ECO-BUS WEEKLY DIGEST December 5-10. Most important Economy & Business news by IPN


● MONDAY, December 5

IMF experts discuss preparations of Moldova’s 2017 budget

An International Monetary Fund (IMF) mission, led by Ivanna Vladkova Hollar, visited Chisinau during November 29-December 2 to discuss the preparations of the 2017 budget and financial sector issues. “The mission held productive discussions with the Moldovan authorities. Agreement was reached on measures supporting the 2017 budget, which is expected to be approved by end year,” Ms. Vladkova Hollar said at the conclusion of the visit. “Work also continues on the rehabilitation of the financial sector, which is necessary to pave the way for restarting credit growth. Staff will review progress on policies and commitments under Moldova’s ECF/EFF program during the first review discussions.”

Pay TV revenues go up

The revenues from pay TV services provided through IP TV networks continued to increase during the first nine months of 2016 amid the decline in the volume of cable TV services. The number of subscribers to the given services rose by about 7,000 (+10%) to 75,800, while the revenues from these services grew by 5.5 million lei or 13.5% compared with the corresponding period last year, to 46.5m lei. The national ICT regulator ANRCETI said the number of subscribers to cable TV services decreased by 11,100 (-5.4%) to about 195,300, while the sales of these services fell by 1.1 million lei to 69.7 million lei.

Patent to be used for at least two more years

The right to carry out trading activities based on patent will be kept for at least two more years, until December 31, 2018, and applies to retail trade at kiosks, stalls and mobile shops. The patent was to be annulled as of January 1, 2017, but the changes approved by the Government extend this deadline. The invoked reason is that the switchover to a new taxation mechanism requires a transition period to enable the patent holders to inform themselves about the particularities of the new fiscal regime and the opportunities of the new mechanism.

● TUESDAY, December 6

Cabinet endorses 2017 draft state budget law

The state budget revenues in 2017 will total 32 839 162 lei, an increase of 10.8% on 2016. The expenditure was projected at 36 994 768 lei (+9.4%), the deficit being of 4 155 606 lei. Over 86% of the revenues will be collected in taxes. As regards expenditure, the costs for services in the economic sector will rise by 18.6% on 2016, for social protection by 10.3%, for education by 7.3%, while for state services with special destination by 10.9%. The spending on education will represent 24.4% of the total expenditure, on social protection 20.1%, on state services with special destination 16.7%, on services in the economic sector 15.5%.

Octavian Armasu: We will increase salaries by optimizing budget-funded institutions

The creation of new jobs, optimization of budget-funded institutions and rise in salaries and pensions are among the priorities of the budgetary-fiscal policy, Minister of Finance Octavian Armasu stated in the talk show “Fabrika” on Publika TV channel. Armasu noted that the Government in 2017 will resort to the subsidization of jobs. “We will launch projects to subsidize and create jobs. In 2017, the mechanism will be improved because we have broader support for such projects. Increased attention will be paid to the areas that are in the ascendant, such as the IT sector,” he said. The minister also said that they decided to optimize the budget-funded institutions and the salaries of the employees of these institutions will be increased based on this optimization. “In the Republic of Moldova, we have over 200,000 employees in the budgetary sector. These include the teachers and doctors, but the figure is anyway too large for a country as ours. We will try to increase the salaries of budget-funded employees based on gradual institutional optimization,” stated Armasu.

External financing envisioned in state budget law

Moldova next year aims to obtain external financing for implementing important projects and for supporting the state budget. The draft state budget law approved by the Government projects that 3.992,5bn lei (US$195.7m) will be attracted for implementing projects financed with foreign funds. It is estimated that 3.494,7bn lei (US$166.9m) will come as budget support. The World Bank will be the Government’s main creditor in 2017, through the International Development Agency, which will release loans to the value of 1.707,4m lei (US$83.7m). This is about 21.7% of the total external state loans.

● WEDNESDAY, December 7

Companies that offered jobs to persons with disabilities awarded

Five companies were awarded in the second Gala of Remarkable Employers that recognizes and promotes publicly Moldovan companies that distinguished themselves by thinking up and implementing positive practices to employ persons with disabilities. Owing to the five employers, about 30 persons with disabilities found a job and can support themselves. In the Gala “RemarcAbilitatea” 2016, the employers were awarded in the categories: Remarkable employer for taking measures to reasonably adjust the workplace for persons with disabilities; Remarkable employer for hiring persons with disabilities by supported employment; Remarkable employer for hiring the largest number of persons with disabilities; Remarkable employer for pro-active attitude in hiring persons with disabilities.

Opportunities of DCFTA discussed in third EU Business Forum

The Moldovan entrepreneurs fully benefit from the provisions of the Deep and Comprehensive Free Trade Agreement (DCFTA) with the European Union. During the two years since Moldova has a Free Trade Regime with the EU, the European market has become the most important one for Moldova’s exports. Also, the Moldovan entrepreneurs can access more European projects to develop their business. Such issues are discussed in the third Business Forum “European Union for the Business of the Republic of Moldova”. Urszula Pallasz, of the EU Delegation to Moldova, noted that the Business Forum was organized in order to ensure communication between businesspeople and to help them establish new relations and familiarize themselves with the EU projects. “We see that the event involves more women. This means that the business in Moldova has a female face and this is laudable,” said the representative of the EU Delegation.

Moldova’s Railways to be restructured

The state-run company “Moldova’s Railways” will undergo broad restructuring. The company’s director Iurie Topala has told IPN that the restructuring is imposed by the EBRD/EIB financing project and is to be done by 2019. The state-run company “Moldova’s Railways” will become a join stock company where the passenger transportation and freight transportation services and infrastructure development will be separated. The state will have controlling interest in the new company. The EBRD and EIB consider such an organizational form will ensure greater transparency. Iurie Topala explained that the division of services will enable the private companies to enter the railway transport sector and propose new routes at prices that will be different from those of the enterprise. “Currently Moldova’s legislation does not envision possibilities of entering this segment for private companies as this is a monopolist state-run company,” he stated.

Building works to be authorized by one-stop shop

The Cabinet approved the regulations concerning the organization and functioning of the ones-stop shop for authorizing building works. Thus, under the regulations, the information resource “e-Authorizations in building” will be created through the Automated Information System for managing authorizing documents. The ones-stop shop will become functional by the end of 2017 and will be applied by all the local public authorities and competent state supervisory bodies in the process of authorizing building works. The ones-stop shop will help reduce the time needed for obtaining building authorizations from 247 to about 100 days. The procedures will be simplified and the costs incurred by the applicant will be reduced, with a number of barriers being removed.

● THURSDAY, December 8

Government postpones imposition of restrictions on chromium content of cement

The time limit when the restrictions on the chromium content of cement made in Moldova, set by the law of June 17, 2016, were to start to be applied was extended until June 17, 2019. Minister of Environment Valeriu Munteanu said that even if the norms set by the aforementioned law are in line with the European standards, and the company Lafarge Ciment Moldova SA realizes this, time is needed to meet these standards. Equipment for monitoring the content of ingredients that pose a threat to health and pollute the environment with heavy metals is to be purchased and installed. At this stage, not even the specialized labs possess equipment to determine the chromium content of cement.

Agriculture Ministry signs country programming framework with FAO

The Ministry of Agriculture and Food Industry and the United Nations Food and Agriculture Organization (FAO) on December 8 signed the country programming framework for 2016-2019. The document envisions three main directions: Enhancement of competitiveness of agrifood sector; Sustainable agriculture and rural development; Sustainable management of natural resources and disaster risk management. Minister of Agriculture Eduard Grama said the three key directions are also contained in the Agriculture and Rural Development Strategy for 2014-2020, with FAO being a strategic partner in the field. “For the Republic of Moldova, it is a really important document, given that the FAO is the most authoritarian organization in the world in the field of agriculture,” he stated.

Mobiasbanca and EBRD help SMEs access EU market

Mobiasbanca-Groupe Société Générale and the European Bank for Reconstruction and Development (EBRD) joined forces to help Moldovan private sector access the EU market. A joint program to help domestic small and medium-sized enterprises (SMEs) converge with EU standards was launched on December 8 so that companies can take full advantage of the opportunities offered by the Deep and Comprehensive Free Trade Area (DCFTA) between Moldova and the EU. Under the agreement, the EBRD is extending a loan of €10 million to Mobiasbanca - Groupe Société Générale to support the development of local SMEs. The financing will be on-lent to the private sector to help local SMEs invest in improvements to product quality and modernize their services to meet EU standards.

“Expert-Grup” warns about factors that affect quality of economic growth

The economic year 2016 was more favorable than 2015. After the recession of 2015 (- 0.5%), the GDP this year is expected to grow by about 3% owing to the evolution of two sectors. The agricultural sector witnessed a compensatory growth following the drought of 2015, while the service sector recovered owing to a modest rise in final consumption, stated the independent think tank “Expert-Grup”. The independent experts anticipate that the same high level of uncertainty about the macroeconomic developments will persist next year as the sources that propelled the economy in 2016 are not sustainable. However, a recovery is possible in the industrial sector and this will lead to a rise in exports and a slight growth in investment activity amid the relaxation of the monetary policy and political stabilization (post-electoral effect). The economic growth forecast for 2017 is of 4-5%.

● FRIDAY, December 9

Octavian Calmac: We have positive statistics about economic recovery 

Minister of Economy Octavian Calmac said a slight economic growth was recorded in the second half of 2016. He developed the issue in the talk show “Moldova live” on the public TV channel Moldova 1. “The trends are upright. Statistical show a 10% increase in the number of enterprises with foreign capital. Among the founders of these firms are our citizens and also foreign investors. It is about money brought from outside the country and invested in our economy,” stated Calmac. The minister noted that a slight rise in exports was witnessed in the second half of this year.

Sales of electronic communications services down 3.5% 

The revenues from sales of electronic communications services in July – September 2016 decreased by 3.5% compared with the third quarter of 2015 to 1.7 billion lei, IPN reports, quoting the national ICT regulator ANRCETI. The revenues on this market in nine months came to 5.4 billion lei. The decline witnessed in the period was due to the lower sales on three segments: landline telephony, broadcasting and retransmission of audiovisual programs, and other activities in the electronic communications sector. In the third quarter, the sales of fixed-line telephone services fell by 20% to 205 million lei, of audiovisual program broadcasting and retransmission services by 18.5% to 68 million lei, while the revenues from other activities in the electronic communications sector declined by 31.3% to 89 million lei.

RISE Moldova: Transnistrian enterprises pumped US$200m out of budget 

In the conditions of a chronic deficit in the budget of the breakaway republic of Transnistria, which annually exceeds 20%, the Transnistrian administration during the last three years provided more than US$200 million to local enterprises in order to support them, IPN reports, quoting an investigation entitled “Rippers” of the Transnistrian budget that was carried out by the Association of investigative journalists RISE Moldova. The article says that among the beneficiaries are a number of companies that are managed or led by deputies of the so-called supreme soviet (local parliament).

“One of these is the Tiraspol-based enterprise “Moldavizolit” that belongs to the firm “Universal Trade”, owned by deputy Yevgheny Gusan (the son of the Transnistrian oligarch Victor Gusan, founder of the local holding “Sheriff”), but the firm is managed by another deputy of the so-called supreme soviet of Transnistria Porfiri Shkiliniuk”, say the authors of the investigation, referring to founding documents obtained by RISE Moldova.

New law on accounting 

A new law adjusted to the European requirements in the field of accounting and financial reporting was drafted by the Ministry of Finance. The bill was proposed for public debates. As the institutions, organizations and enterprises vary by size, the author suggests a classification of the given entities according to three criteria – total assets, revenues from sales and the average number of salary earners in the management period. Thus, micro entities will be considered those that possess assets to the value of 5.5m lei, have sales of up to 11.2m lei and an average number of ten employees. For small entities, the figures are as follows: 63.5m lei, 127.2m lei for sales and 50 employees. The medium-sized entities must have assets to the value of 318m lei, revenues of 636m lei and 250 employees. Large entities are considered those that exceed the limits of at least two criteria set for medium-sized entities.

2017 state budget adopted in first reading 

The MPs passed the 217 draft national public budget law in the first reading. Minister of Finance Octavian Armasu said in Parliament that the draft budget is based on an economic growth of 3%, a 10% rise in exports and a 9% increase in imports. After the most recent amendments, the second reading will be the last one. The 2017 national public budget provides for revenues of 51.1bn lei, an increase of 4.5bn (+9%) on 2016, and for a total expenditure of 55.4bn lei, which is 38.8% of the GDP. The budget deficit will be 4.3bn lei or 3% of the GDP. Octavian Armasu said the deficit was agreed with the development partners.

SATURDAY, December 10

Russia ready to resume import of fruit and vegetables from Moldova 

Russia’s Rosselkhoznadzor is ready to resume the import of Moldovan fruit and vegetables on condition that these are cultivated namely in Moldova and are not re-exported, the media group Interfax quoted the head of the Federal Service for Veterinary and Phytosanitary Surveillance Sergey Dankvert as saying. “The Moldovan side made approaches to us not only once, but they want all the exports to be resumed immediately,” stated Sergey Dankvert, noting that until authorizing deliveries, Rosselkhoznadzor wants to see where the fruit and vegetables are kept and what their quality is. “We will verify and see if they are safe and, if everything is in order, we will issue authorizations,” said the Russian official.