ECO-BUS WEEKLY DIGEST January 27-February 2. Most important Economy & Business news by IPN
● MONDAY, January 27
Government intends to privatize SA “Metalferos”
The Government will put up the scrap metal recycling company SA “Metalferos” for privatization in the immediate period, stated Prime Minister Ion Chicu, who noted that the number of monopolies will be this way decreased by one. “By one monopoly fewer in the country, by one headache fewer. The next monopoly that is to be liquidated is the one existing on the airport market,” Premier Chicu posted on Facebook.
Return to fuel price ceilings is being considered, President Dodon
If the fuel sellers in Moldova do not react to the changes on international markets and do not adjust fuel prices, during the next few weeks the authorities will come up with a bill to restore the previous fuel pricing methodology, President Igor Dodon was quoted as saying on January 27. After the meeting with the Premier and Parliament Speaker, Igor Dodon told the press that the fuel sellers should swiftly react to the changes on international markets. The prices change rather often. They either rise or decline and fluctuations can be witnessed weekly. But the changes in prices are not visible, especially when these decrease.
What is inflation and who is affected by this
The situation when the prices of goods and services witness a general rise is called inflation. Inflation diminishes the purchasing power of money and fewer things than earlier can be bought with the same amount. As money forms part of the goods, inflation is that variable that determines the price of money too. In other words, inflation determines the interest rate that in essence is “the price of money”, this later having a reflection on the cost of a number of financial services, such as the interest rates on loans or deposits. Information about inflation and its consequences is published by the National Bank of Moldova as part of an awareness-raising campaign conducted by it in concert with the National Commission for Financial Markets within the financial education project “Learn! Give sense to money”.
Wine exports in 2019 at five-year high
Moldova’s wine exports in 2019 followed an upward trend, reaching a five-year high. According to the National Office of Vine and Wine, last year Moldova exported over 156 million liters of vine, up 9% or over 12 million liters on 2018. The Office said that Moldova exported wine to 67 countries and the value of deliveries rose to over 3 million lei. Quiet wines accounted for 95% of the exported volume, cognacs and distilled wines for 3%, fortified wines for 2%, sparkling wines for 1%. The quiet wines generated 74% of all the revenues, the cognacs 20%, while the sparkling and fortified wines 3% each.
Almost 4,000 houses bought through “First House” program by now
Nearly 4,000 houses have been purchased through the agency of the “First House” governmental program since its launch. According to the Ministry of Finance, the banks released home loans to the value of over 1.9 billion lei, with the guarantees totaling 990.2 million. Of the total number, 556 persons benefit from compensations under the “First House 2” program that is intended for public sector employees. Those who maintain several minors benefit from compensations from the state as part of the “First House 3” program, totaling 1,377 persons. A number of 253 beneficiaries of the program who work for private companies get state budget allocations under the “First House 4” program.
● TUESDAY, January 28
Vladimir Bolea: I’m very skeptical about privatization of “Metalferos”
MP of the Action and Solidarity Party Vladimir Bolea said that he looks at the privatization of the state-owned company SA “Metalferos”, which was announced by the Government, with great skepticism. According to him, during the past 26 years all the cases of privatization were a form of robbing the state. Before privatizing this company, an audit should be carried out to determine the state of affairs inside this, its revenues and assets. “Up to the moment of privatization, we bring the companies to the knees or make them go bankrupt. They suffer losses and we put them up for privatization. They are bought at a very low price and start to work,” the MP stated. Vladimir Bolea noted that in the case of “Metalferos”, a number of aspects should be clarified, including the monopoly held by this company.
Deficiencies in managing National Regional Development Fund
Deficiencies have been identified in the process of managing the financial resources of the National Regional Development Fund. The method of picking projects is also defective, says a report by the Court of Auditors on the management of the Fund that was presented at the meeting of the Parliament’s commission for public finance control. The audit mission established that even if action was taken to improve the legislative and normative framework on regional development, no end result was produced. The local public authorities have reduced capacities to co-finance projects and the technical documentation of projects is insufficiently prepared.
● WEDNESDAY, January 29
Ion Perju: We import meat that was gown with raw material from Moldova
Minister of Agriculture, Regional Development and Environment Ion Perju said he would like the animal-breeding sector to be revitalized so that Moldova starts to export not only grain, but also high value added products, such as meat and dairy products. According to him, Moldova now imports meat that was grown in other countries with raw material imported from Moldova and the approach in the field should be changed. “We now export grain that represents raw material and import high value added products. We export grain and import meat and dairy products. Our goal is to revitalize the animal-breeding sector so that we do not export grain, but transform it into meat and dairy products and other high value added products. We import meat that was gown with raw material from Moldova,” Ion Perju stated. He also said that the harvests in 2020 are expected to be exposed to risks and the supply of the population with food products could be affected. A lot depends on the weather conditions this year. “Examinations have been carried out and, regrettably, the forecasts for the next two-three weeks are not the best,” noted the minister.
“Made in Moldova” opened at Moldexpo
National products made in different sectors of the economy can be found at the 19th exhibition “Made in Moldova” that brought together over 460 producers and will work until February 2. The eco-products are the novelty of the edition. Tamara Luchian, director of the clothing factory “Ionel”, said it is a tradition for them to take part in this exhibition. This time they exhibited 35 models of suits. “Every time, we make effort for our consumers to see us in a different way. Our prices are attractive and the models are interesting. We keep pace with the European products,” she stated.
Central bank maintains base rate on main monetary policy operations
The National Bank of Moldova’s Executive Board unanimously decided to keep the base rate on the main short-term monetary policy operations at the level of 5.5% a year. The interest rates on overnight loans and deposits were also maintained, at 8.5% and, respectively, 2.5%. In the meeting of the Economic Press Club, National Bank governor Octavian Armașu said the decision was taken based on the new inflation forecast that confirmed the accuracy of the previous forecasts and emphasized the correctness of the decision taken last December. The effect of the monetary policy measures adopted then is to be propagated, having the period of time needed to transmit the impulse to the real economy as a reference point.
● THURSDAY, January 30
Moldovagaz intends to extend network of compressed natural gas stations
Moldovagaz has plans to extend its network of compressed natural gas fueling stations and to launch the construction of pilot stations of the kind for the Chisinau fleet of buses and utility vehicles. Such an agreement was reached by the company’s president Vadim Ceban and mayor general of Chisinau Ion Ceban in a meeting. In a press release, Moldovagaz said a feasibility study will be carried out before the works are launched. The daughter company of Moldovagaz, Transautogaz, will co-finance the costs for conducting the study and will finance the works to design and build the given stations on the territory of the Urban Bus Company situated on Sarmizegetusa St and near the Southwest Motor Station.
Economic growth will slow down in 2020, “Expert-Grup”
The pace of economic growth in 2020 will decline compared with 2019, from 4.5-5% to 3.5-4%. Most of the sectors will witness slow growth paces, with the slowdown in the building sector being the most evident one, the Independent Think Tank “Expert-Grup” says in the biannual publication MEGA. According to the executive director of “Expert-Grup” Adrian Lupușor, the positive effects of the fiscal reform seen in 2019 will fully dissipate in 2020 and will determine a slowdown this year. The economic growth slowdown in the EU and the CIS will also have an impact.
Monetary policy could be subject to pressure, “Expert-Grup”
Adrian Lupușor, executive director of the Independent Think Tank “Expert-Grup”, anticipates the risk of political pressure and pressure on the part of particular business circles on the monetary policy of the National Bank of Moldova. “The National Bank coped with this pressure so far,” stated Adrian Lupușor. “Expert-Grup” welcomes the central bank’s January 29 decision to keep the base rate on the main monetary policy operations at the level of last month. It noted the bank should maintain that independence that ensures macro-financial stability this year, which is an electoral one.
Over 200 Moldovan producers authorized to export to Russia
A number of 205 fruit and vegetable growing companies of Moldova as of January 30 can export products to the Russian Federation. A number of 129 companies could export so far, but the figure was now raised to 334. “Practically all those who asked for access to the market of the Russian Federation were accepted,” Minister of Agriculture, Regional Development and Environment Ion Perju as saying in a news conference. “Moldova Fruct” Association president Vitalie Gorincioi said that 66 producers from the new list are members of the Association. When the producers offer high-quality goods, no problems are encountered. “No matter where we send our products to, these should be of a higher quality and they will be bought. We experienced very big problems last year when products of a very poor quality were transported over the Nistru, with the vehicles being unloaded and reloaded with Polish or Ukrainian products there,” stated Vitalie Gorincioi.
● FRIDAY, January 31
Superior transport category does not necessarily mean fare rises up to 0.70 lei/km
The inclusion of the units of transport in the superior category does not mean that the fare will definitely be raised to 0.70 lei/km as there is the competition factor given that a number of operators work on one and the same route. In the case of routes with one operator, the carrier could apply the charge of 0.70 lei only for the vehicle included in the superior class or should have the whole pool modernized to be able to collect a higher fare. The inclusion of motor vehicles in the superior category was one of the conditions for increasing the interurban route fares as of January 1, 2020 – by 0.12 lei/km (up to 0.60 lei/km), and for super-comfort categories by 0.22 lei/kg (up to 0.70 lei/km).
Igor Dodon: Road tolls should be excluded and included in fuel duties
The road tolls should be excluded and included in the excise duties on gasoline and diesel fuel, considers President Igor Dodon, who said that he will submit such a proposal in the immediate period. In a new edition of the program “President Responds”, Igor Dodon said it is not right for a person who owns a car and drives it once a year to pay the same taxes as those who use cars daily. “Those who travel more by car pay more. I think this is the solution,” he stated.
● SATURDAY, February 1
Fuel prices lowered by 0.20 lei/liter
After the prices of gasoline and diesel fuel were increased by 0.7 lei/liter on average and the price of liquefied petroleum gas by 1 leu two weeks ago, fuel sellers decreased them by 0.20-0.25 lei/liter. The price of gasoline of 95 type, which cost 19.20 lei/liter after the rise, was now reduced by 0.25. The price of liquefied petroleum gas was decreased similarly to 10.80 lei/liter, while the price of diesel fuel was lowered from 17.05 lei/liter to 16.85 lei/liter.
