In August, the main evolutions of the regulatory framework were the adoption of Law on Savings and Credit Associations (SCA), Law on limited liability companies, and the Law on auditing. The first law liberalizes the framework for functioning of the Savings and Credit Associations. As a result, these associations could be constituted not only by citizens, but by juridical entities too, while their territorial borders of functioning will become less rigid. Regarding the new Law on limited liability companies, the Parliament did not changed the minimal threshold of 5400 lei for the normative capital.
In July the regulatory framework was marked by several key evolutions. The publication of study “The costs of developing business 2007” pointed out a progress in simplification of company registration procedure, but also a stagnation in authorizing and licensing of activities. At the same time, the Government adopted a controversial decision to create a working group for monitoring the “strategic” foreign investments. Persisting in creation of different working groups, the Government delays the really important reforms, to begin with the regulatory reform. For this reason, the Parliament had to postpone the enactment of the Law on Basic Principles Regulating Entrepreneurial Activity for several months.
Developments concerning Regulatory Framework in June were rather intensive, as a number of important legislative and normative acts were passed. The most important evolution refers to the amendments undertaken to the Law on Budget, through which the revenues and expenditures were supplemented with additional 620 million lei each. There were also adopted legislative amendments inducing the set up of a new institution – the National Commission of Financial Market – which will supervise the non-banking segment of the market.
The Regulatory Framework witnessed in May a number of interesting evolutions. The most amazing was the promulgation of the set of laws on fiscal amnesty, capital legalization and the reform of income tax system for companies. The Government has approved the Regulation on granting guarantees and compensations to employees combining work and education. The governmental intentions are rather clear and welcome, but the Regulation providing for compulsory granting of such guarantees and compensations for all economic units notwithstanding their ownership type and legal organization form could be actually ignored by the private companies.
In April the business regulatory framework was marked by a series of laws, legislative projects and initiatives. The triple presidential initiative on the economy liberalization dominated the public debates throughout April eclipsing other important evolutions. The Constitutional Court declared as constitutional the provisions of the Regulation on the auto transportation of passengers and goods, stipulating to remove from use all re-equipped vans transporting passengers until the end of 2007. These provisions were contested by a Member of Parliament. It is difficult to imagine how the regulation will be applied, but any hasty interventions could generate severe social and economic consequences.
After a fall of almost 10% in January 2007, in February the sector shrank with other 17%. The situation in the agriculture worsened. The spring agricultural works in the viticulture sector are late because of the uncertainties in the winemaking sector and the unpaid loans of the wine producers. At the same time, the authorities continue to follow false political objectives, such as land consolidation, and refuse to dialog openly and argumentatively about the policies of agriculture subvention. These and a number of other interesting economic developments are analyzed in this 18th edition of the Business and Economy Review.
In January became publicly accessible the final data on foreign trade in 2006. The trade deficit reached the level of 1.6 billion USD, slightly higher that was estimated in Business and Economy Review no.16. For the first time in the last nine years, the galloping deficit growth stems not only from the rapid expansion of imports, but also from the exports’ compression. The growth of the weight of exports to the European Union is welcomed (35% relative to 29.7% in 2005), but not the absolute loss of positions on eastern markets. In 2007 the weight of exports to EU will exceed 52-54%, as a result of Romania’s and Bulgaria’s joining the EU. Speaking of the perspectives of Moldovan wines returning on the Russian market, they remain far away. The re-launching of the exports of animal and vegetal products to Russia inspires optimism, but a significant relief for the economy will come forth when the majority of the companies will be able to export.
During 2001-2005 the Moldovan economy grew about 7 percent annually. This tendency has fuelled the illusion that Moldova is on the highroad. In fact, the rapid expansion of consumption and imports and the increase of economic imbalances determined rather an overheating of the economic system than an increase of its production capacity. The economic growth was restricted to large urban areas, while the small towns and villages languished. The growth was capital-intensive, but went along with the jobs shedding and amplification of migration. External markets remained undiversified and the exports – limited to a narrow range of products.
New statistical data confirm the cooling down of the Moldovan economy. In the third quarter, the GDP grew only 3.9 percent year-on-year. The more modest growth is due to the recession taking place in industrial and agricultural sectors. Abolishment of the Russia's embargo cannot alter the negative dynamics of agriculture and industry in 2006 and first quarter of 2007. At the same time, the more robust services' sector compensates to certain extent the recession in the industrial and agricultural sectors. Private consumptions remains strong, supported by income derived from wages, entrepreneurship and, most importantly, migrants' remittances. The latter has registered a breath-tanking 23 percent growth in the firts nine months of 2006. However, not all sector evolved well. On the background of rapidly growing constructions and telecommunications' sectors, the evolution of the transportation sector looks quite bleak. Strong consumption ensure high budgetary income. However, the planned budgetary current and capital expenditures were financed only in proportion of 87 and, accordingly, 68 percent. This underfinancing is particularly risky for the areas of agriculture and energy which are entirely dependent on the budgetary financing.
This document is available only in Romanian.
During October-November 2006 the Moldovan economy did not display any notable progress. On the whole, the industry continues to recess. The two important branches where the negative dynamics have reversed are the sugar and pastry industry. A 4 percent decrease of the agricultural production for the first nine months has been witnessed by October. The services continued their perky growth, mostly due to telecommunications and electric appliances sales. The services rendered to enterprises increased slower, particularly because of the difficulties reported in the transportation sector.