ECO-BUS WEEKLY DIGEST January 31 – February 5 . Most important Economy & Business news by IPN
● MONDAY, January 31
Moldova directly affected by Europe’s energy crisis
Moldova, as North Macedonia and Bosnia and Herzegovina, rely exclusively on Russian gas, according to Western sources quoted by IPN. These say the United States is working on plans to open up alternative avenues for natural gas to arrive in Europe should Russia cut off its supply in a standoff with Western powers over Ukraine.
Data from the European Union Agency for the Cooperation of Energy Regulators shows which countries’ energy supply would be most in jeopardy in the case of a Russian gas freeze. Among the continent’s major economies, Germany imports around half of its gas from Russia, while France only obtains a quarter of its supply from the country. According to the latest available data, it is relying more heavily on Norway. Italy would also be among the most impacted major economies at a 46% reliance on Russian gas.
Assessing Moldova’s prospects in this European crisis that affects us directly, Deputy Prime Minister Andrei Spînu pointed to the attempts of some of the politicians to gain political advantages by exploring the energy crisis... “What you are doing is incorrect and deceitful, colleagues. We know what we have to do to avoid such a situation in the future and will do it. I repeat, the energy crisis is not the crisis of our country. It is a European crisis that affects us directly. Moldova is for the second time in a state of emergency because of the crisis. The decisions we take are not popular, but are correct. We realize that they affect a lot of families and namely for this reason we came up with compensatory measures so as to ease this crisis. For the first time in history, 3 billion lei is allocated for paying subsidies to all the people through bills,” the official posted on social media.
Nicu Popescu: Promotion of exports and attraction of investment are objectives set for 2022
Economic diplomacy is one of the central objectives on the foreign policy agenda of the Republic of Moldova in 2022. “Our efforts will be aimed at strengthening the institutional capacities of the Ministry, intensification of communication with business entities, especially in the promotion of the export of products made in Moldova and attraction of investment and promotion of tourism,” Deputy Prime Minister Nicu Popescu, Minister of Foreign Affairs and European Integration, stated in a meeting with representatives of the national associative agrifood sector.
The interlocutors exchanged opinions about the main problems faced by the associative community of the Republic of Moldova, including the exiting barriers to the export of Moldovan products, and invited representatives of the business community to signal their necessities whenever necessary.
The meeting involved representatives of the Fruit Producers and Exporters Association “Moldova- Fruct”, the National Baking and Milling Association, the Employers Association of Poultry Breeders, the National Association of Milk and Dairy Producers “Lapte”, the ice-cream company “Sandriliona” and others.
Year will be characterized by stability of Moldovan leu
The year 2022 will be characterized by the stability of the Moldovan leu, with a slight depreciation tendency, said economist Veaceslav Ioniță, who considers that the National Bank of Moldova (NBM) will most probably resort to prudent interventions that will enable the leu to follow a balanced path. The expert of the Institute for Development and Social Initiatives “Viitorul” anticipates that the supply and demand on the currency market will stabilize this year, while the exchange rate of the leu against the dollar and the euro will continue to be stable, with a slight depreciation tendency in the leu.
In Moldova, the exchange rate is influenced by the currency supply, currency demand and the central bank’s interventions on the currency market. In 2021, as during other years, the NBM actively intervened on the currency market to ensure the appreciation or deprecation of the Moldovan leu, depending on the market tendencies. In the short run, the exchange rate is the main instrument for controlling inflation in the Republic of Moldova. A higher inflation means shock prices for the population as the import prices of goods that prevail in the consumption of Moldovans depend on the exchange rate. When the leu depreciates, the prices grow. When the leu appreciates, the prices decline.
PPPDA asks for investigation into case of Rybnitsa steel works
The Party “Dignity and Truth Platform” will demand to start an investigation and identify the persons from different ministries who lobbied for the interests of the Rybnitsa steel works. The party also demands to annul the request to the EU to lift the restrictions on the export of scrap iron to the Republic of Moldova. Ex-MP Alexandru Slusari said the former Democratic MP Vladimir Andronache is behind this business and this is helped by “BPM-Trading SRL” that aims to monopolize the scrap iron, concrete and cement market.
Last November, the European Union, in the context of the implementation of the Green Deal, banned the export of scrap iron intended for recycling to Moldova owing to the non-observances of the environmental requirements. The Rybnitsa steel works, which is the main contributor of the Transnistrian region and has no connection with the budget of the Republic of Moldova, was the only beneficiary of this export. “This way, the EU offered the opportunity for significantly diminishing the economic basis of the separatist enclave,” noted the ex-MP.
The PPPDA demands to start an internal inquiry and, if necessary, a criminal case over this letter and to conduct a broad tax inspection at “BPM -Trading SRL” with the involvement of the Money Laundering Prevention and Combatting Service, given the massive use of funds of doubtful origin at this company.
The Ministry of Environment last week announced that the Moldovan authorities sent a letter to the European Commission, asking this to correct the earlier committed mistakes and to adjust the list of waste that can be exported from the EU to Moldova.
Business entities likely to get subsidies for natural gas
The Government suggests providing subsidies to business entities for the first 500 square meters of consumed gas. Such a measure fully covers the consumption of over half of the clients of Moldovagaz. The given subsidies, as the new gas rates, will be applied retroactively, as from January 1, Prime Minister Natalia Gavrilița told a news conference, being quoted by IPN.
“It is a program that is based on a compensatory mechanism similar to that intended for households. The subsidy will be included in the bill. Both of the decisions, concerning the increasing of subsidies for domestic users and the subsidization of the first 500 cubic meters of consumed gas for companies served by Moldovagaz, will be adopted in tomorrow’s meeting of the Commission for Exceptional Situations,” stated the Premier.
In parallel, they are working on a program to support industries of social importance, such as bread making and milk producing companies, and on a mechanism of support for industries that are affected disproportionately.
Government restructures Consumer Protection Agency. Moratorium on inspections
Prime Minister Natalia Gavrilița told a news conference that the Consumer Protection and Market Surveillance Agency is an inefficient and corrupt institution. The Agency was used as an instrument for extorting money from businesses.
The official noted that a number of actions were taken the past few months to clear the institution of corrupt persons. The necessary information was accumulated and transmitted to the Prosecutor’s Office. “The institution was managed by persons close to Plahotniuc (Vladimir Plahotniuc, former leader of the Democratic Party who is wanted, e.n.). Many inspectors formed part of a sports federation. Abuses were committed there,” stated the Premier.
● TUESDAY, February 1
SSC recommends NBM to analyze effects of its interventions and to correct them
“The rise in prices at international level is an objective cause for the increase in prices in our country, but all the legal instruments should be used to temper this tendency,” President Maia Sandu stated in the meeting of the Supreme Security Council (SSC). Following the discussions, the Council recommended the National Bank of Moldova (NBM) to analyze the effects of its interventions so far and to correct them when these are not efficient, says a press release of the presidential press service that is quoted by IPN.
Meanwhile, the Government will continue the policy to support the categories that are most seriously affected by the rise in prices. “The executive is to provide extra resources in addition to those allocated for raising pensions and subsidies for energy resources, for helping the citizens to easier overcome this crisis. Also, the Government should continue the reforms intended for improving the business climate so as to ensure robust and inclusive economic growth,” said President Maia Sandu.
Energy crisis leads to subsequent prices rises. PAS MP: This is imported inflation
Energy inflation this year has reached the highest level in Moldova’s history and the price of electricity will increase considerably following the rise in natural gas rates, said economic expert Veaceslav Ioniță. However, he noted that the electricity prices will be maintained artificially until April or most of the citizens will be unable to cope with the bills. For their part, representatives of the government said the witnessed inflation is imported and the Government tries to help the citizen by providing subsidies and raising pensions and salaries.
Alexandru Slusari, of the Party “Dignity and Truth Platform”, said that even if the government does not have many instruments to control prices and tariffs, Moldova has a regulatory institution that should penalize abuses on the market and unjustified rises.
Moldovagaz anticipates decline in purchase price of gas
According to preliminary calculations, the purchase price of natural gas for Moldovagaz in February will be US$563 per 1,000 cubic meters of gas, said the president of the company’s Administration Board Vadim Ceban.
“The diminution of costs will enable the company to cover a part of the negative financial deviations that now amount to over 2 billion lei,” stated Vadim Ceban, being quoted by IPN.
In January, the purchase price of natural gas was US$646 per 1,000 cubic meters of gas.
World Bank allocates €44.1m to Moldova for water security project
The World Bank’s Board of Executive Directors approved financing for the Moldova Water Security and Sanitation Project in the amount of €44.1 million, IPN reports. The project that is co-financed by the Austrian Development Agency includes critical investments in water and sanitation in towns and rural areas in order to increase access to safely managed services.
Around 66,500 people are expected to directly benefit from the project by gaining access to safely managed drinking water and sanitation services, many of whom will gain access to a centralized network for the first time. In addition, students, and staff of around 100 schools (around 25,000 people) as well as staff and patients of 25 rural healthcare facilities will benefit from improved WASH facilities.
Legislative proposal: Tax receipts will be accepted as accounting documents
Business entities will be able to avoid tax receipts when they pay for purchases with a debit card. The PAS MPs registered a bill that allows accepting tax receipts as accounting documents for entrepreneurs that pay for goods and services with a corporate card.
“This change will represent an important bureaucratic relaxation for business entities, especially in the case of small-value purchases. The time wasted for filling out tax invoices, their issuing and signing by all the parties of the transaction could be used to perform much more productive activities. The issuing of the tax invoice often means an additional trip when the document is not issued when the purchase is made because the account was absent, for example. I think each entrepreneur had such frustrating episodes,” said PAS MP Radu Marian.
The legislative proposal also equates tax receipts issued in a physical format with those issued in an electronic format. This provision is to be discussed additionally.
● WEDNESDAY, February 2
SA “Franzeluța” increases prices of bread, except for social bread
In a press release, the company said the price rises are inevitable as the current bread prices do not cover production costs. It didn’t specify yet how much the prices will be increased.
“The price of bread was recalculated taking into account the conjuncture on the market when all the necessary raw materials were bought and the rise in natural gas, fuel and electricity prices and will be posted at the start of February,” runs the press release.
Dan Perciun: Citizens will not be abandoned to cope alone with burden of bills in winter
The chairman of the Parliament’s commission on social protection, health and family Dan Perciun said the reduction in the purchase price of gas in February will not result in a decline in gas rates, but the people will feel a reduction in tariffs when the downward trend in prices on the international market persists for several months. The PAS MP noted that the citizens will not be abandoned to cope alone with the burden of bills in winter and the state will partially cover the tariffs for households and businesses.
“It is very important to start to prepare for next winter as swiftly as possible. First of all, we must make natural gas reserves in Ukraine. This is a widely used practice and Ukraine has enormous gas storage capacities,” Dan Perciun stated in the talk show.
Horizontal heat distribution project to be piloted in Chisinau
Thanks to the new distribution system, owners of the apartments will have the possibility to connect, disconnect and regulate heating all year round, according to their needs. They will have a trilateral contract with the housing management entity and the utility provider, as well as their own meter to monitor consumption. The new system will be used for the centralized distribution of hot water. The implemented measures may generate savings to the bills of up to 30%.
Several residents of the three multi-apartment residential buildings selected for the pilot project disconnected from the centralized hot water service. They prepare their hot water with electric boilers, which is a much more expensive and not energy efficient option. Now, they will benefit from qualitative hot water central service from the centralized heating system, which is cheaper than using the electric stations or boilers.
The contributions planned for this pilot project are about US$90,000 from UNDP Moldova and GEF, and about $200,000 from Temoelectrica JSC. The new system will be operational beginning with the next heating season. The pilot project launched in the three residential buildings will be replicated.
New customs control area likely to be built with EIB and EU support
A new permanent customs control area is necessary in the municipality of Chisinau. This would reduce the pressure on frontier posts where 98% of all the export operations are performed and would ease trucks flow at internal customs posts where most of the import customs declarations are submitted. An online meeting centered on the foreign partners’ readiness to help the Customs Service build a new customs control area, IPN reports, quoting a press release of the Service.
In the discussions with representatives of the European Investment Bank and the Delegation of the European Union to the Republic of Moldova, the interlocutors underlined the importance of transferring clearance operations from frontier posts to customs terminals as this will enable the Customs Service to focus more on the facilitation of international trade and combating of fraud.
● FRIDAY, February 4
Trade unions and employers seek urgent application of new minimum salary in real sector
The National Confederation of Trade Unions and the National Confederation of Employers demand that the Government should urgently apply the new minimum guaranteed salary in the real sector. In a letter to the executive, the two organizations express their concern about the non-approval by the Cabinet of the decision drafted by the Ministry of Labor and Social Protection, by which the minimum guaranteed salary in the real sector is raised to 3,500 lei as from February 1.
Last year, the consumer price index grew by 13.94%. The proposal to set the minimum guaranteed salary in the real sector at 3,500 lei as of February 1 was formulated after the two Confederations on July 7, 2021 signed a memorandum by which they agreed to ensure a continuous growth in the minimum guarantees in the field of remuneration, says a press release.
Employers Association of Transport Professionals supports tree-day protest
The Employers Association of Transport Professionals “Transportatorul” supports the protest announced by the Employers Association of Road Transport Operators and will joint in this by stopping the served regular routes on February 7-9, IPN reports.
“It should be noted that this protest is mounted because passenger transportation in the current conditions cannot be ensured,” the Association said in a press release. Its representatives noted the Ministry of Infrastructure and Regional Development’s tactic to shift responsibility for the transport policies onto the local public administration is incorrect. “The mayors mostly realize this stratagem of the Ministry, which will end with direct conflicts between mayors and residents, and categorically deny the provocative and unrealizable ideas of the Ministry,” said the carriers.
Bill to offer cheaper loans to SMEs
Small and medium-sized enterprises will enjoy a new loan guarantee method, namely the portfolio guarantee. They will be able to borrow from banks cheaper and faster. This is provided in a bill that was presented by PAS MP Dumitru Alaiba and Minister of Economy Sergiu Gaibu, IPN reports.
“Currently, we have a vicious circle in which an entrepreneur that needs financing cannot access a bank product, a loan because of the absence of guarantees. Following the introduction of this innovation in the legislation, we bank on loan acceleration on the part of ODIMM, in this case. The Republic of Moldova has immense opportunities and we should only move faster to materialize them,” Dumitru Alaiba stated in a news conference.
● SATURDAY, February 5
Moldovagaz declares it’s not cutting gas with air
In response to complaints fueled by a popular conspiracy theory, Moldovagaz has issued a statement to assure consumers that it’s not diluting natural gas supplies with air.
Moreover, the company says that infusing air into methane would create a highly explosive mixture “with considerable destructive power”.
The volume of oxygen in natural gas supplies does not exceed 1% of the total in accordance with the current standards, assures the company, and the only substance added to natural gas is the smelly odorant mercaptan that is used to give away leaks.
