ECO-BUS WEEKLY DIGEST October 4-10. Most important Economy & Business news by IPN
● MONDAY, October 4
Republic of Moldova at Expo 2020 Dubai
The Ambassador of Moldova to the UAE has hailed Expo 2020 Dubai as a catalyst for change, and a window of and to a better world. “Moldova is here to showcase the history of the nation, rich heritage, and creativity of its people,” Victor Haruta stated in an interview for WAM Agency on the occasion of Expo 2020 that was opened with a one-year delay owing to the COVID-19 pandemic. Talking about the main pillars of Moldovan participation in Expo 2020 Dubai, the ambassador summed it up into three key themes: Discover Moldova, Taste Moldova, and Invest in Moldova, which is characterized by its mild fiscal climate, stable economic growth, low costs, and excellent location at the heart of Europe. “Our narrative and the whole theme of the pavilion is built around our main symbol - The Tree of Life. Every seed planted into our fertile soil grows into a miracle. Each branch of the tree represents an opportunity for growth and has a special significance, talking about one’s experiences and the strategic sectors of Moldova and its economy,” Haruta said.
Carriers demand to increase fares
Representatives of the Employers Association of Road Transport Operators request to increase passenger transport fares. They said that as a result of discussions with companies that operate regular national routes, it was determined that the operators cannot cover the costs and such a tendency started with the first wave of rises in the price of diesel fuel earlier this year. In a letter to Deputy Prime Minister Andrei Spînu, Minister of Infrastructure and Regional Development, the Association asks to do calculations and approve the tariffs for regular passenger transportation services in district and inter-district traffic. The Association noted that due to the pandemic that has lasted for over a year and a half, the flow of passengers decreased considerably and over 1,500 drivers vacated their posts. Investments for renewing the buses are not made and almost 20% of the regular routes are not operated. Furthermore, the price of diesel fuel rises daily. The last time the fares were approved in December 2019, as a result of protests mounted by carriers. In the hope that the tariff will be calculated and approved annually and that many of the problems in the field will be solved by signing and implementing the draft memorandum, the carriers accepted the approved tariff, but the commitment made by the Ministry is not fulfilled.
Price rises and increase in import duties in Russia affected apple growers
The problems related to the sale of apple production caused a decline in profits and also in the number of jobs at some of the business entities. The growers cannot sell their production at the projected price as the apple export intermediaries do not accept all the sorts and this year offer a much lower wholesale price. “Last year, the price offered by intermediaries was of 7-8 lei/kg on average, but this year the piece is of 2.5-3 lei/kg and of 5-7 lei for exclusive varieties,” the mayor of Colicăuți village of Briceni district Lilian Țapu stated for IPN. Asked what the business entities do with the harvest, Lilian Țapu said the business entities that afford store the harvest in cold-storage facilities, but there are growers whose apples are yet in orchards. The Russian Federation increased the import duties from US$1,000 to about US$ 3,000 for a truck carrying apples and this is one of the causes for the difficulties faced by apple producers in northern Moldova. The Russian authorities argue the tax was raised because local production grew. To protect the economic interests of the Russian business entities, the Russian authorities increased import duties on apple production. Moreover, business circles in Russia ask to introduce a quota on the import of apples from the Republic of Moldova, by the example of the European Union. “There are also requests to fully ban the import of apples into Russia,” said Lilian Țapu.
PAS suggests merging Competition Council and NAER
The head of the Parliament’s commission on economy, budget and finance Dumitru Alaiba proposes merging the Competition Council and the National Agency for Energy Regulation (NAER) so as to create a solid, independent, efficient authority that would act in the interests of the citizens and would bear sole responsibility for the market. In a press briefing, the PAS MP said NAER and the Competition Council are very important for ensuring the functionality of the economy, for ensuring prices and reasonable tariffs for all the citizens and entrepreneurs, order on the market and equal conditions. In practice yet, the projected results cannot be seen. According to him, the Competition Council this year alone will spend 26 million lei of the taxpayers’ money without producing anything palpable. During over ten years, this institution hasn’t delivered any results. Its task is to fight monopoly, to protect competition, to destroy cartel agreements so as to safeguard the interests of market players and the citizens pay fair prices. But the Council does not take action and the consumers pay exaggerated prices.
Chisinau municipality wants to lease out public transport stations
The Chisinau City Hall has plans to lease out the pubic transport stations that are under municipal management, mayor general Ion Ceban announced in the ordinary meeting of municipal services. The General Division of Economy, Trade and Tourism, in concert with the deputy mayors responsible for the legal and economic sectors, will design a concept for transferring the stations under private management, with the right to place advertisements in exchange for the maintenance of the stations. Ion Ceban asked to consider the possibility of leasing the stations out to business entities for these to be repaired, modernized and lit and also maintained during a particular period of time. Instead, the business entities can place adverts without additional constrictions and without the possibility of privatization. In connection with the recent vandalizing of public transport stations, the mayor asked the police to identify the culprits and to penalize them in accordance with the legislation.
Chisinau Circus to be rehabilitated with EU support
A tender contest to choose the contractor that will repair the main arena of the Chisinau Circus has been launched. This is the first stage of the project to renovate the cultural facility. The works will be financed by the EU in the framework of the Support to Confidence Building Measures Program through UNDP Moldova, the EU Delegation to Moldova informed through the social media. The interested companies are invited to access the necessary documents and the requirements. Bids can be submitted only through the electronic tendering system by October 18, 2021, 4:30pm (GMT+3).
●TUESDAY, October 5
Agriculture minister: Bread prices can yet rise
The Minister of Agriculture and Food Industry provided explanations about the rise in the prices of some of the baked goods. Viorel Gherciu said that even if the wheat harvest is the largest in the last few years, the price of bread is determined by the price of diesel fuel that is now following an upward trend globally. Representatives of the government said that if the main food products grow in price, the state will intervene to support the vulnerable categories of people. Over the last few weeks, most of the stores in the country posted higher prices for some of the baked goods, by 0.5 lei on average higher. The Bălți bakery was the first to announce higher prices, being followed by bakeries in Soroca. The Minister of Agriculture anticipates that more rises will yet follow. “The grain crop harvest this year is very good. It may seem paradoxical, but bread prices went up. This is due to the fact that the prices of most of the agricultural inputs grew. Furthermore, the prices of diesel fuel and fertilizers also rose. The prices of baked goods can yet rise, depending on the changes in the prices of other components,” Viorel Gherciu stated in the program “Emphasis on Today” on TVR Moldova channel.
Spînu about rise in natural gas tariff: We will provide subsidies
The Government will subsidize the rise in the natural gas tariff, especially for the vulnerable categories of people, said Deputy Prime Minister Andrei Spînu, admitting that the heat tariff this year will be higher owing to the rise in the price of gas worldwide. Spînu noted that the current contract with Gazprom will be extended or a new contract will be signed by the end of October. Deputy Prime Minister Andrei Spînu, Minister of Infrastructure and Regional Development, said the negotiations between MoldovaGaz and Gazprom go on. Even if the price of gas will be higher than last year, it will anyway be advantageous to the Republic of Moldova amid the global explosion in the price of gas. “The formula is anyway advantageous to Moldova in the current international context. The price of gas at international stock exchanges now exceeds US$1,000. We asked to extend the contract based on the old price calculation formula for at least one more year. We consider the old formula is advantageous when the price at international level grows at an unprecedented pace. We haven’t witnessed such a situation when the price of gas increases for four or even five times. As the discussions didn’t produce an end result, it was decided to extend the contract with the formula for the third quarter for a month. We have a month at our disposal and the discussions will continue,” Andrei Spînu stated in the program “In Depth” on ProTV Chisinau channel.
During 30 years of independence, shares of wine exports in total exports decreased five times
Moldova’s emblem, the wine, plays a less significant role in the national economy than earlier, said economic analyst Veaceslav Ioniță. In 2001-2005, the wines represented 26% of all Moldova’s exports. Each fourth gained dollar came from wine exports. After the first ban imposed by the Russian Federation, the share of wines in 2006-2007 decreased to 10% of all the exports. Currently, it is of only 5%. The share of wine exports in Moldova’s total exports decreased five times,” the expert of the Institute for Development and Social Initiatives “Viitorul” stated in the program “Economic Analyses with Veaceslav Ioniță”. The wined industry in Moldova until 2005 developed primarily due to the great demand for wine in the Russian Federation. 80% of Moldova’s wines went to Russia. Since 2014 until present, the exports of Moldovan wine to Russia have oscillated around 10 million or 8% of all the exports. The collapse as a result of the imposition of the first ban would have been much greater if Romania hadn’t lent a hand. In 2006, Romania increased the consumption of Moldovan wine for 15 times to US$24 million. Also, Ukraine in 2006 bought wines totaling US$31 million, which was twice more than it imported traditionally.
NBM raises core rate to 5.5 percentage points
The Executive Board of the National Bank of Moldova (NBM) in an extraordinary meeting on October 5 voted to increase the core rate applied to the main short-term monetary policy operations up to 5.5 percentage points. At the same time, the corridor rate was reduced by 0.5 percentage points - from 2.5 percent to 2.0 percent. Thus, the rate on overnight deposits will be 3.5 percent, and overnight loans 7.5 percent. The NBM continues taking measures to gradually tighten monetary policy in order to mitigate the inflationary pressures generated by the second-round effects of global price growth, production and distribution costs, energy resources and food. At the same time, the NBM took into account the pressures from domestic aggregate demand supported by the increase of the population's income (salary fund, social assistance, remittances etc.) and the increase in the volume of consumer and mortgage loans. Simultaneous reduction of the corridor rates with the increase of the core rate is calibrated to motivate consumers' preferences for savings from immediate consumption, in the context of the sharp revival of economic activity in the first nine months of this year.
●WEDNESDAY, October 6
Șor Party MPs suggest instituting unlimited validity for entrepreneur’s patent
The MPs of Șor Party suggest that the activities based on the entrepreneur’s patent should be allowed for an unlimited period of time. The law stipulates the end of 2022 as the time limit. “Owing to the patent holders, the small business will be able to survive in this period that is not at all easy and not only in this period. The keeping of patents will enable the people to continue work legally and to maintain the existing jobs, which is very important today,” MP Vadim Fotescu stated in a press briefing. He noted that when the time limit for work based on the entrepreneur’s patent was introduced, the COVID-19 pandemic hadn’t broken out. “Given that we are witnesses to rises in the prices of the basic necessities, it’s clear that work based on the entrepreneur’s patent should not be annulled. Thousands of people and their families will remain without sources of living,” said the MP.
● THURSDAY, October 7
€23.5 million loan agreement for upgrading railway infrastructure in Moldova signed
The European Bank for Reconstruction and Development (EBRD) and the Republic of Moldova signed a €23.5 million loan agreement to enable Calea Ferată din Moldova, the state-owned railway operator, to continue infrastructure upgrades. The agreement was signed by Managing Director for Eastern Europe and the Caucasus at the EBRD Matteo Patrone and Deputy Prime Minister, Minister of Infrastructure and Regional Development Andrei Spînu. Matteo Patrone underscored the Bank’s support for Moldova and welcomed the new government’s commitment to reforms during a visit to the country this week. Together with Angela Sax, the EBRD’s Head of Moldova, Mr Patrone met Prime Minister Natalia Gavriliţa, Economy Minister Sergiu Gaibu and Deputy Prime Minister, Minister of Infrastructure and Regional Development Andrei Spînu and the National Bank Governor Octavian Armașu. Discussions focused on much-needed reforms, the business environment and ways to finance local companies’ growth to create jobs, support the development of infrastructure and attract foreign investment to the country. Matteo Patrone told Prime Minister Gavriliţa that the EBRD is a strong supporter of Moldova and remains fully committed to the country’s economic development. “Implementing the administration’s ambitious agenda will send a strong signal to the private sector and help unlock jobs-generating investment by local and foreign investors alike. We stand ready to support the business environment with investment, advice and technical assistance,” he stated.
Moldova faces complex challenges in achieving Decent Work goal, UN resident coordinator
Moldova is facing complex challenges in achieving the Decent Work goal as it undergoes significant democratic changes. Our country sees low employment rates and a high level of informal work. There is a high level of inactivity among the working age population. In addition, there are challenges related to the sustainability and coverage of the social protection system. The coronavirus pandemic has worsened these problems, causing more people to lose their jobs. Some businesses went bankrupt, and the educational process has been interrupted and contributed to feelings of insecurity about the future. These are some of the findings formulated by Simon Springett, UN resident coordinator in Moldova, during a round table organized by the unions on Thursday. According to Simon Springett, Moldova needs structural reforms to restore economic and social growth and create efficient institutions. “There is no simple, one-size-fits-all solution to these challenges. We need joint efforts from all labor market stakeholders in an effective and meaningful dialogue. In 2022, we will celebrate the 30th anniversary of Moldova becoming a member of the ILO. We need a partnership more than ever. This country program (2021-2024 Decent Work Country Program) is an expression of solidarity and commitment. The United Nations stands ready to support all the social partners in the implementation of this Country Program”, stated Simon Springett. Sergiu Sainciuc, vice president of the National Confederation of Trade Unions, said the unions support the Government’s efforts to create a favorable investment climate and manage migration flows. However, this should not be done in violation of employees’ rights, warned Sergiu Sainciuc.
●FRIDAY, October 8
Oil sellers will inform NAER about prices they intend to post on boards next day
The business entities will be obliged to inform the National Agency for Energy Regulation (NAER) about the selling prices of all the oil products that they plan to post on boards the next day. The information will be presented on each workday for each filling station until 4pm, through the agency of an electronic platform managed by the Agency, as a draft decision to amend the methodology for calculating oil prices that will be examined on October 12 stipulates. The NAER pledges to offer public access to the information about the address of each filling station and the prices set for these. Through this platform, the data can be sorted according to such criteria as “lowest price” and “location”. The authors of the draft decision aim to offer the consumers a simple instrument for identifying and choosing the most advantageous fuel seller in a particular area. The law on the oil products market provides that the operators can also retail other types of oil products than those for which price ceilings are set, on condition that the main oil products of the standard type are also sold at the same filling station. The consumers can choose the product they want, while the proposed mechanism will offer them opportunities to compare the prices set within the limits decided by the regulator for standard type products with the other types of products.
12 lots in Chisinau sold for almost 26 million lei
Twelve lots situated in Chisinau were sold for a total of 25.9 million lei at an auction held by the Chisinau City Hall. The most popular lot was sold for 5.7 million lei, the initial price being 3 million lei. This is about 20 ares in area and is located on Petricani St. Of the 17 lots put up for sale, ten were sold at the auction, two by direct negotiations, while five where not auctioned due to the absence of bidders. There are now fewer lots for sale in Chisinau than during the previous years and these are probably less attractive. However, the auctions yield tens of millions of lei into the municipal budget, said mayor general Ion Ceban. The first outcry auction to sell land in 2021 was held in February, when 11 lots were sold for a total of 34.5 million lei.
Moldova uses up quota on plum exports to EU
This season too, Moldova has used up its 15,000 tonnes quota on plums that can be exported tax-free to the European Union under the AA/DCFTA arrangements. To date, Moldova has exported over 36,000 tonnes of plums to EU countries, including Romania, Poland, Germany, Croatia, Austria and the Netherlands, announced Moldova Fruct Association. “This year hasn’t been the best for plum growers. The output has been poor due to heavy rains”, Ion Dobuleac, a plum producer from Grimăncăuți, Briceni district, tells IPN. Dobuleac’s plums reach both the EU and Russia. Starting this year, plum growers are required to provide exporters with quality certificates issued by a Chisinau laboratory, which are to show the amounts of chemicals used, among other things. Previously, says Dobuleac, a sales contract and an invoice were enough.
● SATURDAY, October 9
Official reserve assets decrease slightly
Official reserve assets totaled $3.962 billion as of the end of September, which is by $14.29 million less compared to the previous month, the National Bank of Moldova reported. According to the Bank, the decrease was due to payments made to service Moldova’s foreign debt, of $21.20 million; due to the depreciation of the exchange rates of the component currencies of foreign exchange reserves in relation to the US dollar, with a loss of $13.49 million; and due to Ministry of Finance payments, of $9.61 million. Other factors that caused the decrease are net interventions on the domestic foreign exchange market in the form of foreign exchange sales, of $7.20 million; a revaluation of securities held in the investment portfolio, with a loss of $0.37 million; and other net outflows of $ 3.95 million.
