Activity of the Government on October 11–25, 2005

Reshuffles. Appointments

Moldovan President Vladimir Voronin appointed Zinaida Greceanii as first deputy premier of Moldova, revoking her from the post of finance minister. Vasile Iovv, parliamentarian on behalf of PCRM, held this office until April 2005. Greceanii will coordinate the activity of executive institution in charge with economic-financial sector.
Under Article 98 of Constitution, the cabinet of ministers comprises prime minister, first deputy prime minister, deputy prime ministers, ministers, and other members established through organic law. The Moldovan president revokes and appoints some members of the cabinet, at the proposal of prime minister in case of governmental reshuffle. As a rule, all functions of cabinet member must be established when the Parliament awards the trust vote, but this condition was not respected nor previously, with the chief of state and prime minister performing reshuffles in the structure of executive very often.
In July 2005 Zinaida Greceanii bided for the post of mayor-general of the Chisinau municipality, garnering the highest number of votes at the elections invalidated because of low turnout.
President Voronin appointed Mihail as Finance Minister. Pop held the office of deputy finance minister in the acting executive, and he had earlier headed the State Fiscal Inspectorate subordinated to the same ministry. Pop headed the Balti-based fiscal inspectorate in 1994–1999.
The executive named former interior minister Nicolae Alexei, former director of the department for the struggle against organised crime and corruption, former parliamentarian and reserve major sergeant, as chief of the National Ecological Inspectorate.
Earlier, the prosecutor’s office had filed a penal case vs N. Alexei for committing violations while running the department for the struggle against organised crime and corruption. In summer 2001, the Parliament approved the withdrawal of immunity from lawmaker Nicolae Alexei in order to try him, and the Supreme Court of Justice examined the case until 2005, when N. Alexei was conventionally sentenced and acquitted later.
Immediately after being acquitted, N. Alexei was elected chairman of the Party of Social-Economic Justice of Moldova, a political team which attended the March 6, 2006 elections and garnered 1.66 percent of the votes (25,870 votes).

Sittings. Decisions

Real taxes will grow

The executive analyzed on October 19, 2005 the level of preparation for implementation of the new system for taxation of real estate at real price. According to information provided by the Agency for Land Relations and Cadastre, prices of all apartments and 90 percent of private houses in the Chisinau municipality have been evaluated until now. Available data show that Moldova has 300,000 apartments, 250,000 private houses, 200,000 commercial facilities, and 1.75 million houses in rural area.

Under provisions of the Fiscal Code, new mechanisms for taxation of real estate, included the non-privatised ones, will be applied starting 2006, on basis of their real market price. The real estate tax is based now on estimated cost of real estate goods when they are built, minus level of use, which is often estimated below 60–80 percent.

The calculation and collection of real estate taxes rest with local public administration authorities. The tax accounts for maximum 0.5 percent of the taxable share (50 percent of the cost of real estate) and local authorities will be prohibited to establish taxes lower than 0.25 percent of this share. As for example, the taxable share for an apartment with a market price estimated at 20,000 dollars will be 10,000 dollars, while the annual tax (in dependence of share established in the settlement concerned) will be between 25 and 50 dollars. This sum is about 10-fold higher than the amount paid for a 2-room apartment in the Chisinau municipality at present.

It was earlier remarked that the Government proposes first the taxation of apartment owners, while owners of houses (estimated at hundreds of thousands of dollars in big cities) will be taxed on basis of real price only after a period (1–2 years), when their total re-evaluation will be completed.

Performing Autumn Works

The prime minister was informed at a TV conference about autumn agricultural works. Local public administration authorities presented information regarding finalisation of harvesting of sunflower, with the production volume accounting for about 354,000 tons; global fruit crop is expected to be 410,000 tons, while of vegetable 815,000 tons (more than 200,000 tons of fruits and about 300,000 tons of vegetables have been harvested until now); slow seeding of autumn cereals and ploughing because of soil humidity.

The prime minister told local authorities and agricultural producers that the competent bodies undertake measures to improve the situation related to rise of fuels prices, though they admitted that the oil market of Moldova depends on situation on international and regional markets.

Filling stations reduced the prices of gasoline and Diesel oil by 0.50 lei on October 19. Within recent hearings in the Parliament, a representative of the Economics and Trade Ministry did not rule out the possibility of a new rise of fuels prices by late 2005, though the Government takes measures to reduce the negative impact of growth of these prices.

New strategies for subsidizing of farmers

A new draft regulation on subsidizing of agricultural producers was unveiled at a sitting convoked by prime minister, with the participation of representatives of the Ministry of Agriculture and Food Industry. It calls for larger categories of subsidised crops and agricultural activities, as budgetary allocations for agriculture sector have significantly rose — up to 190 million lei in 2006 (60 million in 2005).

First agricultural census

The cabinet of ministers created a task force to prepare the first agricultural census within about two years. The need pf an agricultural census is indicated in the Economic Growth and Poverty Reduction Strategy Paper (EGPRSP), but no financial resources for this purpose have been established so far. Spending for agricultural census is similar with expenses for population census.

Decisions

Reorganisation of traffic police

The executive decided to reorganise the traffic police in Moldova with the purpose to improve and enhance the efficiency of activity of this structure. A cabinet decision calls for amalgamation of some subdivisions, which function separately at present and reduction of the number of maximum personnel that counts for over 900 employees now. In addition, the executive decided to close up traffic police stations, except for two units in the North and South areas. The cabinet ordered the revision of criteria for selection of staffs for bodies of the Interior Ministry, criteria for appreciation of activity of traffic police officers, and limitation of groundless stoppage of transports.

The Moldovan president has recently demanded the Interior Ministry to take decisive measures related to its staff policy and activity of police bodies.

A similitude is interesting. Ukrainian President Victor Yushchenko ordered last summer the closure of traffic police and all stations of this structure in Ukraine, and population saluted this measure. It was presumed then that similar measures are expected in Moldova as well, especially in the virtue of the latest deep cooperation relations between Moldovan and Ukrainian presidents.

Department for execution of court judgments

The cabinet of ministers approved on October 19, 2005 the regulation and structure of the department for execution of court judgments on civil, administrative and economic causes. The structure created on basis of the department with the same name of the Justice Ministry will comprise 500 employees and will be financed from the state budget, as well as from a special fund of execution system, where an execution tax of 5 percent of the real sum or value of goods will be transferred.

The need to improve the functioning of this department is cogent because existing data show that at least 40,000 court rulings remain unexecuted and this shortcoming is part of the most important count of indictment with which Moldovan citizens’ appeal to the European Court of Human Rights.

New mechanisms for estimation of social needs

The cabinet of ministers approved a new concept on improvement of social protection on basis of EGPRSP, which calls for granting of social services by taking into consideration of real value of beneficiary’s incomes. The concept says that this estimation is difficult now because of the high share of shadow economy and undeclared incomes from remittances.

Another governmental decision on this issue calls for introduction of a mechanism for payment of normative compensations only after determining in what measure the beneficiary needs them. For this purpose, several pilot projects will be implemented in some districts of the republic in 2006. The normative compensations are paid now on basis of social status of person, and no real incomes of person or his family are taken into consideration. More than 200 million lei is allocated from the state budget for these compensations a year.

Administration of customs risks

The executive approved the concept of administration of risks in Customs Service, a document aimed to ensure a coordination of activity of all structures participating in collection and processing of information on individuals, business, transports, imported drugs, prices of goods, issued and annulled licenses, etc. Implementation of this concept will be preceded by a statistical analysis of the most frequent customs violations and elaboration of documents and measures that would reduce the inherent risks.

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