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Study: Corruption in Moldova’s public procurement yearly costs up to 3 billion Lei

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Source: Iurie Morcotilo, Expert-Grup

11 April 2018- An analytical commentary by Iurie Morcotilo states that the corruption in public procurement costs Moldova up to 3 billion Lei (183,24 million USD).

The study is based on the official data on the estimated full cost of public procurement from 2008 till 2015. The main factors cited as causes stimulating corruption in public procurement are lack of transparency, the complexity of the procurement process, but also the misinterpretation of the public budget as something abstract, not as money from the taxpayers. The corruption in public procurements are believed to happen at different stages: planning, procurement launching, evaluation and contract awarding, contract implementation stage.

Though Morcotilo recognizes that quantifying corruption is hard in this field, the study views some indicators from Moldova’s ranking in the Global Competitiveness Report: embezzlement of public funds, favoritism in governmental decisions, informal bribes and payments, and inefficiency of public spending.

The costs of corruption in public procurement was also calculated based on the estimated international average of 20-25% of the total amount of public procurement. In Moldova’s case, the 25% quota was reasonably applied, even if the statistical data on public procurement are lacking (only big contracts are counted for stats). The study found that between 1,3% and 2,5% of Moldova’s GDP are lost to corruption in public procurement:

“Based on the available data and applying the 25% average percentage of the corruption cost in public procurement, it can be estimated that in 2015 this cost varied from MDL 1.6 billion to MDL 3 billion, which represents between 1.3% and 2.5% of GDP”, reads the study.

Of course, those are only monetary costs. Other consequences are:

  • long-term financial losses for the public budget;
  • negative impact on health and safety of population;
  • negative effects on competition.

The author opinionates that the corruption in public procurement can be reduced only by joint efforts of the authorities fighting corruption and those responsible for procurement management, but also by enhanced monitoring by citizens.

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

Economy

Good news! A motorway that connects European Union and Republic of Moldova could be built

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On November 7th, the representatives of the Romanian parliament adopted a law that enables the construction of a 318 km long motorway on the territory of Romania. 261 deputies out of 268 voted for promulgating of the respective law.

According to the designed project, the motorway will make the connection between a planned bridge at the border with Republic of Moldova and the A3 motorway Brașov-Borș in the neighbourhood of the city Târgu-Mureș. The most difficult segment of the road to be constructed will lay in the mountain area, where tunnel digging, and viaduct building will be needed.

The total planned cost for the motorway construction is estimated to be four billion dollars. The main financing sources include the Romanian Government budget through the Transportation Ministry budget, external loans, as well as European grants and/or public-private partnerships.

The planned motorway from Targu-Mures to the border of Republic of Moldova| Photo source: realitateafinanciara.net

During the implementation of the project, the yearly government budget law will specify the amount of appropriations that will be allocated to this objective, according to the financial necessities communicated by the Transportation Ministry. The latter will be responsible for the coordination of the works and for starting the procedures required for the investment within 30 days following the date of entry into force of the law.

The law in question was initiated by 70 senators and deputies from all parties that are members of the Romanian parliament. It was especially supported by the members of NLP (National Liberal Party) and SRU (Save Romania Union) that displayed unionist messages like “Moldova asks for the highway” and “The highway of the Great Union.” More information on the topic here.

As the motorways are designed for high speed vehicular traffic, they need a special infrastructure and a higher amount of investments than any other type of roads. In the European Union the number of motorways has tripled in the last 30 years, the most extensive motorway networks being in Germany, France and Spain, according to Eurostat.

Total length of motorways map (km) 2016| Photo source: ec.europa.eu

In Romania, the total length of the motorways is more than 786 km, according to the most recent data and the network is still planned to be extended.

Romania ‘s motorway map 2018| Photo source: 130km.ro

Republic of Moldova has no built motorways until this moment.

Featured photo source: startrescue.co.uk

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Economy

Moldova will receive €30.1 million to strengthen the land system

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Moldova will receive €30.1 million for the land registration and land registration project. Today, the Government approved the draft law for ratification of the Financing Agreement between our country and the International Development Association, signed in Chisinau on 17 September 2018.

The assigned money will be allocated for primary and real estate valuation, consolidation of project management and land management. At the same time, the project will also be based on the current work of the Government and the World Bank on the modernization of the tax administration and government services (eGovernment).

The partnership framework of the Republic of Moldova with the World Bank provides financial support for our country through several instruments.

Until now, the World Bank has allocated over $1 billion to more than 60 projects in various areas.

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Economy

The Moldovan currency passes the Prut river. It will be accepted for foreign exchange and banking transactions in Romania

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The Moldovan Leu will be accepted for foreign exchange and banking transactions in Romania, thanks to the cooperation of the National Bank of Moldova (NBM) with the Romanian Commercial Bank and Banca Transilvania.

The MDL / RON exchange service will be available from October 1, 2018, at the branches and counters of the main Romanian cities. The Romanian Commercial Bank is the sole shareholder of Romanian Commercial Bank of Chişinău S.A., and Banca Transilvania is a major shareholder, together with the European Bank for Reconstruction and Development (EBRD), BC “Victoriabank” S.A.

Romania is the first trading partner of the Republic of Moldova, with 26% of exports and 14% of Moldovan imports in the first half of the year.

The widespread acceptance of the Moldovan leu for foreign exchange outside the Republic of Moldova is an important first step and represents an additional step towards strengthening the credibility and convertibility of the national currency.

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