The President of Romania, Klaus Iohannis, paid an official visit to the Republic of Moldova, today, at the invitation of President Maia Sandu. The event was of great importance, as Klaus Iohannis was the first high-ranking official who visited Chisinau since the Moldovan president was appointed.

Maia Sandu welcomed Klaus Iohannis during an official ceremony. The two heads of state had a tête-à-tête meeting, after which they took part in the official talks with the participation of the members of the two delegations, as the Presidency official page informed.

A Joint Declaration of the President of the Republic of Moldova, Maia Sandu, and the President of Romania, Klaus Iohannis, was adopted during the meeting, emphasizing the special character of the bilateral relationship based on the language, culture and history community and based on the Strategic Partnership for European Integration of Republic of Moldova.

“Romania is committed to remaining the most sincere supporter of the citizens of the Republic of Moldova, as it has already acted and will continue to do so in the context of the crisis generated by the COVID-19 pandemic. In turn, the Republic of Moldova decided to continue building a democratic and prosperous state, by consolidating its European path and benefiting from the support and cooperation offered within the bilateral Strategic Partnership,” it is mentioned in the declaration.

“I am glad that, starting today, the Republic of Moldova and Romania are re-entering a natural, fraternal and open interaction. These days, the Republic of Moldova is entering a new stage: a stage of exit from international isolation and connection to the European area, to our neighbours and strategic partners. And, of course, a stage to relaunch our Strategic Partnership for European Integration,” said Maia Sandu, while mentioning the Romanian support offered to the Republic of Moldova.

President Klaus Iohannis announced Romania’s intention to remain “the sincere friend and the main partner of the citizens of the Republic of Moldova”, along with a new support package for Moldova including:

• Signing the Sixth Additional Protocol to the Bilateral Grant Agreement of EUR 100 million, aimed at extending the validity of the Agreement and extending the areas of cooperation;
• Supporting the process of vaccination against COVID-19 of the citizens of the Republic of Moldova, by providing up to 200 000 doses of vaccine and sending a team of Romanian experts to share the experience and help prepare the Vaccination Strategy;
• Providing medicines, medical and protective equipment for taking care of COVID-19 patients;
• Supporting Moldovan farmers through a foreign aid – 6 000 tons of diesel.

“I am glad to be in Chisinau today. I am glad that this visit is taking place against the background of a massive vote of citizens. This vote in favour of reforms is a clear signal. I hope that all political forces in the Republic of Moldova will understand this clear signal,” stated Klaus Iohannis.

The previous visit of the Romanian president in Chisinau took place in February 2015, during the term of office of Nicolae Timofti.

Photo: presedinte.md

An series of reports presenting the economic overview of the Republic of Moldova were published recently by the World Bank. The reports’ main conclusion emphasised that the COVID-19 pandemic and this year’s drought “have drastically worsened the outlook for Moldova with a significant economic contraction expected in 2020, and a slow recovery in 2021,” as it mentioned in the Moldova Economic Update for Winter 2020 of the financial institution.

What is more, the uncertainty related to the duration of the pandemic could have a further negative impact on firms, workers and households.

“Poverty is expected to increase as households face the impact of the crisis, including loss of employment and earnings, a reduction in remittances receipts, and the return of vulnerable migrants from abroad who might struggle to find employment.”

First, the economic activity of the country dropped in the first three quarters of 2020, driven primarily by a reduction in households’ consumption and stocks. The lockdown measures have hindered trade and industrial production, while a severe drought has impacted agriculture, as the Word Bank overview stated. Therefore, an economic contraction is expected in 2020 of a magnitude not seen since the great global recession in 2009.

The World Bank Economic Update for Winter 2020 and the Assessment of the impact of COVID-19 and the drought on jobs, firms, and households presented the following figures:

• The GDP is estimated to decline by 7.2% in 2020;
• Employment, earnings losses and remittances will continue to decline due to the lockdown in Moldova and its main economic partner, that hitting households hard;
• Mainly, employment is expected to drop by almost 8% in 2020, with an estimated 70 000 jobs lost, of which the majority in trade and hospitality, followed by agriculture and industry;
• Even with an adjustment of intermediate costs to make up for reduced sales, still almost half of firms (mostly micro) may need to cut costs to remain profitable – large firms are expected to experience the largest decline in profits, micro firms will be forced to adjust their labor costs;
• Poverty is expected to increase to about 13%, as 17% of households reported a reduction of income from work, 8.3% – a reduction of remittances from abroad, and 3.6% – the withholding of salaries, pensions, and social benefits, according to the 2020 Household Budget Survey;
• Most of the investment activity has been postponed or cancelled due to uncertainty;
• Depressed global demand, combined with the recent drought, are expected to contain exports;
• Imports are also expected to shrink due to anaemic consumption throughout the year;
• The combination of the pandemic and the severe drought is expected to affect most sectors of the economy.

The increasing number of COVID-19 confirmed cases and deaths in 2020 have created health and social emergencies and put a great strain on the economy, as it is mentioned in the World Bank assessment.

“In addition, the most severe drought since 2000 has hit the country, with agricultural production falling by more than 30% in the third quarter compared to the same period in 2019.”

According to the World Bank’s data, the imports have contracted by 16.4%, “which has more than compensated the decline in export (-7.4%) and in remittances (-4.6%).” The contraction happened due to lower energy prices and weak domestic demand in the first half of 2020. “As a result, the current account deficit (CAD) has narrowed to 4.4% of GDP, which is almost 2.5 times smaller than during the same period in 2019.”

On the other hand, the existing 2020 CAD was mainly financed by public debt instruments. “By September, external debt reached around 65% of GDP, 3% higher than in 2019,” the report said.

Another aspect pointed out in the report is related to the fiscal situation: fiscal revenues decrease by 1.7%, due to declining corporate income tax and VAT on imports. At the same time, public spending increased as the result of COVID-19 mitigation measured introduced by authorities. Public investment contracted by about 4%.

“As a result, the fiscal deficit will reach 4.5% of GDP, pushing the public and publicly guaranteed debt up by 4% to 31.4% of GDP,” is concluded in the report. That is higher than historical averages, but less than half of what was planned in the state budget law.

“Going forward, the fiscal stance is expected to be challenging due to a decline in revenues as businesses struggle and households suffer from weak job creation and wage growth. As a result, public debt is expected to increase rapidly, but still remaining low by international standards.”

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Even though the forecasts for 2021 seem optimistic, the pandemic is still expected to keep the economy below its potential. Economic growth is expected to reach 3.8% in 2021, thanks to the development of vaccines. “Consumer and investment confidence are expected to rebound thanks to the resumption of remittances, increase in social transfers, and accommodative monetary stance,” the World Bank reports stated. Most sectors, including agriculture, are also expected to recover, reaching the 2019 levels in 2022. The current account deficit will gradually widen as the economy accelerates, as well as the average inflation that “is expected to be below the target of 5% in 2020-2021, but to pick up as the recovery strengthens.”

The economic recovery though, relies on favourable conditions linked to vaccine rollout, but also on the ability of the authorities to advance long-term structural reforms: ensuring fiscal efficiency and access to external financing, continue justice and governance reform agenda, along with reforms in the non-banking financial sector, market and price regulations, anti-corruption and rule of law, as well bolstering productivity in private sectors.

Photo: Kevin Schneider |Pixabay

Prime Minister Ion Chicu announced, in a press conference on December 23, the resignation of the Moldovan Government. Prime Minister said the decision was taken after consulting with President Igor Dodon and Parliament Speaker Zinaida Greceanii.

Ion Chicu claimed that the dissolution of the current Parliament and holding snap elections shall be a priority. He also stated that he hopes to have a meeting with President-elect Maia Sandu regarding the future Government in office, as the current Cabinet of Ministers will be still in office until the oath is taken by the members of a new Government, according to the legislation of the Republic of Moldova. During this period, the resigning Government will perform only public administration tasks. No decisions related to foreign affairs and no legislative initiative can be made.

“Starting tomorrow, President-elect must take full responsibility for what is happening in the country: either starting talks with parliamentary groups to appoint a new Government or discuss the steps for dissolving parliament and holding snap elections,” Igor Dodon declared in the same press conference. “The next period will be a very interesting one. Everything is just beginning,” he added.

Several representatives of political parties made statements after the Government’s resignation.

“The resignation of the current Government means that it will no longer be at the service of billionaire thieves, as it has been in recent weeks. This shameful episode is over. Now the ball is in the court of the new president,” wrote the democrat Pavel Filip, referring to the recent unconstitutional voting process in Parliament.

See also: Practising undemocratic voting in the Moldovan Parliament – how far can it get?

“The resignation of the Chicu Government is the result of citizens’ pressure, who demanded the change of political class in the presidential elections. […] They want to reform the judiciary, they want a real fight against corruption, they want to have responsible, honest leaders who work in the interest of the country,” said interim President of PAS, Igor Grosu,  in a press release.

According to Igor Grosu, electing a legitimate and representative parliament for the Republic of Moldova is the next step. “The resignation of the Chicu Government opens the shortest constitutional path to the dissolution of the current Parliament and holding snap elections,” claimed the PAS representative.

At the same time, the politician stated that appointing a transitional Government is not a viable option. “The majority government of PSRM-ŞOR and Plahotniuc’s defectors dominate this Parliament and will lead to the perpetuation of the crisis. The PSRM-Șor MPs shared their schemes like thieves, filled their bags with money and violated any law, any common sense rule. This Parliament cannot appoint a transitional Government that would work for people. This Parliament must leave. […] Snap elections are the only solution to solve the serious problems the country faces nowadays,” said Grosu.

The Dignity and Truth Platform Party representatives communicated that either option – snap elections or a “responsible transitional Government, able to manage the economic and healthcare crisis until the next free and fair parliamentary elections “ – is acceptable.

On the other hand, ex-democratic MPs who participated in the voting of controversial laws as part of the majority government, expressed their concern related to executive’s resignation. “We are concerned about the irresponsible attitude of the current Government and Prime Minister Ion Chicu who did not mention anything about any future actions. During winter, in the midst of a coronavirus pandemic and economic crisis, amid protests of farmers, who are desperately asking for state’s help and a concrete plan to recover the agricultural situation, the country risks collapsing.” is said in the note of the Parliamentary Platform “For Moldova”.

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The inauguration ceremony of the new president took place on December 24. “I will be a righteous and honest president who has not been and will never be involved in corruption schemes. I will be a fair president who calls things by their name, who will not spare those who violate the rights of citizens and the interest of the country. I will be a unifying president who respects all the citizens of the Republic of Moldova. […] I will be the president of European integration, who will turn the country over to its foreign partners, I will make sure that Moldova has a clear and firm position for all our partners and I will make sure that our interests are understood and respected. I will promote a foreign policy that will help domestic policy, to build bridges not to build walls, to allow us new investments and jobs, to open doors for our citizens, for our products, to put our country at the discussion table with developed countries,” President Maia Sandu said in her speech.

The Presidents of Lithuania, the Czech Republic, Estonia, Latvia, Poland, Romania and the Slovak Republic have signed a joint statement congratulating Maia Sandu on her appointment to the Presidency of the Republic of Moldova. The heads of the EU states expressed their full support for Moldova’s President, Maia Sandu, and offered to share their experience in implementing the country’s reforms.

“We stand by the President Maia Sandu in her endeavours to establish a functioning democratic system in the Republic of Moldova that reflects the will of the citizens of the Republic of Moldova. We are also ready to share our reform and European integration experience that could contribute to the prosperity and wellbeing of the Republic of Moldova on its path towards the European Union.

We reiterate our unwavering support to independence, sovereignty and territorial integrity of the Republic of Moldova and the European path chosen by the citizens of the Republic of Moldova.”

Photo: Reuters