Impact of macroeconomic’ and banking sector’ problems on Moldova’s Public Budget

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Publishing date: Tuesday, 04 August 2015
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Abstract

The current adverse economic developments in Moldova, unlike previous years, are mostly determined by domestic influences rather than external ones. The banking crisis had a crucial impact in deteriorating economic situation in Moldova, even though trade restrictions imposed by Russian Federation and  economic struggles in Ukraine and Russia may not be neglected as destabilizing factors for the national economy.

Following the current macroeconomic circumstances, the study estimates an aggregate decrease of tax revenues in 2015 with 1.5 billion MDL / $79 million (3.5% of the total planned budget revenues). The decrease is largely due to diminishing of imports to $4.16 billion, plunging with 21.7% y-o-y, which affected VAT payments. The greatest reduction in revenues from VAT comes import activity - 1.35 billion MDL / $71 million, followed by excises and customs duties, with 333 million MDL / $17 million and 186 million MDL / $9.7 million respectively.

In addition, there are little chances for reactivating funding from World Bank and the EU anytime soon, which in turn will create an additional deficit in funding of over 2.1 billion MDL / $111 million (4.6% of the planned budget revenues).

 

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This document has been published by Expert-Grup Think-Tak within the project "Budgetary process in Moldova: monitoring transparency and promoting public control", financed by Soros Foundation Moldova.

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