Monitoring→Economy→The Socioeconomic Environment

Prices

• Prices of petrol and Diesel oil could grow again. Importers of oil products in Moldova could increase soon the prices of petrol and Diesel oil by 10–15 percent, if prices of fuels at international exchanges grow in continuation.

  The cost of importation rose from 502 to 545 dollars for one ton, in the case of petrol, and from 516 to 563 dollars for one ton of Diesel oil.

  A crude oil price at the world’s major commodities markets rose very rapidly, especially since the Goldman Sachs Bank had predicted a price over 100 dollars.

  On the other hand, many analysts estimated that the forecast of Goldman Sachs is overestimated. In New York NYMEX price closed at a new record, 57.28 dollars, and in London the “black gold” price rose by two dollars in just one day, till 56.50 dollars.

  On March 21, the petrol price in Moldova rose by about 7 percent and the Diesel oil price by 14 percent as response to introduction of higher prices of crude oil at international exchanges. Last year fuel prices in the ex-Soviet state rose by more than 30 percent.

• Andrey Kokoshin, chairman of the Russian State Duma’s Committee for the Commonwealth of Independent States, told journalists in Moscow that the tariff for natural gas supplied to Moldova could grow by 25–30 percent.

  Some estimates show that the gas tariff could grow by 25–30 percent and even more, if the world prices of energy resources remain at a high level. “The economic relations between Moldova and Russia cannot remain out of the influence of Chisinau’s policy on Transnistria.”

  Even more, he underlined that the announcement of Gazprom about eventual introduction of higher tariffs fits the recent statement of the Russian government that the Russia-Moldova economic relations will depend on Chisinau’s policy.

  On the other hand, Moldova-Gaz manager Ghennadi Abaskin estimated that there are no economic reasons to increase the natural gas tariffs. “Moldova is not a subject of the European energy market and therefore no European tariffs can be introduced,” said Abaskin, adding that Moldova pays for the entire current consumption of natural gas.

  At present, Moldova imports natural gas from the Russian concern Gazprom in exchange for 80 dollars per 1,000 cubic metres, as well as from the daughter company of the Russian concern, Gazexport, which establishes the gas tariff every quarter. Thus, Gazexport exported gas to Moldova for 69 dollars per 1,000 cubic metres but the tariff rose up to 71 dollars on April 1, 2005. Moldova-Gaz signed contracts on acquisition of 3,150 billion cubic metres of gases from Russian companies Gazexport and Gazprom in 2005, by about half from each of them.

Banks and insurance

• The National Bank of Moldova (BNM) has approved new regulations on functioning of bank cards in order to adjust the normative base on activity of commercial banks and their clients within card payment systems to practices and norms of the European Union (E.U.). The central bank ordered the commercial banks to comply with the new regulation and to adjust the software programmes used for drafting of the statistic report on activity in the card payment systems till June 30.

  Operations worth 2,874,064,000 lei (231.82 million dollars) were carried out in Moldova via cards of Moldovan banks last year. The most of operations were related to cash withdrawals — 2,857,035,000 lei or 95.4 percent of the total, while the others were cash-free payments.

  Overall, 340,275 cards were in circulation in late 2004, including 327,917 of international payment systems (VISA, EuroPay, MasterCard etc.). Banks issues 134,998 cards in 2004, including 3,315 local cards and 131,683 international cards. Twelve commercial banks issue cards in Moldova at present, including 11 cards of the system MasterCard International, six of the Visa International system, two of the local system MoldCardSystem, and one of Unicard system.

• Insurance companies in Moldova raised insurance premiums worth 378.9 million lei (over 30 million dollars) last year, by over 89.4 million lei more than in 2003, and paid 101.5 million lei in damages, up by 26 million lei.

  According to preliminary data of the State Inspectorate for Supervision of Insurance and Non-State Funds of Pensions (ISSAFNP), the following companies paid the highest damages: QBE Asito SA 43.18 million lei, Afes-M 8.93 million lei, Moldova-Astrovaz SRL 7.52 million lei, Moldcargo SRL 7.37 million lei, Carat 6.17 million lei, Artas 4.11 million lei, Donaris-Group SA 4.03 million lei, and Moldasig 3.72 million lei.

  Most of money — 123.7 million lei — was raised from civil responsibility insurance of owners of motor transport and Green Card policies. Another 112.8 million lei was raised from optional insurance of goods, while 102.4 million lei was paid for insurance of estate of enterprises.

  The total statutory capital of insurance societies rose by 50.8 million lei in 2004 up to 168.5 million lei, while reserves and insurance funds grew by 20 million lei up to 146.6 million lei.

  Forty-five companies function on the insurance market in Moldova, of which only 33 hold a social capital in the amount of two million stipulated by legislation.

Trade

• The Ukrainian Supreme Rada [parliament] will ratify the new Free Trade Agreement (FTA) with Moldova, signed in Chisinau on November 13, 2003, which the Moldovan legislature ratified on February 12, 2004.

  According to members of the Ukrainian executive, the new agreement will allow the creation of a free trade zone between Ukraine and Moldova under the existing requirements of the World Trade Organisation (WTO).

  The agreement calls for a “no-exception” regime of trade between the two ex-Soviet countries, under the WTO rules and practices. Under the document, the sides committed themselves to protect their markets, compensate losses and apply anti-dumping and safeguard measures in line with WTO rules. The agreement would take effect at the time Ukraine became a WTO member.

  The first free trade agreement between Moldova and Ukraine was signed on August 29, 1995. Official statistics show that Ukraine is the second largest trade partner of Moldova. Last year’s trade turnover between them rose to more than half a billion dollars. On the other hand, Ukrainian exports created in Moldova the largest trade deficit last year compared with another 80 countries — 371.7 million dollars. Moldova exported goods and services worth 64.7 million dollars to Ukraine, while imports absorbed 436.4 million dollars.

• Members of the Uniagroprotect Republican Union of Associations of Agricultural Producers sold agricultural products worth two billion lei (160 million dollars) in 2004, by 700 million lei more than in 2003.

  Farmers contracted credits and benefited from unreimbursable financing in the amount of 120 million lei last year, compared with 84 million lei in 2003. Also, the 17 agricultural enterprises affiliated to associations sold products worth 42.2 million lei and invested 640 million lei.

  Uniagroprotect was founded in 2001 as a nongovernmental and non-profit nongovernmental organisation to assist private agricultural producers. At present, the union includes 15 associations of agricultural producers, who brings together 2,240 members and administrate 50 percent of agricultural fields in Moldova.

Moldova and the world

• The European Union (E.U.) will release a 9.2-million-euro unreimbursable assistance to Moldova for insurance of the food security within the Food Security Programme.

  David Johnson, coordinator of the Food Security Programme, said that this is the first project drafted on basis of the Economic Growth and Poverty Reduction Strategy Paper (EGPRSP) and the E.U. Action Plan for Moldova. The financial assistance will be distributed for promotion of concrete reforms in three key directions: public finances, social protection and agriculture.

• According to forecasts of the International Monetary Fund (IMF) regarding the development of global economy, the Commonwealth of Independent States (CIS), including Moldova, will register an economic growth in 2005–2006 below the levels reached in the past two years. Azerbaijan will be the only exception, as it will post a 21.6 percent growth in 2005 and 38.3 percent in 2006, the IMF forecasts.

  Forecasts show that Moldova will post a five-percent growth in 2005 and four percent in 2006. Armenia will register 9.5 percent and 14.2 percent, Tajikistan 8.0 percent and 7.0 percent, Georgia 6.0 percent and 5.0 percent, Kazakhstan 8.0 percent and 7.7 percent, Ukraine 7.0 percent and 4.0 percent, the Russian Federation 6.0 percent and 5.5 percent. A “relatively favourable” situation will be recorded in this region, the IMF report said.

  Economist Intelligence Unit (EIU), a subdivision of the London-based The Economist forecasts a five-percent growth for Moldova in 2005 and 2006, and an inflation rate of 12.5 percent this year and 10 percent in 2006.

  EIU experts warn that the narrow economic base, trade deficit and financial insufficiency are risky, but the significant growth of remittances of Moldovans who work abroad will partly reduce this risk. According to the EIU analysis, the payment of debts will be a problem in continuation.

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