ECO-BUS WEEKLY DIGEST–January 13-19. Most important Economy & Business news by IPN

● TUESDAY, January 14

Banca Transilvania intends to purchase Microinvest

Banca Transilvania (BT) of Romania has plans to buy 100% of the share capital of the Moldovan nonbank financial market leader Microinvest, which lends to micro-enterprises. In a press release, the Bank said it is waiting for the consent of the surveillance authorities of Romania and of other relevant authorities. BT noted that Microinvest in time cemented a solid position as a powerful brand on the market. The company has over 25,000 customers, almost 200 employees, 13 branches and so far provided over 30,000 loans. The professional management team with expertise and experience in banking and microfinance is another strong point of Microinvest. BT entered the market of Moldova in 2008, initially through BT Leasing Moldova and in 2018 through Victoriabank.

Over 13,000 lease agreements registered last year

More than 13,000 lease agreements were registered with local tax service divisions in 2019. As a result, revenues of 22.7 million lei were collected into the budget, up 6.3 million lei on 2018. According to the State Tax Service, tax inspectors carried out inspections at over 600 private individuals who lease out real estate and additionally calculated over 715,000 lei basic payments, over 37,000 lei penalties and about 106,000 lei fines. The persons who lease out real estate are urged to comply with the fiscal legislation and pay the tax of 7% of the earned revenues by the date of 2 of each month or in advance. If the lease was signed after the date of 2, the payment that month is made the next day after the agreement is concluded, at any commercial bank or post office in Moldova.

Funding under requests for financial support uncovered in 2019 resumed

The Agency for Intervention and Payments in Agriculture resumed the process of providing financial support based on applications filed in 2019 that remained without financial coverage as the amounts earmarked in the National Fund for Agriculture and Rural Development were used up. It is planned that the receipt of applications for funding this year will start on February 1, 2020. According to the Agency’s preliminary data, a record number of 7,505 applications for financial support for 4,476 agricultural producers were accepted in 2019. The value of the requested financial support exceeded 1 billion lei. Through the National Fund for Agriculture and Rural Development, the state supports agricultural producers that invested in hothouses, multiannual plantations and agricultural machinery. Among other covered areas are the development of animal breeding, organic farming, promotion of products on markets, founding of rural agripensions, creation or extension of handicraft units.

● WEDNESDAY, January 15

Victor Parlicov: Gas tariffs should be raised, but will not be for political reasons

Energy expert Victor Parlicov, former director of the National Agency for Energy Regulation (NAER), said the gas tariffs should be raised, but they will not be raised this year for political reasons. According to him, the NAER should already consider increasing the price of gas, but continues to focus on the political agenda and does not raise this subject. Victor Parlicov noted the gas tariff should be raised even if the purchase price of gas decreased. Despite the fact that a purchase price of US$178 per 1,000 cubic meters was set for last year, de facto Moldova bought the gas for over US$220 per 1,000 cubic meters on average. Respectively, the price last year didn’t cover this difference in costs. “Theoretically, according to the NAER’s methodology, these tariff deviations should be included in the price for next year. This means the price should now include last year’s losses,” the expert stated in the talk show “About us” on Jurnal TV channel.

Government to weekly assess prices of products

The Government will once a week carry out a detailed analysis of the prices of all types of products, with emphasis on social products. The announcement was made after the joint meeting of the Premier, Parliament Speaker and President on January 15. “We discussed the monitoring of the evolution of prices in the Republic of Moldova with the Prime Minister. We have a market economy. The rules say the market dictates prices, but this does not mean that the Government, the state should not become involved in the monitoring of prices,” President Igor Dodon told reporters. He noted that this mechanism was successfully implemented by the Government led by Zinaida Grechanyi, of which he and current Premier Ion Chicu also formed part.

Government to weekly assess prices of products

The Government will once a week carry out a detailed analysis of the prices of all types of products, with emphasis on social products. The announcement was made after the joint meeting of the Premier, Parliament Speaker and President on January 15. “We discussed the monitoring of the evolution of prices in the Republic of Moldova with the Prime Minister. We have a market economy. The rules say the market dictates prices, but this does not mean that the Government, the state should not become involved in the monitoring of prices,” President Igor Dodon told reporters. He noted that this mechanism was successfully implemented by the Government led by Zinaida Grechanyi, of which he and current Premier Ion Chicu also formed part.

Important changes for Transnistrian business entities

The business entities that registered or didn’t register with the Public Services Agency and the public institutions based in Moldova’s eastern districts will be allowed to cross the state frontier posts Pervomaisk-Kuchurgan, Goianul Nou-Platonovo and Novosavitskoe–Kuchurgan for performing customs procedures applicable to goods without paying import and export duties  until January 31, 2021, on condition that the goods remain on the territory that is not controlled by the Moldovan constitutional authorities. The Government extended the deadline set by a decision approved in 2017 for a year. As the Ministry of Finance stated, the decision was taken in a move to identity viable solutions for integrating the public institutions of the eastern districts of Moldova and to additionally notify the Transnistrian business entities that didn’t register with the Public Services Agency of the obligation to register.

● THURSDAY, January 16

Tenure of temporary administrators of Energbank extended

The Executive Board of the National Bank of Moldova decided to extend the tenure of the temporary administrators of BC “Energbank” SA until April 11, 2020. In a press release, the central bank says the temporary administrators fulfill their duties within the early intervention regime instituted at BC “Energbank” SA earlier. The bank works as usual and provides all the services, including those related to deposits, lending and settlement. A year ago, the Executive Board of the National Bank of Moldova ascertained concerted activity, without its prior written consent, at Energbank and decided to suspend the exercise of particular rights in relation to 52.77% of the bank’s shares.

65.7% of Moldova’s exports directed to EU in 2019

The Republic of Moldova in the first 11 months of last year exported goods to the value of US$ 2.6 billion, up 3% compared with the corresponding period last year. 65.7% of the exports went to the EU, as opposed to 69.4% in 2018. Exports to the Commonwealth of Independent States represented 15.8%, as against 15.5% a year before, IPN has learned from the National Bureau of Statistics. Exports rose to Bulgaria, Switzerland, the Czech Republic, the United States, Malaysia, Poland, Russia, but declined to Italy, the UK, Kazakhstan, Saudi Arabia, Denmark and Portugal.

Export of Moldovan products to Russia was privatized by Igor Dodon, PPPDA

The Party “Dignity and Truth Platform” said the export of Moldovan products to the Russian Federation was privatized by President Igor Dodon for evil purposes and is exploited by this to the detriment of producers. In a news conference, the leader of the PPPDA Andrei Năstase stated the party he heads is concerned about the given situation and the lack of transparency in this regard. Andrei Năstase related that during a visit paid by Moldovan MPs to Moscow in 2019, Deputy Parliament Speaker Alexandru Slusari raised the modification of the list of Moldovan exporters and its extension by including producers with multiannual plantations. Later, after representatives of Russia’s food safety watchdog Rosselkhoznadzor visited Moldova, the National Food Safety Agency in September sent to Russia the updated list of fruit exporters that was extended from 130 to 500 companies.

One time limit introduced for paying property tax

The fiscal and customs policy for 2020 provides that the deadline for paying the property tax will be September 25 and there will not be two deadlines as until now - August 15 and, respectively, October 15. In a response to an inquiry made by IPN, the Ministry of Finance says the measure applies both to private individuals and legal entities. According to the response, as earlier, the taxpayers can benefit from a 15% reduction if they fully pay the tax by June 30 of each year. The list of those that benefit from tax exemptions and the upper value of the goods exempted from taxes for these categories of beneficiaries remained unchanged. The method of punishing those that will not honor their obligations until September 25 will be the same.

Ungheni-Chsinau gas pipeline to be finished in first half of 2020

The works to build the Ungheni – Chisinau gas pipeline are performed according to plan and are to be completed in the first half of 2020, the National Natural Gas Transmission Society “Transgaz” of Romania has said, being quoted by IPN. In a press release, the company said that when the project to develop the national transmission system in northeastern Romania is implemented, the capacity of transporting gas from Romania to Moldova will be 1.5 to 2.2 billion cubic meters a year, which is 4 to 6 million cubic meters a day, as it was agreed with the Moldovan authorities. The press release was issued after a number of media outlets in Chisinau earlier this week reported that the Ungheni-Chisinau gas pipeline will be ready to supply natural gas from Romania to Moldova only in 2021.

● FRIDAY, January 17

Fuel prices go up

A number of filling stations posted higher fuel prices. The prices of gasoline and diesel fuel rose by 0.7 lei on average, while the liquefied petroleum gas is now by 1.2 lei more expensive. Currently the gasoline of type “95” is sold for 19.20 lei a liter, as opposed to 18.50 lei a day ago. The gasoline of type “98” costs 19.80 lei a liter, while diesel fuel is sold for 17.05 lei, in contrast to 16.30 lei earlier. The price of liquefied petroleum gas is now 11.05 lei, compared to 9/80 lei. According to the new fuel pricing methodology approved by the National Agency for Energy Regulation, fuel sellers will set the retail prices of the main fuels and liquefied petroleum gas by themselves, within an annual markup of 10%. But they are to present the relevant calculations within three days of the day new prices are posted.

Municipal carriers estimate cost of trip by minibus at 10 lei

The managers of municipal routes calculated the cost of a trip by minibus at 10 lei. In a letter to the mayor of Chisinau and the General Public Transport and Communications Division, 14 transport operators say the situation is disastrous and, of the 1,950 minibuses that ran on routes in 2014, only 780 remained at present. The letter notes that a meeting with minibus route mangers of Chisinau was held on December 19. In a new meeting on December 24, it was decided to inform the municipal authorities about the created situation. Owing to irresponsibility (it is not noted whose, e.n.), a number of routes were closed, while others will be yet closed. The shortage of drivers is another pressing problem. Only 60-70% of the necessary number of minibuses are now on routes.

NAER comments on rise in fuel prices

The National Agency for Energy Regulation (NAER) said that under the legal provisions, the license holders set and modify by themselves the retail prices of the main oil products and liquefied petroleum gas. But the fuel sellers must present the calculations to the NAER within three days of the day the new prices are posted. Until now the Agency received no information about the changes in fuel prices. According to the Agency, the license holders set and modify by themselves the prices taking into account the consumption and costs related to the sale of the given products, in accordance with the applied accounting standards, with an annual markup of at most 10%. The prices are calculated based on the import price of oil products, excise duties and value added tax put in accordance with the Tax Code. The commercial and administrative costs associated with the retailing of the main oil products and liquefied petroleum gas and the applied profit margin are taken into account.

If price of oil does not decline at world level, fuel prices will be raised again, expert

If the price of oil on the international market does not decrease during the next few weeks, the price of gasoline will be raised again, by at least 0.50 lei a liter, economist of the Institute for Development and Social Initiative “Viitorul” Veaceslav Ioniță posted on Facebook, answering why gasoline grows more expensive. According to the expert, particular costs of fuel sellers increased and they will try to introduce these all in the price of gasoline. The price of oil on the international market last December and this month rose by over 6% on last November, which is by about 0.4 lei a liter. Veaceslav Ioniță also said that the excise duties on gasoline are higher as of January 1 and another 0.34 lei a liter is thus added. “The exchange rate saves us a little. Owing to the appreciation of the leu against the dollar, we save 0.12 lei/liter. So, if the leu hadn’t appreciated, the Brent price of oil would have increased by 0.52 lei/liter, not 0.40 lei/liter,” he stated. The economist noted the fuel sellers only started to import oil at higher prices and haven’t yet included all the costs into the excise duties on gasoline.

IMF mission to visit Moldova

An International Monetary Fund (IMF) mission led by Ruben Atoyan will visit Chisinau during January 22 – February 5, 2020. The visit was announced by Volodymyr Tulin, IMF Resident Representative in the Republic of Moldova, by a press statement. The mission will hold discussions with the authorities in preparation of the 2020 Article IV consultation and in the context of the sixth and final reviews of Moldova’s IMF-supported program under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) arrangements. The mission will take stock of the recent economic developments and the progress in authorities’ program implementation, update and assess the macroeconomic outlook, and discuss with the authorities medium-term challenges and risk facing Moldova’s economy and policies to address them.

● SATURDAY, January 18

PM Chicu instructs to create appropriate conditions for export-oriented businesses

Prime Minister Ion Chicu said the current package dispatch procedures are difficult and can compromise the intention to develop businesses in Moldova. In a meeting centering on the facilitation of export and development of trade online, the Premier requested the officials in charge to communicate intensely with national producers and to together work out a scenario for creating maximally appropriate conditions for export-oriented businesses. According to the Government’s press service, the official of the Customs Service in the meeting said that a simplified procedure for export operations was launched in 2019. This enables producers to file an application to the closest customs post for being authorized to dispatch goods to the value of €1,000 per invoice. Work is now done to improve the customs information system ASYCUDA World that is designed to essentially simplify export.

Moldovagaz provides details about tariff for end-users

SA Moldovagaz reiterates that its priority is to restructure all the enterprises and financial deviations, to optimize and reduce costs so that the reduction in gas transit does not affect the final tariffs for the supply of natural gas. In a press release, the company says the tariff for the supply of natural gas to end-users has a series of components, such as the cost of purchased gas that depends on the purchase price in US dollars and the exchange rate of the national currency, gas transportation tariff, gas distribution tariff and gas supply costs that include the supplier’s costs and profitability. In the structure of the current average tariff for the supply of natural gas to end users, the gas transportation costs represent only 3.7%. The other 96.3% refer to the price of natural gas and the natural gas supply and distribution costs. Of these, 71.4% represent the cost of natural gas.