ECO-BUS WEEKLY DIGEST June 14-20 . Most important Economy & Business news by IPN
●MONDAY, June 14
NBM explains oscillations in currency exaggerate rates past few months
The relative depreciation of the Moldovan leu against the euro during the past few months is primarily due to the appreciation of the euro against the U.S. dollar and other currencies on the international markets. The trend has stabilized in the recent past. The exchange rate of the Moldovan leu against the euro oscillates, reflecting the supply and demand on the domestic currency market and the modification of the exchange rate on international currency markets. “The National Bank intervenes in the market, if necessary, so as to reduce the excessive currency fluctuations by purchasing or selling currency, as it possesses a wide range of intervention instruments. I will reiterate that the NBM does not forecast and does not target the inflation rate, its key objective being to ensure and maintain the stability of prices,” the governor of the National Bank of Moldova Octavian Armașu stated in an interview for the press. According to the governor, the central bank analyzes the evolution of the Moldovan lei against the currencies of the main commercial partners of the Republic of Moldova in accordance with the nominal effective and real effective exchange rates. These indicators are most often used to analyze external competiveness.
NAER approves methodology for calculating fuel prices
The Administration Board of the National Agency for Energy Regulation (NARE) approved the methodology for calculating and applying the prices of oil products. The meeting was held online and involved fuel sellers. The document envisions the approval of margins on the retailing and wholesaling of the main oil products and liquefied petroleum gas. The Agency’s decision takes effect on July 1, while some of its provisions – when it is published in the Official Gazette. The retail prices of oil products, existing before the coming into force of Law No. 54/2021 to amend Law No. 461/2001 on the oil products market, remain in force and cannot be increased by sellers until the decision takes effect. The oil products available in stock when the decision takes effect will be considered one batch and the highest price for these will be determined depending on the average values of each type of products on that day.
Annual rate of inflation will continue to be under lowest limit, NBM
According to the latest forecasts of the National Banka of Moldova (NBM), the annual rate of inflation in the immediate period will continue to be under the lowers limit of the variation interval of ±1.5 percentage points from the inflation target of 5%, which is considered optimal for the development of the economy of the Republic of Moldova. Starting with the fourth quarter, it will return to the interval of the target and will be close to it until the end of the forecast period. In an interview for the press, NBM governor Octavian Armașu said the given result will be obtained as a result of the monetary policy decisions adopted in the last quarters by the Bank to alleviate the negative effects of the pandemic on the national economy and to bring back the inflation to the targeted interval. The forecast is based on the pro-active monetary policy decisions promoted by the NBM, whose major goal is to ensure and maintain the stability of prices. “But not everything depends on the central bank’s mandate. The NBM’s monetary policy actions should be accompanied by the fiscal and economic policy pursued by the Government for ensuring economic recovery,” stated the governor.
Investigation of NBM employees has discouraging effect, governor
The National Bank of Moldova has to defend the reforms done and results achieved the previous years as these are challenged by former shareholders through investigation bodies and courts of law. The investigation of employees of the NBM has a powerful discouraging effect on the bank and an intimidating effect on its employees in the process of fulfilling their duties, NBM governor Octavian Armașu stated in an interview for the press. “Such actions prevent the personnel of a central bank from appropriately fulfilling their responsibilities and reduces the institution’s capacity to ensure the supervision, transparency and stability of the banking sector. Moreover, such actions are a major risk to the country’s financial stability and can cause substantial damage to the state Republic of Moldova,” stated the governor. He noted the prosecution body’s assertions that the NBM and its employees haven’t fully cooperated within the effort to investigative the bank fraud of 2014 cannot be yet understood. “I will reconfirm that the NBM offered and continues to offer all the existing materials, explanations, specialists, etc. For example, in 2020 the National Bank provided data in over 1 million electronic files and on over 10,000 sheets of paper,” said Octavian Armașu.
PPPDA protests against wrongdoings at CFM. Reaction of CFM director
The Party “Dignity and Truth Platform” (PPPDA) protested in front of the Government Building, demanding to settle the salary arrears at Moldova’s Railways (CFM) and not to allow the company to go bankrupt. On the other hand, Oleg Tofilat, the new director of CFM, promised that they will fully pay the overdue salaries for last December during two weeks and later the employees will get by a pay each month. He assured that the company will not go bankrupt during the next six months. PPPDA vice president Alexandru Slusari said that 25% of all the goods that are imported into or exported from Moldova are conveyed through Moldova’s Railways, which has thousands of square meters of buildings, lots and employees. The average salary at the company is 4,300 lei, but the employees haven’t received their pays for five-six months, even if they continue to work. The politician noted the company had been used by several criminal governments to obtain gains. Twenty of the 23 criminal cases started by the National Anticorruption Center over illegalities at this company were dropped. Searches were carried out, but no person was arrested as the judiciary remains captured. Only a new government can start the process of remedying the situation there.
● TUESDAY, June 15
Japan is one of most important Asian partners of Moldova, secretary of state
The agenda of the 27th Universal Postal Congress that will take place in Abidjan, Côte d'Ivoire, in August 2021, was discussed in a meeting of Mihail Lupașcu, secretary of state at the Ministry of Economy and Infrastructure, and Yoshihiro Katayama, Japan’s Ambassador to Moldova. The two officials conferred primarily on the election on the administration of the Universal Postal Union and the promotion of the official candidacy of Japan, which is to compete against two more candidates. According to the Ministry of Economy and Infrastructure, Mihail Lupașcu thanked the Government of Japan for the foreign assistance offered in such strategic sectors as agriculture, the environment, healthcare and education.
“Japan is one of the most important Asian partners of the Republic of Moldova from commercial and investment viewpoints. We are glad that Japanese companies are present on the market of the Republic of Moldova and we enjoy specialized consultancy services in business at the national level and the promotion of the export of wines made in the Republic of Moldova in Japan, including of the country brand “Wine of Moldova”,” stated the official.
● WEDNESDAY, June 16
Chisinau transport strategy proposed for public debates
For the people to more often use public transport and less own cars, the municipality will have to introduce single tickets for all the types of public transport (buses, trolleybuses) and season tickets that enable to travel by several types of public transport. These tickets will allow paying less for a trip. The use of public transport will lead to the disappearance of traffic jams and to larger amounts collected into the municipal budget. The local public authorities will have to put new and modern buses and trolleybuses on routes, Czech experts stated in the presentation of the Chisinau transport and intelligent mobility strategy and the related action plan. Deputy mayor of Chisinau Victor Chironda said digital technologies have the potential to revolutionize the way in which we move, making mobility more intelligent, more efficient and more ecological. “This strategy and the experience of the Czech team of experts will help us to implement modern European practices for planning mobility and managing traffic in Chisinau,” he stated.
Virtual tourist stand for Moldova at China European Marketplace, ETOA 2021
Seven tourism companies of Moldova joined the European tourism market at the China European Marketplace. Approximately 70 tour operators and trip buyers from the People’s Republic of China took part in the workshop that involved a series of individual meetings that ensured connection between Moldovan companies and tourism professionals of China. According to the Employers Association of the Tourism Industry of Moldova (APIT), the goal of the workshop was to present the tourism potential of the key tour operators of Moldova to travelers in China. The APIT became a fully-fledged member of the European Tour Operators Association (ETOA) in London on May 12, 2020. The ETOA is the only tourism association in Europe that represents the interests of the industry in the European Parliament. The Association brings together over 1,200 companies and pays special attention to the active development of tourism.
Oil sellers obliged by NAER to annul unjustified rises in fuel prices
The National Agency for Energy Regulation (NAER) obliges the license holders that work on the oil products market to annul the prices that were raised unjustifiably staring with June 14 or it will initiate the procedure for suspending the licenses of the companies that will not comply. In a press release, the NAER says its Administration Board approved the decision on deviations in the formation of prices on the oil products market in an ad-hoc meeting on June 16. The Agency ascertained that the fuel price rises of June 14-16 are unreasonable. After amendments to Article 4 of the Law on Oil Products Market took effect on June 14, the license holders are to set the prices in accordance with the methodology for calculating and applying fuel prices that was approved by the NAER.
Government allocates 9.5m lei for “First House” Program
The Government has allocated an extra 9.5 million lei from the reserve fund for the “First House” Program. The money will go to finance the compensations provided by the state within this program as the allocations approved for 2021 have been used, while the number of beneficiaries has grown. Tatiana Ivanichkina, secretary of state at the Ministry of Finance, said that 18.8 million lei of the sum of 20 million lei approved for 2021 had been used during the first six months. The new amount will help reduce the risk of activating state guarantees and the allocation of budget funds for making payments to the banks involved in the program, which can be recovered only after the commercial banks sell the mortgaged property. The procedure is long and can lead to the temporary blocking of the financial resources that can be used to finance additional costs.
● THURSDAY, June 17
Revenues of 2020 state social insurance budget about 12% up
The revenues collected into the state social insurance budget last year came to 24.285,6 billion lei, an increase of 2.537,2 billion or 11.7% compared with 2019. The social insurance contributions totaled 14.295,4 billion lei, which is a 101.9% fulfillment of the budget plan. The contributions were by 659.6 million lei or 4.8% higher than in 2019, Elena Țîbîrnă, director general of the National House of Social Insurance, stated in the Cabinet meeting where there was approved the report on the execution of the 2020 state social insurance budget. The transfers from the state budget to the state social insurance budget added up to 9.769,4 million lei, with the annual projections being 94.6% met. Compared with 2019, the transfers were by 1.812,4 million lei or 22.8% higher. Other revenues came to 220.8 million lei, with the common tax collected from residents of IT parks representing 54.7% of this sum.
ACC: Details about holding of tender contest for purchasing smart water meters
Apă Canal Chișinău (ACC) provided details about the way in which the tender contest for buying smart water meters was held. In a press release, the company says the regulations concerning the goal of public procurement were respected as SRL “Partener Energo” submitted the lowest price bid and was chosen the winner. The procurement commission assessed the bids according to such criteria as the quality, the lowest price and the most advantageous offer from technical and economic viewpoints. The public procurement procedure held by the ACC in 2020 was transparent and the invitation to take part in the contest was published repeatedly on www.acc.md and in the Official Gazette so as to ensure the participation of an unlimited number of bidders. The winner, Partener Energo, purchased 1,000 electronic automatic reading system meters DN-15mm, L-110mm; 69 electronic automatic reading system meters DN-20mm, L-190mm and one outdoor gateway system.
● SATURDAY, June 19
NAER’s methodology is contrary to market economy principles, expert
The new methodology for calculating fuel price ceilings agreed by the National Agency for Energy Regulation (NAER) goes against the market economy principles, encourages monopoly and is aimed at eliminating small oil sellers, considers the Agency’s ex-director Victor Parlicov.According to the energy expert, the new methodology for calculating prices is destructive for the oil market of the Republic of Moldova as similar rulers for oil sellers with different costs and profits cannot be set down. “The attempt to regulate the prices by setting a ceiling on a competition market is not a good solution and this is doomed to failure from the start. The law provides that we have a market economy and we should thus create conditions on the competition market so that the oil sellers compete between them for consumers. Now the NAER pursues the goal of setting a profit margin that de facto cannot be set as each company has different contracts and different costs,” Victor Parlicov stated in the talk show “Friday with Anatolie Golea” on RTR Moldova channel.
Moldovans in May borrowed 3.308bn lei from banks
The new loans released this May came to 3.308,7 billion lei, an increase of 64.4% compared with last May. By the repayment period, the loans repayable in two to five years remained the most attractive ones, constituting 54% of the total loans. By the goal of borrowing, the consumer loans represented the largest portion. The applicants usually raise loans from banks in Moldovan lei. In May, these loans made up about 75%. According to the National Bank of Moldova, 53.7% of the loans in national currency were released to private individuals, with 53.7% of these being provided to nonfinancial commercial organizations. 50.5% of the loans released to nonfinancial commercial organizations were intended for trade. The average interest rate on new loans released in national currency was 6.81%. Compared with April, the average rate on loans in Moldovan leu decreased by 0.24 percentage points. The loans provided to legal entities had an average interest rate of 8.2%, to individuals who practice an activity – 8.96%, while to private individuals – 5.57%.
Volume of cash in first five months up 23.8%
The volume of cash collected in January-May 2021 rose by 23.8% compared with the corresponding period last year to 55.691,7 billion lei. The rise was due to the 23.8% increase in amounts collected from the sale of consumer goods that represented 56.4% of the total volume of cash. The given development was supported by the augmentation of practically all the cash collection sources. At the same time, the volume of cash from the sale of foreign currency to private individuals decreased by 4.7% to 3.1% on the same period last year. The cash released by licensed banks in the first five months of this year rose in volume by 24.2% compared with the corresponding period last year to 57.687,9 billion lei. The given change followed the 41.1% rise (4.786,8bn lei) in the volume of cash released for purchasing currency from private individuals to 16.421,5 billion lei.
