Diana Enachi: This year we witnessed two-digit inflation

Expert of the Institute for Development and Social Initiative “Viitorul” Diana Enachi stated for IPN that in 2015 the financial-banking sector witnessed a continuous decrease of the money mass under the pressure of the restrictive monetary policies of the National Bank. This had an impact on the economic entities and negatively affected the development of the real economy. “The effects of the phenomena of the end of 2014 were felt throughout 2015. The unstable situation in the region, the unstable political situation in the country and the depreciation of the leu seriously influenced the evolution of prices in 2015. This year we witnessed two-digit inflation at a time when the real incomes of the population decreased. The real salary in September 2015 – September 2014 represented 97.7%,” said the expert.

Diana Enachi noted that together with colleagues from “Viitorul”, she compiled a list of five accomplishments and failures of the Moldovan economy in 2015. “Regretfully, we must admit that we do not have much to say about the accomplishments. Instead, we have a whole list of failures, including the thefts committed in the baking system, the defective implementation of the Association Agreement with the EU, suspension of foreign financing, including of the budget support, and the recession in a number of sectors of the economy.

Decline in agricultural production – clear failure of this year

According to the expert, a clear failure of this year is the 11.8% decline in the agricultural production in January – September, compared with the corresponding period last year. Among failures is also the defective autumn agricultural campaign, the frauds in the agricultural subsidization process, the difficulties experienced in entering new markets, non-utilization of the export quotas provided by the EU, the delay in implementing the agricultural policy documents and insufficient promotion of Moldovan agricultural companies on foreign markets.

In 2015, the value of Moldova’s foreign trade was much lower than in 2011-2014. “In January – October 2015, the foreign trade came to US$4.9 billion, which is 78% of the value recorded in 2014, 77% of that of 2013 and 82% of that of 2012,” stated Diana Enachi.

Prices will continue to rise in 2016

For 2016, Diana Enachi made a gloomy forecast too, saying the prices will continue to grow, foreign trade will also see downward trends, exports will decrease by about 7%, while imports by about 18%. “Regretfully, there are no signs that the National Bank will change its monetary policy next year. Thus, in the immediate future, given the absence of loans from international organizations and the low foreign exchange reserves, the central bank will not risk to ease the monetary policy. Consequently, 2016 will be a difficult year for the business sector and, respectively, for the real sector of the economy,” said Diana Enachi.

Alexei Buzu: It was a difficult year from social viewpoint too

The head of the National NGO Council Alexei Buzu has told IPN that from social viewpoint, 2015 was as difficult. According to him, a number of negative developments were witnessed in 2015. The Ministry of Economy didn’t publish the traditional report on poverty. “I suspect that the level of poverty rose towards the end of 2015. If the same trends continue in 2016, poverty will become more extreme,” he stated.

The provision of three-day parental leave at the birth of a child is a positive element of 2015. “The leave was negotiated between the Government, employers and trade unions and was enshrined in the Collective Work Convention. Those three days are a first step that I hope will be extended during the next 2-3 years,” stated Alexei Buzu.

In 2016 we will pay for many of the mistakes made in 2015

The expert said that if all those negative developments hadn’t been witnessed, 2015 should have been the year when the Government would have proposed a solution as regards crèches, which are a very important element in the education of children. “2015 should have witnessed the start of the pension system reform because we are close to the fall of this system. I think next year will be as difficult. In 2016 we will have to pay for many of the economic and political mistakes made in 2015,” stated Alexei Buzu.

According to him, the fiscal-budgetary policy will be a major challenge. “At this moment, not many people probably know how large the budget gap is. Now many say that it’s not clear how the salaries, pensions and social benefits will be paid, but next year we will have to prioritize the budget costs and I suspect that many of the social services and payments will not be consolidated, if they are not cut. In Moldova, we have to invest in a lot of services and in social infrastructure and I think that in 2016 investments will not be made. In the best case, these will be maintained at the level of 2015. This is the most optimistic forecast,” said the export, noting many social services could be annulled and emphasis would be put on optimization.

Anastasia Rusu, IPN