Economic Policies on October 11–25, 2005

Prices and inflation

Filling stations in Moldova lowered the prices of gasoline and Diesel oil by 0.5 lei (about 5 percent) last week, though importers of oil products have announced new price rises. The motivation of this internal price reduction is that importers have renewed their stocks for lower importation prices.

This is the first reduction of fuels prices this year, after six rises of prices in a row, so that they grew by over 50 percent in 2005. Being reflected in many production costs and consumer prices, the price cut is a good news for inflation rate, which could be lower in October than in September 2005.

Public finances

Over-plan budget collections…

Fiscal incomes to the national public budget of Moldova accounted for 5.63 billion lei (about 448 million dollars) after the first nine months of this year, by 1.6 percent more than planned for the same period. The national public budget includes incomes to the state budget, budgets of administrative territorial units, social insurance budget, and mandatory health insurance budget.

In particular, fiscal incomes to the state budget accounted for 1.8 billion lei in January-September 2005, budgets of administrative territorial units — 1.4 billion lei, state social insurance budget two billion dollars, and mandatory health insurance budget 287.3 million lei, by 0.5 percent less than planned.

…associated with historical debts of taxpayers

On the other hand, the Fiscal Service shows that debts of taxpayers towards national public budget amounted to 1.7 billion lei (about 135 million dollars) on October 1, 2005.

Real sector

Industry is on the rise…

Perhaps the Moldovan industry is on the rise after facing a crisis in late 2004 and early 2005. The industrial sector registered an average rise of 8 percent the past three months, and the industrial production grew by 10.2 percent in September.

According to data of the National Bureau for Statistics (BNS), the production volume rose by 6.1 percent in nine months of this year, up to 14.5 billion lei (1.15 billion dollars) in current prices. The growth pace is comparable with the pace registered in 2004, when the industry grew by 7.9 percent in January-September. The growth was mainly based on processing sector, which represents about 70 percent of the total industry, and played a primordial role in its evolution.

According to government’s forecasts updated in August 2005, the Moldovan industry is credited with a 9-percent growth for 2006, up to 20.7 billion lei (1.65 billion dollars).

Commercial relations

Ukraine’s presence in Moldova’s external trade is on the rise…

The commercial exchanges between Moldova and Ukraine are very close to the commercial exchange between Moldova and the Russian Federation, which constantly topped the commercial partners of Chisinau after 1991.

Data of BNS show that the external trade between Moldova and the Russian Federation turned over 385 million dollars after eight months, and commercial exchanges with Ukraine accounted for about 371 million dollars.

Moldovan exports to the Ukrainian market rose a lot compared with the Russian market, respectively by 49.4 percent and 6.9 percent, while the difference of imports is insignificant. Imports from Russia rose by 22.1 percent in January-August, while imports from Ukraine grew by 20.4 percent. The reduction of Moldovan exports to Russia may be explained through interdictions of the latter against many Moldovan products, including fruits and vegetables.

The first 14 partner countries of Moldova regarding exports held 91 percent of the total of supplies to foreign markets, estimated at about 680 million dollars, while the first 14 states regarding imports held 86.3 percent out of a total of 1.39 billion dollars.

Moldova — European Union

The European Commission has released a first part of 1.2 million euros (18.15 million lei) from an unreimbursed financial assistance worth 9.2 million euros for implementation of the Food Security Programme in Moldova. The programme aims to promote reforms in three directions: public finances, social protection and agriculture sector.

The prime minister outlined that the allocation of this part is the first step forward implementation of the European Union-Moldova Action Plan and the Economic Growth and Poverty Reduction Strategy Paper. The money from this part will be mainly used to improve the living standards of children from boarding schools, to purchase irrigation equipment, and to modernise laboratories for checking of quality of agricultural production.

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