ECO-BUS WEEKLY DIGEST April 20-26. Most important Economy & Business news by IPN

● TUESDAY, April 21

Government approves bill to ratify lending agreement with Russia

The Cabinet endorsed the lending agreement between the Government of the Republic of Moldova and the Government of the Russian Federation concerning the provision of a state financial loan. This is the Russian loan of €200 million that will be disbursed in two tranches. Minister of Finance Sergey Pușcuța, Deputy Prime Minister, said Moldova will pay an interest rate of 2% a year on this loan that is repayable in 11 years with a grace period of approximately a year. “The agreement provides that if the sums deriving from this accord are not paid on time, Moldova will pay an interest rate of 3% on the overdue payments,” stated the official.

NBM launches new circulating coin on occasion of Flag Day

The National Bank of Moldova (NBM) puts into circulation a coin with the face value of MDL 10 on the occasion of the National Flag Day that is marked in the Republic of Moldova on April 27. In a press release, the NBM says the coin is dedicated to the 30th anniversary of the adoption of the tricolor and completes, as a whole, the series of circulating commemorative coins, which includes two more coins of this type. The new coin is made of steel, plated with nickel and brass, conferring a bimetallic appearance: silver and gold, and will have a circulation of 250,000 copies.

Government approves bills on attraction of loan from IMF

The bills on the attraction of the external state loan from the International Monetary Fund via the Rapid Credit Facility (RCF) and the Rapid Financing Instrument (RFI) were approved by the Government. Minister of Finance Sergey Pușcuța, Deputy Prime Minister, said the loan consists of a disbursement under the RCF equivalent to SDR 57.5 million (about US$78.4 million) and a purchase under the RFI equivalent to SDR 115 million (about US$156.7 million).

Three in four Moldovans have a payment card

Three in four inhabitants of the Republic of Moldova on average own a payment card. In 2019, each inhabitant made 19 card payments on average, as opposed to three cashless payments in 2015. The ratio of POS terminals to the population is 8:1,000, shows a report on the development of the payment systems in Moldova for 2019 published by the National Bank of Moldova. According to the report, the cards in circulation at the end of 2019 numbered over 2 million, an increase of almost 4% on 2018. By the technical solution, the proximity cards represented 82% of the cards issued last year and 69.2% of the total number of owned cards. During the last four years, the number of proximity cards rose about 8.5 times, which contributed to the gradual replacement of hybrid cards that, for their part, earlier substituted the magnetic stripe cards.

Grants and financing of 100m lei to be offered through ODIMM programs

Grants and financing to the total value of about 100 million lei from budgetary and European resources will be provided to business entities through active programs of the Organization for the Development of the Sector of Small and Medium-Sized Enterprises (ODIMM), Minister of Economy and Infrastructure Sergiu Railean as saying in a press briefing. The female entrepreneurs will benefit from grants ranging from 165 000 lei to 1 649 000 lei for purchasing equipment and software solutions, for development and consultancy.

● WEDNESDAY, April 22

PDM and PSRM ask for details about conditions of agreement with Russia

The members of the Democratic and Socialist parliamentary groups asked the Ministry of Justice to formulate a legal opinion and interpret the article of the lending agreement with Russia providing that “any outstanding debt of any entity in the Republic of Moldova to the Russian government or institutions of the Russian government, where there is the consent of the Moldovan side, automatically becomes part of this contract”. The decision was taken as a result of discussions on the platform of the Coalition’s Council. In a press release issued in the evening of April 21, the PSRM and PDM say the method of resolving disputes between the two sides should also be clarified. The parliamentary majority also asked the Ministry of Finance to provide information about the existence of state-guaranteed debts or loans to the Russian Federation and about the eventual procedure and method of providing such guarantees by the Republic of Moldova.

Kiril Moțpan: Russian loan is a threat to country’s economic security

MP of the Party “Dignity and Truth Platform” Kiril Moțpan considers the loan of €200 million provided to Moldova by the Russian Federation is a threat to the country’s economic security. In a posting on Facebook, the MPs wonders “why would someone want a loan that comes with a number of conditions that are so disadvantageous for the state, when there are so many options that are much more favorable available through Brussels?”. The MP provided his own response variant that is. “Things seem to be evident. If (Igor) Dodon had taken out a loan from the European Union, he would have been unable to appropriate and use this money for his election campaign. Instead, when obtaining a loan from the Russian Federation, Dodon will encounter no problems in financing his election campaign prior to the presidential elections with this money,” stated the MP.

Fuel prices decreased

All the types of diesel fuel and gasoline were cheapened by 1 leu. The price of liquefied petroleum gas was reduced by 0.10 lei. The new prices were posted at a number of gas stations on April 22. A liter of diesel fuel now costs 13.12 lei, as opposed to 14.12 lei until now. The price of a liter of gasoline of type “95” is 15.47 lei, as against 16.47 lei a day ago. The liquefied petroleum gas costs 9.67 lei, in contrast to 9.77 lei earlier.

Net supply of currency from private individuals US$47m down

The degree of covering the net demand of foreign currency from business entities by the net supply of currency from private individuals in March represented 42.7%, as opposed to 95.7% in February. Compared with the previous month, the net supply of currency from private individuals in March ecreased by US$47.1 million (-32.7%), while the net demand from business entities rose by US$76.4 million (+50.8%). The National Bank of Moldova said the imbalance between the supply and demand of foreign currency to a particular extent was due to the suspension of air traffic starting with the second half of March, which affected the currency market operators’ capacity to manage cash.

2020/04/22/17:37/ European Commission offers €100m to Moldova

The European Commission has adopted a proposal for a €3 billion macro-financial assistance (MFA) package to ten enlargement and neighborhood partners to help them to limit the economic fallout of the coronavirus pandemic. Moldova will get €100 million. The proposal comes on top of the ‘Team Europe' strategy, the EU’s robust and targeted response to support partner countries' efforts in tackling the coronavirus pandemic. It represents an important demonstration of the EU’s solidarity with these countries at a time of unprecedented crisis. The proposal, following a preliminary assessment of financing needs, provides for the MFA funds to be distributed as follows: the Republic of Albania (€180 million), Bosnia and Herzegovina (€250 million), Georgia (€150 million), the Hashemite Kingdom of Jordan (€200 million), Kosovo (€100 million), the Republic of Moldova (€100 million), Montenegro (€60 million), the Republic of North Macedonia (€160 million), the Republic of Tunisia (€600 million) and Ukraine (€1.2 billion).

Rail freight traffic suspended as of April 23

Moldova’s Railways has announced that the rail freight traffic will be halted for the period between April 23 and April 27 in response to the substantial reduction of the volume of freight. The company said all the wagon loading and unloading requests of business entities will be satisfied.

● THURSDAY, April 23

Finance minister: Moldova will end year with debt of 73bn lei

The Republic of Moldova will end the year 2020 with a public debt of about 73 billion lei. The figure rose significantly in connection with the COVID-19 pandemic compared with the situation before the pandemic, when the authorities forecast a lower figure. “If we end 2020 based on the scenario that is now analyzed by Parliament, the Republic of Moldova’s foreign debt will total 73 billion lei or about 34-35% of the Gross Domestic Product,” Deputy Prime Minister Sergiu Pușcuța, Minister of Finance, said. The official noted that if Moldova had avoided this pandemic, the public debt towards the end of 2020 would have represented 29.5% of the GDP.

Agreement on provision of Russian loan ratified by Parliament

The agreement on the provision of a loan of €200 million by the Russian Federation has been ratified by Parliament. The bill was given two readings and was carried by the Socialist and Democratic MPs. The amendment proposed by the Action and Solidarity Party wasn’t supported, while the Democrats’ amendment was accepted. Under the accepted amendment, the eventual guaranteeing of private loans with state budget funds is to be endorsed by Parliament. While in Parliament, Prime Minister Ion Chicu said the loan is to be provided in two tranches. On this loan, Moldova will pay an interest rate of 2% a year. The loan is repayable in 11 years and the grace period is of about a year. The money will be used to finance Moldova’s budget needs, covering almost half of the rise in the budget deficit. Without this and other loans, the pensions and salaries could not be paid.

Parliament ratifies US$234m lending agreements with IMF

The MPs ratified the agreement of the Government of the Republic of Moldova with the International Monetary Fund concerning the provision of an emergency loan of about US$234 million. The ratification bill was adopted in two readings by all the attending MPs, except for the members of the Shor Party’s group. Under the agreement, a zero interest rate will be paid on US$78 million that is to be repaid during ten years. The interest rate on the other US$156 million is 1.5% a year and the loan is repayable in five years.

IMF emergency loan reaches accounts of NBM

The loan provided by the International Monetary Fund for managing the exceptional epidemiological situation generated by the COVID-19 pandemic got to the accounts of the Nationals Bank of Moldova. In a press release, the NBM says the loan is of about 172 500 000 Special Drawing Rights, which is equal to approximately US$233.9 million. Under the agreement with the IMF, a zero interest rate will be paid on US$78 million that is to be repaid during ten years. The interest rate on the other US$156 million is 1.5% a year and the loan is repayable in five years.

Avia Invest to sue Government for not respecting concession agreement

Avia Invest, which manages the Chisinau International Airport, plans to file a lawsuit against the Government of the Republic of Moldova to the International Court of Arbitration. It intends to prove that the Government’s actions in relation to the concessionaire go against the conditions and obligations of the concession agreement and violate different international conventions and the international law in general. In a press release, Avia Invest says the international law firm Hillmont Partners was contracted to defend the company’s rights and interests in the relations with the Government at the International Centre for Settlement of Investment Disputes in New York.

Measures to support entrepreneurial activity adopted by MPs

The law on the institution of measures to support the entrepreneurial activity and to amend a number of regulations was passed in two readings. The opposition parties didn’t support the Government’s initiative. Prime Minister Ion Chicu said in Parliament that until now, the Government and the Commission for Exceptional Situations took measures with an immediate effect during the state of emergency. The provisions of this bill will be implemented after the state of emergency is lifted. The bill includes the program to subsidize the interest rates in loans that is designed to facilitate the enterprises’ access to loans in the period between May 1, 2020 and December 31, 2020. It also establishes the legal framework for implementing the VAT refund program. The VAT rate for the hospitality industry is reduced from 20% to 15%.

Parliament adopts amendments proposed by Government to 2020 state budget

The bill to amend the state budget law for 2020 was passed by Parliament after being given two readings. In the new conditions, the budget deficit will represent 15.975 billion lei or 7.52% of the Gross Domestic Product. According to the Government, the necessity of amending the state budget appeared as a result of the economic effects of the measures imposed in the process of managing the epidemiological situation. Under the bill, the state budget revenues will be decreased by 6.338 billion lei or by 14.3% to 37.798 billion, owing mainly to the reduction in taxes and duties and the inflows of grants. The state budget expenditure will increase by 2.221 billion lei or about 1.6% to 53.773 billion lei. Given the priority costs in the period, the spending for healthcare will be increased by 1.1 billion lei, for social protection by 1.127 billion lei, for state services of a general purpose by 1.084 billion lei.

● FRIDAY, April 24

CC suspends €200m lending agreement with Russia

The Constitutional Court (CC) suspended the legal effect, including the procedure for enforcing the law to ratify the lending agreement between the Government of the Republic of Moldova and the Government of the Russian Federation for the provision of a state financial loan of €200 million to Moldova. The judgment was passed on April 23 following a requisition filed by MP of the Pro Moldova group Sergiu Sîrbu. The MP requested the CC to verify the constitutionality of the agreement and to suspend the legal effect of the Government decision of March 13 concerning the initiation of negotiations and approval of the signing of the agreement and the Government decision of April 21 concerning the approval of the bill to ratify the agreement.

Electronic signature increasingly popular

The number of citizens who, at request, received electronic signatures from the Center for Information Technology in Finance in the first quarter of this year continued to rise. According to the Center, the number of holders of e-signatures increased by 6.5% compared with the corresponding period last year to over 4,800. Specialists of the Center said the rising number of applicants for an electronic signature is due to the extension of the range of electronic public services and the people’s increasing confidence in the efficiency of these services.

Farmers could set up water intakes by riverside

The agricultural producers will be able to place water intakes and mobile installations on riparian buffer strips for irrigation purposes. A number of documents needed for obtaining an irrigation environmental authorization will be excluded. This is provided in a bill that was adopted by the MPs after giving it a final reading. Under the bill, if centralized irrigation systems work near riparian buffer strips, water pumps for irrigation could not be installed. In this case, the users will irrigate through the agency of centralized irrigation systems.

All types of trade to be resumed, markets and shopping centers remain closed

All the types of trading activities will be restarted as of April 27, except for the activity of shopping centers and markets. Also, walks in parks will be allowed, but in groups not larger than three persons. The decisions were taken by the Commission for Exceptional Situations. Prime Minister Ion Chicu said that a higher number of confirmed cases of COVID-19 were reported today, but this is due to the massive testing of persons from the existing hotbeds.