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Experts: What is wrong with the credit agreement signed with the Russian Federation?

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The Russian Federation and the Republic of Moldova signed a credit agreement, which provides for a loan of 200 million euros. The announcement was made by the head of state 2 days ago.

“It is the first actual financial support offered from outside of our country during this crisis period, and the money will be transferred to the state budget of Moldova for the country’s needs, including for financing infrastructure projects,” announced Igor Dodon on social media.

At the same time, several experts’ opinions were published in the media, stating that the credit agreement could be problematic.

Economist Veaceslav Negruță explained in a blog article what are the hidden aspects of the 200 million euros credit that will be received by Moldova from the Russian Federation.

“The annual interest rate is 2% for a euro loan. In fact, this loan seems to be the most expensive credit resource that Moldova is receiving during this period. The IMF credit funds of $ 235 million are cheaper for a period of 30 years. And resources in euros from Brussels could be cheaper, if the necessary requests were made. In the case of a 10-day delay in repayment of the loan, the respective amount would be considered outstanding and a 3% interest rate would be applied for the delay period (150% at the initial rate of 2%).,” wrote the economist.

The expert believes that Dodon will use the credit funds for the next election period.

See also: “The state of emergency ‘side effects’ or what is the proper moment to start the presidential election campaign”

“This loan from the Russian Federation was included in the 2020 budget, when it was adopted in 2019, as a source of financing of a part of the budget deficit of 7.4 billion lei. When rectifying the 2020 budget, the government announced an increase in the budget deficit from 7.4 to 16.2 billion lei. The prime minister said that half of this deficit will be covered by credit resources from the IMF and Russia. But the Russian loan (part of it) was already included in the financing of the initial deficit. […] It turns out to be double-entry bookkeeping.”

Economic expert Dumitru Budianschi, from the Independent Analytical Center Expert-Grup, considers the credit agreement as being totally at the disadvantage of the Republic of Moldova, even harmful to it.

The credit agreement specifies the following: “The Moldovan side, in the interest of extending the economic-trade relations between the two countries, will endeavour to ensure the implementation of joint projects on the territory of the Republic of Moldova by Russian companies. To this end, Russian companies will have access to participate in competitive procedures for the procurement of goods and services, established in the Republic of Moldova, under favourable conditions like those offered to companies in Moldova and other companies.” 

Still, the expert believes that the basic concept to be emphasized in this agreement is “joint projects”. “Before transferring the money, the Russian Federation and Moldova will approve a list of joint projects. The consequences of this provision are the most dangerous and with enormous risks for Moldova. It is, most likely, about projects that the Republic of Moldova does not need, but which the Russian Federation or companies affiliated with some group interests may need to be implemented,” said Dumitru Budianschi.

The credit of 200 million euros offered by Russia is a “hybrid”, which combines the sovereign credit, previously promised by the authorities, and the commercial credit, as the economic expert Veaceslav Ionita stated for ZdG.

“On the one hand, it is a loan that goes to the state budget. On the other hand, the Russian Federation has set some conditions which, if we talk about a civilised country and competition, we would say that they are ok. One of the conditions is that Russian companies have the right to participate in public procurement. In a classic commercial contract it is clearly stipulated that the company that will implement the project is our company. If we didn’t know that things are not exactly democratic in the Russian Federation, I would say that this is a good condition,” claimed the economic expert.

“In these hybrid loans, there is a risk that one will pay more for the purchased goods and services. The second risk is that there may be conditions that we do not know, such as access to privatisation. I would have nothing against it if a public privatisation process is announced, a Russian company participates and wins. I don’t have a problem if it’s transparent. But, given that this may be a provision in this contract, it could be a problem.”

“The worst part is the existence of Article 7, part 2, which is an obvious Trojan horse. Basically, any outstanding debt of any entity in Moldova to the Russian Government or institutions of the Russian government, where there is an “agreement of the Moldovan side”, automatically becomes part of this credit agreement. Generally speaking, linking other debts with this agreement is a pretty nasty thing and requires a detailed analysis and a comprehensive report by the Ministry of Finance on the debts and guarantees that would fall under this agreement,” stated economic expert Sergiu Gaibu.

“It is better that such an agreement is neither signed, nor ratified. If the gas debt is attached to this agreement, based on Article 7, the debt of $7 billion will turn into $11.5 billion in 10 years. What is the interest of the government, if it accepts such clauses in a signed contracts?”

Previously, it was announced that the International Monetary Fund (IMF) approved a disbursement of about $235 million to meet Moldova’s urgent financial needs amid the COVID-19 pandemic. Also, the European Union (EU) will re-direct 87 million euros of funds available from other existing assistance programmes to overcome the consequences of the crisis provoked by COVID-19 in the Republic of Moldova.

Photo: chamber.md

Jurnalistă that speaks English very well. De aia Maria are grijă că prietenii noștri străini să nu piardă nicio informație valoroasă despre actualitatea din Moldova.

Politics

Critical changes blocked in Moldovan politics – the Constitutional Court dictated the separation of powers

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On July 7, the Constitutional Court (CC) of the Republic of Moldova issued a decision, according to which, the dissolution of the Parliament in the last six months of the presidential term of office is prohibited under any circumstances, even though the president resigns during this period. Moreover, according to the same decision, holding parliamentary elections and presidential elections during the same period is prohibited. Simultaneous local elections are permitted though.

The CC took this decision after 2 members of the Parliament (MPs) submitted 2 notifications in this regard. The institution explained its decision by the fact that the separation of powers is needed, that meaning the temporal separation of the presidential and the parliamentary election campaigns.

“We are on the verge of social revolts due to the deepening poverty, as well as the injustice in the country. The Constitutional Court issued a decision that leaves no room for interpretation. From now on, a Government capable of relaunching the economy and ensuring the safety of the people of Moldova must be formed,” claimed Andrian Candu, the member of Pro Moldova (a political party formed after the separation of democrats).

The vice-president of the Dignity and Truth Platform Party, Alexandr Slusari, declared that the CC decision was predictable. “It was clear for us from the the very beginning that simultaneous parliamentary and presidential elections is a wrong and strictly political path. […] If several MPs had acted in unison, without making use of a hidden agenda, the Chicu government would have long gone down in history,” he said.

Socialists consider the current Parliament as being compromised, as it ‘sunk’ into many corruption scandals and the opposition boycotted legislature’s plenary sessions for several times already. “We addressed the CC to make this clarification. We would have liked to save the citizens’ money and to hold the snap parliamentary elections on the same day as the presidential elections, on November 1,” is mentioned in a press release published on the page of the Party of Socialists of the Republic of Moldova.

“In this context, we support the idea of President Igor Dodon that, the first decree signed by the head of state after the autumn presidential elections must be about the dissolution of the current compromised Parliament and holding snap parliamentary elections,” is also declared in the press release.

The socialists’ dissatisfaction is especially reasoned by 3 failed attempts of the Parliament to meet in plenary session, during which the bills for which Chicu’s Government took responsibility before the Parliament were supposed to be communicated. Opposition MPs urged the Government to withdraw its bills from Parliament and register them for parliamentary scrutiny.

Photo: Facebook| The Parliament of the Republic of Moldova

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Reintegration

Protecting public health or violating freedom of movement? Protests in Transnistria

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On July 02, a protest has been registered in Ribnita (a city in the Transnistrian region). Dozens of city residents who work in Rezina (Moldova), blocked the bridge across the Dniester that connects the two localities. People complained they are not allowed to go to work because the Tiraspol authorities cancelled their permits to cross the bridge.

More than 70 people demanded free access to Moldova, as well as respecting their right to free movement. They also requested the cancellation of the obligation to stay in quarantine for 14 days upon return from Moldova.

On June 29, a decision of Transnistrian authorities has been made, stating that the residents of the Transnistrian region are allowed to enter and leave the region without being quarantined upon return, in case they go to Moldova for maximum 12 hours.

Moreover, citizens from Transnistria, employed by companies on the right bank of the Dniester, were granted a temporary permit issued by the Tiraspol authorities in order to travel freely to their workplace and back. Once the permits were cancelled, these people were left without the possibility to go to work.

The Tiraspol authorities claimed that the permits were cancelled because at least 10 employees of factories in Rezina, who are residents of Ribnita, were infected with COVID-19. Therefore, avoiding a second wave of infections among the inhabitants of the Transnistrian region is aimed, according tot the the so-called Minister of Internal Affairs, Ruslan Mova.

Mova warned that people who organised the protest could be held accountable. He claimed people from Transnistria still have a choice, as they can enter the Republic of Moldova and stay there during the coronavirus pandemic or they can be quarantined when returning to Transnistria.

“The abusive actions of Transnistrian structures are described as an act of defiance of the basic acts of the peacekeeping operation and a total disregard for the decisions approved at Unified Control Commission,” is mentioned in a press release of the the Bureau for Reintegration Policies from Moldova. The Transnistrian manner of distorting the truth, misinforming the Commission and trying to manipulate public opinion was condemned by the Moldovan delegation, highlighting that the reduction in the Commission’s authority is a consequence of Tiraspol’s actions, as it also mentioned in the press release.

Source: Alexandr Podgoretchi

On the other hand, the OSCE Mission to Moldova expressed its deep concern about the unexpected cancellation by the Transnistrian side of permits for the residents of the region, is mentioned in an OSCE statement cited by INFOTAG News Agency

Head of the OSCE Mission to Moldova, Claus Neukirch, urged the region’s authorities not to create artificial obstacles to the free movement of residents. “Although health measures are needed to prevent the spread of COVID-19, there must be a functioning mechanism to allow people to travel to their jobs, access healthcare services and other urgent needs even during the pandemic,” Neukirch said.

The OSCE Mission to Moldova also urged the Transnistrian administration to dismantle all border checkpoints installed in the last five months.

During the COVID-19 pandemic, Tiraspol unilaterally installed 37 illegal checkpoints in the Security Zone. Such actions impeded the free movement of about 50 thousand inhabitants from 11 localities and tensioned the relations between Transnistria and the Republic of Moldova, according to a statement of the Government.

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Society

COVID-19 statistics: Moldova’s harmful figures that still can break the European records

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In June, the COVID-19 pandemic advanced rapidly in the Republic of Moldova. The number of contaminated persons increased by 92% as compared to May, while the growth was only 23% from April to May, according to a note of the ADEPT association. The same source stated that an increase by 70% in the number of deaths was recorded in June as compared to May.

With the lifting of the state of emergency in Moldova, the National Extraordinary Public Health Commission cancelled several restrictions contrary to the warnings of public health specialists regarding such premature measures: relaunch of dental and hairdressing services, resumption of international rail and road transport of people, markets re-opening and resumption of museums and libraries’ activity. The Commission also approved religious ceremonies in closed spaces, opening shopping malls and outdoor training for performance athletes, as well as regular flights and passenger charters.

See also: Lifting coronavirus restrictions in Moldova – risks and future costs

As a result, a record number of daily cases and deaths caused by the coronavirus was recorded in June. At the end of the state of emergency (May 15) the total balance of confirmed cases had reached 5 745, with a steady ascending trend. The trend  continued in the following weeks, reaching over 2 000 confirmed positive cases per week.

Source: statista.com

According to the Ministry of Health, Labour and Social Protection (MHLSP) data, the peak of the daily cases recorded in Moldova was reached on June 17 – 478 new cases. To date, the total number of confirmed cases is 17 150 and the total number of deaths – 560. The Republic of Moldova ranks the 12th in the list of the European countries with the highest incidence of coronavirus cases – 410.88 cases per 100 000 population.

Another record number that has a huge negative impact on the way the coronavirus pandemic is managed in the country is the rate of the infected medical staff out of the total confirmed cases. Until, July 2, 2 429 cases of infection (13.11% of total cases) have been confirmed among medical staff, including 613 doctors, 28 pharmacists, 974 nurses, 125 janitors, 698 auxiliary personnel, as the MHLSP reported. The number of medical workers infected with COVID-19 has almost the same increase rate as the total number of infections, mentioned the ADEPT association.

The positive test rate is another figure that recorded one of the most significant growths as compared to other European countries. The total positive tests rate recorded since the beginning of testing (in February) is 20.8%, with the highest monthly rate of 24.1% in June. The maximum number of tests performed in one day was 1 659 on June 17. All in all, 82 635 people were tested for the first time and 20 404 were tested repeatedly in Moldova.

The MHLSP warned that the coronavirus also massively affects children. The authorities specified that a total of 824 minors were infected in the Republic of Moldova.

The positive news is that the number of registered active cases decreased during the last days of June. The same tendency was observed as regarding the medical staff. At the same time, the number of recoveries increased during the same period.

Source: statista.com

Photo: Wikimedia

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