Veaceslav Ionita – There could appear difficulties next years in implementing the state budget because of decrease of remittances

Because of reduction of abroad remittances inflow of citizens of Moldova, there will appear difficulties in implementing the state budget and ensuring the appropriate incomes to all public workers. The impact will have result starting this year, economic analyst Veaceslav Ionita noted. In his opinion, it will not happen a sudden reduction, but one step-by-step and this regards the second wave of migration, which supposes family integration. According to Ionita, Moldova is not ready for this event. „In 2005, only the salaries of public employees increase and not because of economic growth, but because the remittances lead to a big consumption made in the state budget through massive accumulations of VAT, excises and import goods. These represented about 80% of the state budget,” the analyst mentioned. Ionita considers that in order to decrease the great influence of remittances over the economy, the government should create a favourable investment climate. „The investment environment of Moldova is still difficult. At the moment there are undertaken certain actions, but their result could be seen by businessmen only in 2-3 years.” Main analyst of EBRD in Moldova, Larisa Monastarli, also has the opinion that there is the possibility to reduce the remittances inflow. In her opinion, only development of economy and private sector especially, through improving business environment, reducing government involvement in private business, fiscal stimulation and establishing the legislative background could create an appropriate level of protection against such a micro-shock. According to new report of the International Monetary Fund (IMF), in 2004 the official estimations noted that the total amount of remittances inflows on behalf of abroad employees is 700 million dollars or about 27% of GDP. In the same time, the available income per capita in Moldova, a measure that includes the net income and abroad transfers, in 2000-2004 increased more than twice and got to about 1 billion dollars. At the end of 2004, Moldovan emigrant workers, including part-time and full-time, represented about 17% of the total population of Moldova. In 2005, the number of Moldovans abroad seeking a job was between 500,000 and 1,000,000, of the whole population of about 3,38 million persons. Many experts, including foreign ones, forecast a sudden decrease of remittances inflow, at the mid of 2007, related to reintegration of families and new emigration wave.