The 2016 budgetary year will remain in history owing to the very late adoption of the budget, in July 2016. Between January 1 and October 31, 2016, mainly as a result of the conversion of the state guarantees provided by the National Bank of Moldova, the state debt increased considerably, to 50.2bn lei or about 37.9% of the GDP. The information is contained in an analytical note of the independent think tank “Expert-Grup”, which says that not the size of the debt is the problem, but rather the way in which this level was reached, IPN reports.
According to the experts, in only a month of the adoption, in September, the budget needed a substantial review and the spending was decreased by about 2bn lei following the drastic reduction in revenues from foreign grants in budget support and in the amounts of collected taxes. In an as short period of time, on November 25, the Government proposed another bill to amend the budget, this time for utilizing additional resources of about 330m lei that is to be collected as VAT and import duties until this yearend. The two modifications affected mainly the energy, road and subsidization sectors.
In October 2016, the Government rectified the 2016 state budget by reducing revenues by 6.6% and spending by 5.5% or 2.06bn lei each, the deficit remaining unchanged. The move was aimed at maintaining the national public budget deficit at the level 3.2% of the GDP, this being a condition stipulated in the memorandum signed with the IMF in October 2016.
The state debt in January – October 2016 grew by 50.2% to 50.3bn lei on October 31, 2016. As share of the GDP, this rose from 27.4% at the beginning of 2016 to 37.9%. Moldova’s state debt is not large enough to cause problems as regards macro-budgetary stability, but the way in which it appeared represents a problem. It grew mainly as a result of the conversion of the state guarantees provided by the National Bank of Moldova, to the value of about 13.6bn lei.
The analysis authors say the assumptions that as a result of this conversion, the repayment of the debt was made the people’s burden are based on erroneous reasons. The committed fraud caused huge damage to the Moldovan state, no matter where the loss was witnessed and no matter from what public source it will be covered, either the budget, the National Bank’s profit or the profit of the public companies as the taxpayers are and will be affected. Recovering the money from those who caused the damage is the only solution.
