ECO-BUS WEEKLY DIGEST–February 3-9. Most important Economy & Business news by IPN
● MONDAY, February 3
Customs revenues in January at 1.4bn lei
The Customs Service in January collected 1.428 billion lei into the state budget, an increase of 6% compared with the corresponding period last year, IPN reports, with reference to a press release of the institution. Almost 500 violations of the customs legislation were identified last month. Among the most frequent ones were the nonobservance of the period of stay on Moldova’s territory for motor vehicles with foreign license plates and of the transit period or the period for submitting a customs declaration, non-declaring or inaccurate declaring of consumer goods. Fines totaling 1.3 million lei were imposed in the period. The Leușeni and Sculeni customs posts were the most popular frontier posts in January.
Metalferos is not a profitable enterprise, PM
Prime Minister Ion Chicu said the state-owned enterprise Metalferos does not bring revenues and the state should not deal with the collection of scrap metal. After a meeting with the President and Parliament Speaker on Monday, Premier Chicu noted that Metalferos in 2018 earned revenues of 1.4 billion lei and the made profit totaled about 20 million lei. According to the official, when dividing the profit of 20 million lei to the turnover, we see that profitability was unessential. But the enterprise was a monopolist on the market and dictated purchase prices, facing no competition. “I do not want to anticipate what will happen to the state-owned enterprise Metalferos later if in 2018, when it was a monopolist, its profit represented only 2%,” stated Ion Chicu.
EAIR is most efficient instrument for comparing products of different lenders
The effective annual interest rate (EAIR) is one of the most important elements of the lending agreement. This indicator is useful when comparing a number of loan options as it presents all the payments in one digit, as an annual percentage of the value of the loan. The information about the EAIR, which is applicable to all the loan products, is published by the National Bank of Moldova in the context of the information campaign launched together with the National Commission for Financial Markets as part of the financial education project “Learn. Give sense to money”. Willing to attract clients, the institutions that provide loans distribute commercials presenting different costs of a loan. For example, if the person wants to take out a loan of 1,000 lei for a year by starting to repay it the next month, the options are the following: monthly payment of 100 lei (EAIR = 42%); annual interest rate of 10% without any commission (EAIR = 10.47%) or interest rate of 0% with a monthly administration commission of 2% (EAIR = 26.8%). It’s normal for a person to want the loan whose total cost is the lowest for the whole period.
State Tax Service collects higher revenues into public budget
The revenues collected by the State Tax Service into the national public budget in the first month of 2020 grew by 13.7% compared with the corresponding period last year, totaling 3.3 billion lei, IPN reports, quoting the Service. A sum of 1.4 billion lei was collected into the state budget this January, by 7.1% or 92.6 million lei more than last January. The sum is comparable with the one collected by the Customs Service into the state budget - 1.428 billion lei, up 6% compared with the corresponding period last year. The amounts collected by the State Tax Service into the local budgets came to 344.7 million lei, into the state social insurance budget to 1.1 billion lei, while into the mandatory health insurance funds to 394.8 million lei.
Over half of Agriculture Development Fund is intended for clearing arrears
Starting with this year, applications for subsidies from the National Agriculture and Rural Development Fund can be submitted not only by farmers, but also by local public authorities, non-agricultural private individuals and legal entities. Vadim Curmei, director of the Agency for Intervention and Payments in Agriculture (AIPA), told a news conference that three new measures are proposed for subsidization this year. The local public authorities can apply for subsidies to implement projects to develop and improve the living standards in villages within the first two measures. The subsidy will not exceed 3 million lei, of which the state contribution will represent 80%. The third measure applies to non-agricultural private individuals and legal entities, such as craftspeople and other persons who carry out activities in localities. These can ask for subsidies of at most 1 million lei where the state contribution will be 50%.
Transfers from abroad in 2019 down 3.5% on 2018
The bank transfers from abroad to private individuals in Moldova in 2019 totaled US$ 1.222,89 billion, a decrease of 3.5% in dollars on 2018, IPN reports, with reference to the National Bank of Moldova. The value in dollars of transfers declined mainly as a result of the depreciation of the euro and rubble against the US dollar. The real diminution of the value of total transfers was 0.4% and was determined by the 10.5% rise in transfers in euros and the 45.6% decline in transfers in rubles. Transfers from the EU grew by 11.2% on 2018 to 46.6%, those from the CIS decreased by 24.7% to 22.0%, while those from other states represented 31.4% in 2019 and 31.2% in 2018.
● TUESDAY, February 4
Sergiu Pușcuța: Moldova is already eligible to receive second tranche of macro-financial assistance
Deputy Prime Minister Sergiu Pușcuța, Minister of Finance, said the Republic of Moldova is already eligible to get the second tranche of the macro-financial assistance from the EU. Moldova fulfilled all the conditions in this regard, but it is not known when this money will be disbursed. “One of the commitments undertaken by the Republic of Moldova to get the first tranche is being fulfilled and will be fully implemented in one-two weeks. The bill was drafted and is to be presented to the Government. As regards the second tranche of the macro-financial assistance, we can now say with certitude that all the conditions that formed part of the mutual commitments were met by the Moldovan side and the Republic of Moldova is already eligible to get the second tranche,” Sergiu Pușcuța stated in the talk show “Emphasis on today” on TVR Moldova channel.
Igor Munteanu: Withdrawal of funds from state reserves will lead to an inflation rate of 25%
MP of the Party “Dignity and Truth Platform” Igor Munteanu said President Igor Dodon’s proposal to withdraw US$ 1 billion from the state reserves would lead to an inflation rate of 25% that would affect the poorest people in the Republic of Moldova. The important international institutions would not welcome such an initiative. “Economic questions should be put here, why should you use US$ 1 billion if, for example, the result of the related transactions will be an exponential growth of inflation in the county? In this case, you push the economy towards a collapse, towards a vicious circle from which the people will have to escape and leave the country,” the MP stated in the program “Secrets of the Power”’ on Jurnal TV channel.
Employers ask to simplify procedure for bringing labor force from outside
Employers complain about a shortage of labor force in the Republic of Moldova and ask for the simplification of the procedure for bringing workers form outside the country. The problem of deficiency of labor force was discussed in a meeting called by Prime Minister Ion Chicu, IPN reports, quoting the Government’s press service. According to the participants in the meeting, the shortage will become more acute when the road building works start as larger volumes of human resources will be needed there. The deficiency of workforce can compromise the implementation of the action plan.
Faults identified in allocation and utilization of money from Vine and Wine Fund
Provisions of the current regulations concerning the approval, allocation and use of financial resources from the Vine and Wine Fund weren’t observed. As a result, additional costs of 28 million lei were incurred for financing the Fund, while 35.1 million lei accumulated in the accounts of the National Office of Vine and Wine during several years remained unused, says an audit report on the management of the Fund that was examined by the public finance control commission. “The carried out audit procedures revealed problems and faults in the management of the Fund. These limited the efficiency and efficacy of the management of the allocated funds and prevented the achievement of the set objectives,” runs the report.
● WEDNESDAY, February 5
Economy minister: Franchise agreement on airport can be terminated
Minister of Economy and Infrastructure Anatol Usatyi said the contract for the concession of the Chisinau International Airport can be terminated. The concession principle itself was positive, but the way in which the concession took place generates questions. The authorities intend to go to court to have this contract terminated. Anatol Usatyi said the Ministry does not communicate with the owner of “Avia Invest”, which manages the airport under franchise. All the contacts are ensured through the Public Property Agency. At the start of this year, the court rejected the appeal filed by the Agency for the reason that the documents weren’t collected according to procedure. “The concession is not convenient for the state and the citizens of the Republic of Moldova. If this contract can be terminated, we should make sure that this is done,” the minister stated in the program “About us” on Jurnal TV channel.
NBM governor says withdrawal of foreign exchange reserves is inacceptable
The governor of the National Bank of Moldova Octavian Armașu said he considers the withdrawal of foreign exchange reserves for performing modernization and infrastructure works, as President Igor Dodon suggested, is inacceptable. Asked in a news conference to comment on expert opinions that such a scenario can lead to a considerable rise in the rate of inflation, up to two-digit inflation, the governor said an eventual withdrawal of funds from the foreign exchange reserves will have the same effect as the annulment of state securities. More exactly, there will be witnessed a situation of money issuance without coverage. “The uncovered money issuance can lead to a high rate of inflation, to the depreciation of the leu and other unfavorable conditions that will first of all affect the people with the most modest incomes,” stated Octavian Armaşu.
Central bank: Average inflation in 2020 will be of 5.1%
The average rate of inflation in 2020 will be of 5.1% and in 2021 of 3.6%, according to the National Bank of Moldova’s forecasts that were presented in a news conference by governor Octavian Armaşu. According to him, the annual rate of the regulated prices will be relatively low. This will rise slightly in the first half of this year and will then decrease until the first quarter of 2021. Octavian Armaşu said the rate of inflation in the first months of this year will be relatively high due to the main effects of the previous year and will gradually decline to 5.1%. The forecast from this report confirmed the previous rounds and proved the correctness of the decisions taken by the Executive Board of the National Bank of Moldova. The effects of the monetary policy measures adopted last December will become more evident at the next stages. The subsequent decisions will depend mainly on the macroeconomic situation and will be aimed at maintaining the inflation relatively low, stable and credible.
Only 10% of buses expected to be classed as superior comfort vehicles
More than 2,200 buses will be examined to see if they meet the comfort requirements. By February 3, 232 road transport operators submitted classification schedules and about 90 operators confirmed they will present such schedules by this weekend. The authorities estimate that only 10% of the buses could be included in the category of superior comfort vehicles. Secretary of state at the Ministry of Economy and Infrastructure Iulian Postică told a news conference that 24 periodic technical inspection stations were authorized to classify the buses. The National Motor Transport Agency adjusted the automated information system Autotest by which each vehicle undergoing the periodic technical inspection is monitored in real time. The Agency will inform the administration of bus and minibus stations about the operators that didn’t submit schedules for the inclusion of buses into comfort categories so that their vehicles are removed from regular routes.
Register of sales to be digitized
The Government approved the technical concept of the automated information system “Electronic Monitoring of Sales” that envisions the digitization of the register of sales and the possibility of controlling transactions online. The implementation of the system will generate electronic bonuses and is a stage aimed at optimizing and modernizing the processes of recording, managing and monitoring sales. Deputy Prime Minister Sergiu Pușcuță, Minister of Finance, said the information system will benefit the about 20,000 traders who hold retail trade permits and are obliged to use cash registers. “The advantage of the given system resides in its simplicity as it allows for interconnection not only with cash registers, but also with any other equipment and information system. The experience of other states shows the financial discipline of business entities increased considerably as a result of the implementation of this system,” stated Pușcuță.
Taxes could be paid online by one operation
Users of the automated information system “Common Taxpayer’s Account” can pay online all the taxes and duties by one operation. The State Tax Service, with the assistance of the Electronic Governance Agency, integrated the electronic service “Common Account” into the governmental electronic payment service MPay. The mechanism consists in the formation of a payment note for fiscal obligations with the possibility of transferring the whole sum for paying taxes and duties with redirection to the pre-established budget destinations. The payer does not need to print and remit the payment order to banks. The service is available to all the taxpayers that have access to electronic fiscal services and use the service “Common Account” of the automated information system “Common Taxpayer’s Account”.
● THURSDAY, February 6
Changes to law on normative price and sale-purchase of land
The consolidation of farmland by sale-purchase transactions will be facilitated. Parliament gave a final reading to the amendments to the law on the normative price of land and the land sale-purchase method. Currently, the legislation provides that the territorial-administrative units can sell only land that belongs to the private sector of the village or town, at a normative price, by competition or tender contest. But it does not specify how the technological roads inside camps should be sold. When a person becomes the owner of all the lots of a field or of a portion of this field, this person must also purchase the roads inside the camp for consolidation purposes. According to the authors of the bill, it is evident that the given roads cannot be auctioned as nobody except the initiator of the consolidation process is interested in buying the land occupied by such roads.
● FRIDAY, February 7
Moldtelecom and Moldova’s Railways will not be put up for privatization, PM Chicu
Prime Minister Ion Chicu said the Public Property Agency assessed the state-owned enterprises and presented a list of those that will be put up for privatization. The list includes enterprises that have been proposed for privatization for a long time, but does not include Moldtelecom and Moldova’s Railways, as it was rumored. Premier Chicu said the list does not include the power distribution networks and the hydropower station of Costești. “The enterprises we consider strategic are not on the list. This consists of enterprises whose activities do not match the domains of the state,” the official stated in the talk show “Direct Access” on NTV Moldova channel. He explained that the moment is now not opportune for privatizing the telecoms carrier Moldtelecom. If such a moment comes, such a move will be considered.
Fuel prices go down
Filling stations posted lower fuel prices in the morning of February 7. Gasoline is by 0.30 lei on average cheaper, while diesel fuel and liquefied petroleum gas by 0.30-0.40 lei. The price of a liter of gasoline of 95 type is 18.42-18.55 lei, as against almost 18.80 lei a day ago. Diesel fuel costs 16.22 lei to 16.40 lei a liter, as opposed to 16.70 lei, while liquefied petroleum gas is sold for 10.45 to 10.55 a liter, in contrast to 10.87 lei. Almost one week ago, the fuel prices were decreased by 0.20-0.25 lei/liter.
PAS MPs present legislative proposal to stimulate electronic payments
The PAS parliamentary group of the ACUM Bloc will register a legislative proposal aimed at promoting electronic payments and reducing the use of cash. Presenting the bill in a news conference, MP Dan Perciun said they propose reducing the VAT on card payments by 2%. All the companies that have more than ten employees and have the headquarters in a city or a municipality will have to mandatorily transfer the salaries to card. Also, the limit for cash payments made by companies will be reduced to 10,000 lei a month, down from 100,000 lei. According to Dan Perciun, the presented measures will be implemented together with the reduction in bank commissions.
Competition Council should bring things on fuel market in order, expert
The more frequent changes in fuel prices are a good signal as these are adjusted daily at international level. However, if the prices at all the operators change to the same or a similar extent, this shows the competition mechanisms remain inefficient, stated the former director of the National Agency for Energy Regulation (NAER) Victor Parlicov. According to the expert, the return to the capping of fuel prices is not a solution when competition is to be ensured on the market. The Competition Council should do its job and should determine if there are price agreements between fuel sellers as this is a direct and flagrant violation of the law. Asked by IPN to comment on the recent rise in fuel prices that was shortly followed by a decline in prices, Victor Parlicov said this is a move in the right direction. The prices cannot be kept fixed during months when the quotations, exchange rates and stores change daily.
● SATURDAY, February 8
Securing external financing requires a strong reform momentum, IMF
The 2020 budget envisages a growth-friendly fiscal expansion to help address large infrastructure needs, but implementation and financing risks remain significant. Securing financing from external development partners, as envisaged in the budget, requires a strong reform momentum, says a concluding statement of the IMF team that visited Chisinau during January 22 and February 5. The statement that is quoted by IPN says that “Moldova’s subpar track record in executing budgeted capital spending reflects significant weaknesses in public investment management that need to be urgently addressed. Also, securing financing from external development partners, as envisaged in the budget, requires a strong reform momentum. Meanwhile, contingency plans need to be developed in the event that external inflows fall short of expectations.”
