector made record profits of 3.6 billion lei in 2022, which is by 58.6% more than in 2021, and of 4.1 billion lei in 2023 or by 12% more than in 2022,” explained Iurie Rija.
According to him, not only the economic agents operating in agriculture will suffer due to this law. Commissions will be included in the cost of raw materials, i.e. they will be calculated from the amount paid to the farmer, who is the most fragile and vulnerable in this complex chain.
“As a conclusion, the draft law should be thoroughly analyzed to see its impact on various sectors of the Moldovan economy, especially agriculture. Before adopting such restrictive measures, it is of crucial importance to identify balanced solutions that ensure both transparency of transactions and support for the business community and the vulnerable categories of the population. In this respect, it would be good to implement measures to stimulate transfer payments, but not restriction regulations,” said Iurie Rija, director of “Agrocereale” Association of Exporters and Importers of Agricultural and Cereal Products.
Recently, the Parliament held public consultations on the draft law that limits cash transactions.
