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Activity of the Parliament on June 16–29, 2003

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June 16–20, 2003

During last week’s plenary meetings, the atmosphere of debates was rather calm and the hottest debates referred to the new Law on Inspection before Expedition. At the same time, among the drafts examined by the Parliament, there have been a series of important drafts, whose socio-economic consequences will soon emerge.

Law on the Amendment of the State Budget for 2003

This law was adopted in relation to the application of the territorial administrative reform and is intended to regulate the redistribution of resources allocated for the second tier administrative territorial units. At the same time, expenditure rose by over 62 million lei, which are to be covered from the growing state tax and income tax payments by entrepreneurs.

For the moment, 62 million lei is the sum that is to be regarded as the first part of additional expenses for the application of the territorial administrative reform. Earlier, independent experts had estimated the overall cost of the reform at over 700 million lei.

Law on the Amendment of the Budget of Social Insurance

This law provides for the necessary means for the implementation of some legislative acts such as:

Law on the Amendment of the Law on the Repatriation of Currency Means

This law derogates from the general principles and provides that the term of repatriation of currency means for contracts of purchase of seeding vine material may be increased to 18 months of the date of conclusion of the contract.

This derogation has been necessary because the process of purchase of such material is usually a very long one, and it needs to be contracted in advance, with an advance payment.

Law on the Amendment of Some Laws on Entrepreneurship

This law has introduced a number of changes and additions to the laws regulating the entrepreneur activity, in order to improve the system of state and fiscal registration of economic agents.

In particular, the law provides for the following:

Conception on the Orientation and Training of Human Resources

The conception adopted by the Parliament determines the aims, tasks, principles and fundamental directions of state policy on the efficient use of human resources.

The conception includes several chapters, as follows:

Draft Law on Inspection before Expedition, adopted in the first reading

Earlier, following long and controversial debates, the deputies had voted in several readings a new law on inspection before expedition, which provided for at least two companies to be selected through competition, the list of good to be subject to inspection to be compiled by the Government, and conflicts to be settled according to current civil and economic laws.

That law was rejected by the International Monetary Fund that found it to be running counter to the memorandum of assistance to the Republic of Moldova and, implicitly, a major condition for resuming foreign funding to our country. The dragged out solution of the problem has already resulted in a delay in granting Moldova the ordinary SAC-III instalment due in June. Should the IMF conditions be met and the inspection carried out before 21 July 2003, the possibility of resuming funding to Moldova could be considered in September 2003 and new funding could be granted by the end of the year.

During the 19 June meeting, upon Government’s insistence, the deputies cancelled the votes on the previous law on inspection before expedition and adopted a new law in the first reading. The following essential changes have been made to the latter:

The debates over this law have shown once again that the homogeneity of the majority faction is breaking up and ever more of its representatives oppose the proposals of the Government, disregarding the consequences that such positions might trigger for our country internationally.

The Draft Law on the Cancellation of Financial Penalties and Sanctions, adopted in the first reading

This law proposes that for the period of 1 April 2003 to 31 October 2003, the agricultural producers who have suffered losses as a result of natural calamities be not applied penalties to the sums that they owe to the consolidated state budget and the state social insurance budget.

Also, it is proposed that all penalties and 80% of fines as of 1 April 2003 be cancelled for the agricultural producers who had suffered losses as a result of the natural calamities of 2002 and winter-spring of 2003.

The law also proposes that the Government approve the list of agricultural producers who fall under these provisions.

Draft Law on the Completion of the Code of Commercial Maritime Navigation of the Republic of Moldova

The law proposes that the right of navigation under Moldovan flags is granted to ships registered in the ship register and which satisfy the following requirements:

Also, the law provides that the ship owners who have registered their ships with the ship register be exempted from paying fees and taxes according to current laws.

June 23–27, 2003

During this period, the Parliament examined and adopted a series of legislative acts primarily aimed at fulfilling the commitments to the international financial institutions. In addition, the Parliament heard the report of the Governor of the National Bank on 2002.

Law on Inspection before Expedition

As mentioned earlier, despite the substantial opposition from the deputies, the Government succeeded in persuading the parliamentary majority to vote for the law on inspection before expedition i.e. for the draft proposed by the Government and previously negotiated with the IMF.

According to this law, the “inspection before expedition” refers to the totality of actions of control of the quality, quantity, price, financial conditions and customs classification of goods on the territory of the exporting country.

Within less than one month the Government will have to select a company with the right to carry out the inspection before expedition. The selected company will have to open in Moldova an office with the status of legal entity. The requirements with regard to the inspection services will be set out in an agreement that will be concluded between the Government and the company. The agreement will include a number of mandatory clauses: — the contracting parties; — the object and aim of providing services; — the obligations of parties; — the method of provision of services; — the terms of conclusion, duration and termination of the agreement; — causes of force majeure; — settlement of conflicts etc.

The Government will also have to adopt the rules of carrying out the inspection, its regulation, the methodology of calculation and the amount of payments for the inspection services.

The last IMF mission to Moldova decided that funding to Moldova would be resumed if the inspection before expedition was applied by 21 July 2003. Considering the short term, one can assume that the Government will not look for a new company for these services but will hire “SGS” Company, which have catered these services to date.

One of the problems that might arise upon the implementation of the law and of the inspection could be an eventual appeal to the Constitutional Court that had cancelled the obligation to carry out the inspection before expedition and that could rule again to the same effect. In case such a thing happens, especially interesting will be the reaction of the international organisations, which on the one hand insist that their recommendations are applied and, on the other, demand form our authorities to respect justice and the rule of law, in particular with regard to the execution of decisions of all judicial bodies (all the more so of the constitutional ones).

Law on the Application of Mandatory Health Insurance

The application of mandatory health insurance is another requirement of the international financial organisations, but in this sense the Moldovan authorities have managed to secure a series of delays and even the permission to apply a pilot project, for the first time in the modern history of the country.

The law provides for the application of mandatory health insurance in the district Hincesti, starting 1 July 2003.

The insurance will be paid by:

The value of the contribution will be of 2 percent to be calculated from the salary, bonuses and other forms of retribution (for the employees of legal entities, notaries and lawyers).

The value of fixed contributions (for other categories) is set at 170 lei.

The total amount of means that are to be accumulated is estimated at 14 million lei. If the project goes well, then the law will be applied nation-wide starting 1 January 2004.

The problems that might arise upon the application of the law might be the changes in the addresses of some firms which would continue to work in the Hincesti district but would register in other places. Another problem could be the decrease in the salary of state employees, who might protest against the new tax and ask raises equal to the respective quantum (considering that recently some trade unions have demanded raising salaries of state employees by 100 percent, the fight for the 2 percent might be even tougher).

Law on Cancellation of Financial Penalties and Sanctions

Via this law it was established that the agricultural producers who suffered losses as a result of the natural calamities of 2002 and 2003 would be exempted from paying penalties for debts to the budget and would not be penalised of fined for late payments of taxes.

The Parliament, through this law, is trying to help the agricultural producers. However, due to this summer’s drought, more and more producers have turned to the authorities for full exemption from the land tax, which would be the only real help the farmers can get this year.

The Government cannot cancel the taxes because the tax returns stipulated for in the budget amount to a huge sum and there is no way other means could be found to cover them this sum in the near future. In addition, the international financial organisations do not allow for exemptions because the budget already has a considerable deficit, which no one knows from which sources it could be paid for.

Law on the Methodology of Calculation of Payments for Notary Services

This law is intended to reduce the fees on notary services by state notaries. According to the information presented to the legislative body, 50% cuts will be operated on the fees for a series of services, which will be of great benefit for the low-income categories.

At the same time, however, it is planned that starting 2004, for transactions on fixed assets the notary fees will be calculated according to the market price of the fixed asset and not the price estimated in the documents of the cadaster body. Thus, in Chisinau Municipality and in other big cities, really complicated situations might arise, such as when for losing ownership or inheriting a house it will be necessary to pay huge taxes. As a result, the private notaries will have the chance to lower the fees below the ones set by the state notaries and thus boost their earnings.

Decision on the Report of the National Bank of Moldova

According to the National Bank report, last year’s economic growth was: in the US — 2.4 percent, average inflation of 1.6 percent; in the Eurozone — 0.8 percent, average inflation of 2.2; — in the CIS countries — 4.6 percent; — in Romania — 4.7 percent, average inflation of 17.8.

In 2002, Moldova registered a 7.2 percent GDP growth, and current consumption prices increased slowly by 4.4 percent, while prices on industrial production grew by 6.7 percent.

Upon hearing the National Bank report, the Parliament adopted a decision whereby the National Bank was tasked to help enhance the banking system and bank services, as well as to work with the Government and the commercial banks in order to improve the banking climate, in particular with a view to lower the interest rates on loans to economic agents.

The Parliament charged the Government to attract local and foreign investors and foster the judicial system i.e. co-operation with the banks in the procedures of granting credits and paying them back.

June 2–15, 2003 June 30 – July 20, 2003