Political dissonance compromised dynamic of coming closer to EU standards, analyst

[Info-Prim Neo article from the series “2011: how it was and how it wasn’t”. Repeat from 23.12.11] {“Moldova closer to the EU?”, in the opinion of economic analyst Iurie Gotisan } ”The political frustrations and dissonance compromised the dynamic of coming closer to the EU standards. The danger resides in the fact that most of the EU funds in the future will be used to resolve the Union’s internal problems. I’m inclined to believe that the European Neighborhood Policy will become a secondary matter. The Moldovan political class did not take this into account and did not fully profit from the opportunities it had in 2011,” said economic analyst Iurie Gotisan. According to the analyst, Moldova’ economic growth forecast for 2011 is rather optimistic – 6.7% for the first three quarters of the year. But this growth is due to a rather good agricultural year and the higher demand for the Moldovan products abroad. The projected budget revenues were mainly collected, but it was principally due to the rise in exports and to the imports on which duties, excises and other taxes are put and they augmented the state’s incomes. ”We maintained a growth trend and this is very important. It is rather improbably that the same pace will be kept in 2012. The growth resources remained mostly the same, being based on consumption, not structural development. Industry showed signs of recovery and this propelled exports. But the prospects in the eurozone seem to affect the internal situation, including the volume of exports,” said Iurie Gotisan. As to the EU’s decision to launch talks on the Deep and Comprehensive Free Trade Area with Moldova, which was taken in December, the analyst said things in this field advance relatively quickly. However, the implementation of reforms is much more painful, especially because there are no resources and capacities. It is much easier to write good reports and send them to the European Commission than to carry out internal reforms. According to Iurie Gotisan, special attention should be paid to the observance of the EU sanitary standards by the Moldovan producers. It is not excluded that Moldova will encounter difficulties in the talks when the quality of products is discussed, in particular of the agroindustrial ones. Furthermore, we should not forget that the EU is the largest importer of agroindustrial products in the world, but these products should be of a high quality. The yet low quality of some groups of Moldovan products does not allow massively reorienting the exports to the Western markets. The economic analyst also said that Moldova has yet a lot to work in the area of consumer protection, given that this is a mandatory aspect of the future Association Agreement with the EU. Serious work is needed in fiscal administration and optimization of the public finances as tax evasion leads to the collection of insufficient budgetary resources, but that money could be used to implement social reforms, including in the public pension system. Without political will and appropriate managerial ability, things develop slowly, as we have an outsized and often inefficient public administration system. The analyst considers that 2012 is likely to be the year of challenges, when we will have to cope with the consequences of the feared economic crisis, especially because their will be foreign provocations. “I do not see safe sources for economic growth. The only source is the inertia of the economy. The industrial production that provides services and products for the export may be maintained and the exports will continue to rise, even if at a much lower pace. This means that industry and the service sector, which are the main suppliers of value added, will be able to provide support. This hypothesis is based more on foreign factors. Exports can continue to grow, but this depends on their structure. Otherwise, consumption will be unable to support the demand,” said Iurie Gotisan. He considers that the optimization of the public finances will be the main challenge and it will be impossible to avoid the fiscal consolidation measures. Cutting costs or increasing taxes and duties, or combining the two measures cannot help the authorities to avoid taking measures that will quickly lead to fiscal consolidation. “I think 2011 was a year of job hunting and I’m afraid that the scenario in 2012 will remain the same. The workplaces will be the people’s main obsession,” said Iurie Gotisan. [Elena Nistor, Info-Prim Neo]