{"id":235910,"date":"2005-06-15T18:11:00","date_gmt":"2005-06-15T18:11:00","guid":{"rendered":"http:\/\/new.moldova.org\/2005\/06\/15\/moldovas-economic-policy-doesnt-support-economic-growth-3359-eng\/"},"modified":"2005-06-15T18:11:00","modified_gmt":"2005-06-15T18:11:00","slug":"moldovas-economic-policy-doesnt-support-economic-growth-3359-eng","status":"publish","type":"post","link":"https:\/\/www.moldova.org\/en\/moldovas-economic-policy-doesnt-support-economic-growth-3359-eng\/","title":{"rendered":"Moldova's Economic Policy Doesn't Support Economic Growth"},"content":{"rendered":"Reading Time: <\/span> 3<\/span> minutes<\/span><\/span>

The economic and social policy pursued by Moldovan government does not stimulate economic growth nor facilitate poverty reduction, so is the leitmotiv of the report – The Republic of Moldova: economic growth policy, creating new jobs and reducing poverty – reviewed Tuesday at a similarly titled conference in Chisinau. <\/p>\n

Presented by independent foreign and domestic experts supported by Swedish International Development Agency (SIDA), UNDP, British Government’s Department for International Development (DFID), and International Labour Organization (ILO) the survey contains eight chapters touching on Moldova’s budgetary and tax policies, investment opportunities, migration, social security, and gender issues. <\/p>\n

Being largely dependent on farm sector Moldova’s national economy has little chances to reduce poverty any time soon; (now is the time for) a long-term viable strategy based on the competitive industrial sector, said the report. <\/p>\n

"Productivity growth in agricultural and manufacturing sectors may be possible only alongside an efficient public investment coming primarily for internal sources." <\/p>\n

"In this respect a priority should be given to fiscal revenue as one of the base elements of the Economic Growth and Poverty Reduction Strategy Paper (EGPRSP)" <\/p>\n

"Contrary to that, in 2003 the public revenue comprised only 24.2% of the nation’s GDP and in 2007 is set to dip to 22.5%. The public expenditure shrank from 40.5% in 1997 to 22.7% in 2003," said the report. <\/p>\n

In view of this, the experts suggested that the government refrain from sharp reduction of income tax (from 28% to 15%) as the companies in question might try to dodge the new tax just as they did the old one. <\/p>\n

"It is hardly appropriate to consider tax cuts as a (prime) weapon for fighting the shadow economy. No one could guarantee that low corporate taxes will prove sufficient an attraction for foreign investors. Under market economy profit opportunities are far more important than low taxation," held the report. <\/p>\n

Furthermore, the government has been recommended to strengthen partnership with the banking sector in order to cut rates and sustain export-friendly forEign Exchange Setting. <\/p>\n

As to recommendations for foreign financial institutions and donors, the report has suggested writing off Moldova’s external debt completely or having it restructured on favourable for the country terms using EGPRSP as a guideline. <\/p>\n

The report on Moldova’s economic growth prospects has set off active debate in civil circles touching upon the government economic policy and its effect on the national economy and poverty reduction. <\/p>\n

Speaking Tuesday at a national conference, Deputy Minister of Economy and Commerce Sergiu Sainciuc said the survey has uncovered both, achievements and mistakes in EGPRSP implementation. <\/p>\n

Maia Sandu of the World Bank, in turn, stressed that although the tax expansion as such, along with the social spending increase, is undoubtedly important a step, the source of its financing is yet to be found. <\/p>\n

Speaking on Moldova’s low consumption level, Sandu said the problem derives from insufficient offer, hence the rising imports instead of domestic production. <\/p>\n

She described as unrealistic the idea of writing off the external debt saying Moldova doesn’t fit the necessary criteria. <\/p>\n

Former MP, Vice Premier and Minister of Economy Alexander Muravschi praised "the first independent from IMF and WB survey" and subscribed to its point of view on tax policy. <\/p>\n

"Had it not been for the government’s populist approach to tax cuts, we could have expended more on economic development. I believe that the current government or its successors would definitely have to bring back the higher taxes because the ‘cuts’ decision was purely political without any basis in economic facts. The currently applied tax rates are the lowest in the CIS and Europe. I sincerely doubt that further cuts would fit in with European tax policy," he said. <\/p>\n

Touching on foreign exchange Muravschi said the NBM must uphold the "balanced" approach. <\/p>\n

"We can’t stimulate exports and be largely dependent on imports for energy and hi-tech equipment at the same time. The imbalance might have ruinous consequences for the national economy." \/\/ INFOTAG<\/p>\n","protected":false},"excerpt":{"rendered":"

Reading Time: <\/span> 3<\/span> minutes<\/span><\/span>The economic and social policy pursued by Moldovan government does not stimulate economic growth nor facilitate poverty reduction, so is the leitmotiv of the report – The Republic of Moldova: economic growth policy, creating new jobs and reducing poverty – reviewed Tuesday at a similarly titled conference in Chisinau. Presented by independent foreign and domestic […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-235910","post","type-post","status-publish","format-standard","hentry","category-economy"],"content_social_share":"Reading Time: <\/span> 3<\/span> minutes<\/span><\/span>

The economic and social policy pursued by Moldovan government does not stimulate economic growth nor facilitate poverty reduction, so is the leitmotiv of the report – The Republic of Moldova: economic growth policy, creating new jobs and reducing poverty – reviewed Tuesday at a similarly titled conference in Chisinau. <\/p>\n

Presented by independent foreign and domestic experts supported by Swedish International Development Agency (SIDA), UNDP, British Government’s Department for International Development (DFID), and International Labour Organization (ILO) the survey contains eight chapters touching on Moldova’s budgetary and tax policies, investment opportunities, migration, social security, and gender issues. <\/p>\n

Being largely dependent on farm sector Moldova’s national economy has little chances to reduce poverty any time soon; (now is the time for) a long-term viable strategy based on the competitive industrial sector, said the report. <\/p>\n

"Productivity growth in agricultural and manufacturing sectors may be possible only alongside an efficient public investment coming primarily for internal sources." <\/p>\n

"In this respect a priority should be given to fiscal revenue as one of the base elements of the Economic Growth and Poverty Reduction Strategy Paper (EGPRSP)" <\/p>\n

"Contrary to that, in 2003 the public revenue comprised only 24.2% of the nation’s GDP and in 2007 is set to dip to 22.5%. The public expenditure shrank from 40.5% in 1997 to 22.7% in 2003," said the report. <\/p>\n

In view of this, the experts suggested that the government refrain from sharp reduction of income tax (from 28% to 15%) as the companies in question might try to dodge the new tax just as they did the old one. <\/p>\n

"It is hardly appropriate to consider tax cuts as a (prime) weapon for fighting the shadow economy. No one could guarantee that low corporate taxes will prove sufficient an attraction for foreign investors. Under market economy profit opportunities are far more important than low taxation," held the report. <\/p>\n

Furthermore, the government has been recommended to strengthen partnership with the banking sector in order to cut rates and sustain export-friendly forEign Exchange Setting. <\/p>\n

As to recommendations for foreign financial institutions and donors, the report has suggested writing off Moldova’s external debt completely or having it restructured on favourable for the country terms using EGPRSP as a guideline. <\/p>\n

The report on Moldova’s economic growth prospects has set off active debate in civil circles touching upon the government economic policy and its effect on the national economy and poverty reduction. <\/p>\n

Speaking Tuesday at a national conference, Deputy Minister of Economy and Commerce Sergiu Sainciuc said the survey has uncovered both, achievements and mistakes in EGPRSP implementation. <\/p>\n

Maia Sandu of the World Bank, in turn, stressed that although the tax expansion as such, along with the social spending increase, is undoubtedly important a step, the source of its financing is yet to be found. <\/p>\n

Speaking on Moldova’s low consumption level, Sandu said the problem derives from insufficient offer, hence the rising imports instead of domestic production. <\/p>\n

She described as unrealistic the idea of writing off the external debt saying Moldova doesn’t fit the necessary criteria. <\/p>\n

Former MP, Vice Premier and Minister of Economy Alexander Muravschi praised "the first independent from IMF and WB survey" and subscribed to its point of view on tax policy. <\/p>\n

"Had it not been for the government’s populist approach to tax cuts, we could have expended more on economic development. I believe that the current government or its successors would definitely have to bring back the higher taxes because the ‘cuts’ decision was purely political without any basis in economic facts. The currently applied tax rates are the lowest in the CIS and Europe. I sincerely doubt that further cuts would fit in with European tax policy," he said. <\/p>\n

Touching on foreign exchange Muravschi said the NBM must uphold the "balanced" approach. <\/p>\n

"We can’t stimulate exports and be largely dependent on imports for energy and hi-tech equipment at the same time. The imbalance might have ruinous consequences for the national economy." \/\/ INFOTAG<\/p>\n

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