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Moldova Government pays back first tranche of “stolen billion” obligations to National Bank

On October 6th, Moldova’s Finance Ministry announced about transferring 668 million lei to the National Bank. The funds represent the first tranche of the so-called “payment of the stolen billion”: the Government pays back the central bank for the money loaned to the three banks that failed in 2014.

Out of the 668 million, 50 million lei accounted for the actual state obligations to the National Bank, while 618 million lei were for the interest rate for 2016-2017.

Although it is seen as a serious damage to Moldova’s finances and the use of taxpayer money, the payment allegedly helps to avoid the decapitalization of the National Bank that would lead to the incapacity to conduct adequate monetary policy, to receive international payments and even secure an agreement with the IMF.

Unpaid loans taken by Banca de Economii, Banca Socială, and Unibank from the National Bank in 2014 were transformed into public debt by the Government of Moldova with money from the National Bank. The payment of 13,5 billion lei would be made from the state budget during 25 years with a 5% interest rate.

Currently studying International Relations at the University of Pécs, Hungary. Study focus: Transnistrian conflict settlement, Moldovan statehood, Moldovan democracy.


PM Filip: Moldova will not receive the €100 million EU assistance this year

The Republic of Moldova is not going to receive the expected tranches from the 100 million euros macro-financial assistance fund provided by the European Union. At least, in 2017. Quoted by Reuters, Prime-Minister Pavel Filip stated that the fund will not be disbursed

Quoted by Reuters, Prime-Minister Pavel Filip stated that the fund will not be disbursed because the Moldovan authorities have not fulfilled all of the 30 required conditions from the agreement. Moreover, the Finance Minister Octavian Armașu told Reuters that the budget for 2017 had foreseen two trances coming in Moldova’s budget, expressing confidence one would be disbursed in early 2018.

The €100 million macro-financial assistance for the Republic of Moldova consists of 60 million euros in loans and 40 million in grants. Previously, the European Parliament together with the European Commission committed to close monitoring of the democratic character of reforms, such as the electoral system reform. The EU Parliament also underlined that the assistance should support Moldova’s commitment to sound public finance management, fight against corruption and money laundering, the de-politicisation of public administration, an independent judiciary, the freedom of the media. In addition, the Commission promised to temporarily suspend or cancel payments of the €100 million, if agreed conditions are not met.

The main condition put by the EU was for the Moldovan governing coalition to ensure a fully democratic change of the electoral system, with a full consensus of all political forces. A significant part of the Moldovan civil society and five opposition parties does not agree at all with the change of the electoral system but recommend the improvement of the current proportional system and the media environment. The governing Democrats and the “opposition” Socialists are instead going with the mixed system.

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Moldova has fully fulfilled the plum export quota in the EU market

The Republic of Moldova exported 10 400 tonnes of fresh and dried plums on the European Union market by October 1. Thus, the plum export quota, which provides for 10 thousand tons, has been fully exploited.

Compared to last year, plum exports to the Community market increased by about 40 percent. In order to fulfill contractual obligations with European partners, growers are asking for an increase in the prunes export quota.

The largest quantities of fresh and dried plums were delivered to the Romanian markets (4240 tonnes), Poland (4300 tonnes), Latvia (610 tonnes), Czech Republic (373 tonnes).

Today, Moldovan plums are sold in 10 European Union countries, where the selling price is convenient for Moldovan fruit growers. Until now, the European importers have not yet complained about the quality of the Moldovan products.

Prunes are being exported by 96 companies, which have delivered around 40 thousand tons abroad since the beginning of the year. A considerable amount of fruit is exported to Russia, – 18415 tons, 9 thousand tons less than last year.

The geography of fruit exports has expanded, plums being exported for the first time this year to the US, Canada and other countries.

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World Bank update: Moldova’s economy to grow by 3,5% in 2017

In its most recent Economic Update on Moldova, the World Bank states that the Moldovan economy is expected to grow by 3,5% in 2017, driven by strong private consumption and a good harvest.

WB points out that in the first half of 2017, the real GDP increased by 2,8% because of recovery in remittances, strong growth in wages and the indexation of pensions (+3,6%). It was balanced by the negative contribution from net exports (-0,7%).

Fixed investment rebounded from its sharp decline in 2016, and grew 4.8%, y/y. The build-up in inventories added another 2.3 percentage points to overall growth. On the production side, with stagnating industry, the main growth impulse came from retail and wholesale trade, while agriculture contracted in the first half of 2017 by 4.1%, y/y.

Regarding the medium-term outlook, the World Bank sees as a key downside risk a slowdown in the implementation of key growth-enhancing reforms, including those related to the restructuring of the financial and energy sector and to the efficiency of public finances. Events like the Parliamentary elections in 2018 and the economic situation in the EU and the CIS might also affect Moldova’s economy:

“Weak rule of law and vested interests could further halt the reform process. Parliamentary elections, scheduled in 2018, may also affect the pace of the implementation of the reform agenda. Weaker than expected growth in Moldova’s main trading partners (The European Union and the Commonwealth of Independent States) could further dampen growth.”

Thus, the World Bank recommends avoiding delays in implementing reforms for stronger economic governance so that Moldova keeps the benefits of this solid growth.

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