Economic Policies on September 13–26, 2005

Financial-bank system

International reserves are on a continued rise…

The international reserves of the National Bank of Moldova (BNM) accounted for 585.6 million USD on September 10, by 115.3 million USD more than on January 1. Statistics confirm one more time that the international reserves of BNM could exceed 600 million USD by late 2005, a figure forecasted by BNM officials early this year.

The international reserves are mainly completed from purchases of currency on domestic market within monetary mass sterilization operations carried out by BNM, besides sources raised from their placement in different financial tools which ensure an interest rate. Besides securities valued at 177.2 million USD, most of international reserves are stored as forward reserves and placements (408.2 million USD).

…crediting of economy is also on the rise

In addition, the share of released credits rose by 4.3 percent in the first and second trimesters of 2005, up to 7.5 billion MDL (596.6 million USD), according to BNM statistics. About 50 percent of contracted credits went to industry and commerce, while agricultural enterprises got 24.7 percent of loans. The share of small credits rose by about 24 percent in the first half of this year, and turned over 1.4 billion MDL (112 million USD). As much as 25.6 percent of these credits went to business development, while consumption credits grew by about 17 percent.

Remittances of workers from abroad likely to exceed on billion USD

At the same time, Moldovans working abroad transferred 280.4 million USD home in the first half of this year via commercial banks. More than 192 million USD out of this amount was transferred via rapid transfer systems. Remittances accounted for 119.8 million USD in the 1st quarter of 2005, and they amounted to 160.6 million USD in the 2nd quarter of this year.

The largest remittances in the 1st quarter were registered in April — 57.44 million USD, while the smallest remittances were recorded in January — 31.57 million USD. Independent experts say that the equivalent of one billion USD is transferred to Moldova a year on different ways, including the bank system.

On the other hand, data of the World Bank for 2004 show that the largest remittances of emigrant workers via bank system are typical to India -10 billion USD, followed by Mexico 9.9 billion USD, the Philippines 6.4 billion USD, Marocco 3.3 billion USD, Egypt 2.9 billion USD, Turkey 2.8 billion USD, Lebanon 2.3 billion USD, Bangladesh 2.1 billion USD, Jordan and Dominican Republic by 2 billion USD each.

Garantinvest awards first financial guarantee

The interbank society Garantinvest has introduced a new financial service — guaranteeing of credits, and awarded the first financial guarantee to an entrepreneur from Leova for a 100,000-MDL credit. The entrepreneur intends to use this money for purchasing building materials and equipment in order to construct a depot.

The Rural Financing Corporation, ProRuralInvest Association, and seven commercial banks including Moldova-Agroindbank, Savings Bank, Victoriabank, Eximbank, Mobiasbanca, Energnank, and Banca Sociala founded Garantinvest last February. Garantinvest holds a social capital of about 4.5 million MDL (356,000 USD) and guarantees investments from portfolio.

Foreign trade

Sugar exports have increased

The sugar sales rose by about 17 percent in the first eight months of this year due to rise of exports, up to 67,000 tons. Moldova exported 12,500 tons of sugar during the said period, compared with 5,200 tons in January-August 2004. In particular, the exports rose after Chisinau and Moscow eliminated obstacles on way of sugar trade. At the same time, Moldova exported 2,600 tons of sugar to Romania.

Overall, 54,300 tons of sugar were sold on domestic market, compared with 51,900 tons in January-August 2004. Sudzucker-Moldova sold 33,400 tons of sugar, while Marr Sugar Moldova traded 20,900 tons.

Moldova in the world

Moldova is ranked in the middle of rating regarding business favouring index…

Moldova is ranked the 83rd place among 155 states in a standing based on business favouring index for 2004, drafted on basis of the World Bank’s report “Doing business in 2004”. The relatively low index places Moldova on the 83rd spot in the CIS, after Armenia and Russia, which rank the 46th and, respectively, the 79th places. Moldova is followed by Kyrgyzstan as regards the freedom of entrepreneurial activity, and the latter ranks the 84th place, while Kazakhstan is ranked the 86th spot, Azerbaijan the 98th, Georgia the 100th, Belarus the 106th, Ukraine the 124th, and Uzbekistan the 138th. New Zealand, Singapore, the United States, Canada, Norway, Australia, Hong Kong, the United Kingdom, Japan, Ireland, and Iceland lead the rating.

…but complicated regulations in real sector direct to a higher unemployment rate

The performance in business sector is in a deep connection with the number of jobs. Thus, New Zealand, world leader regarding business success, registers a 4.7 percent unemployment rate, while Greece is ranked the 80th with 11 percent of its active population is jobless. Business remains in shadow because of legislative and administrative obstacles, and this reduces the job opportunities and obstructs the access to social protection. Youth and women are the worst affected categories, if taking into account the fact that ¾ of illegal workers in the world are women.

Also, Doing Business report does not take into account the macroeconomic policy, quality of infrastructure, stability of profit, perception of investors, and crime rate. The new study of the World Bank has examined new indicators such as licence awarding, foreign trade and taxation besides the seven indicators concerning change of business climate, starting a business, employment and lay-offs, implementation of contracts, registration of goods, contracting of credit, protection of investors, and closure of business.

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