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Activity of Public Institutions

Parliament
Government
Presidency

Strong leu, great leu or new heights for the dollar?! by Iurie Gotisan

Activity of Public Institutions

Parliament

1.1. Appointments

The Parliament has modified the nominal structure of the Supreme Court of Justice (SCJ), at the initiative of the Superior Council of Magistracy:

• Natalia Moldovanu was appointed SCJ deputy chairwoman, chairwoman of the Economic College;
• Vera Macinskaia was appointed deputy chairwoman of the Civil and Administrative Solicitor’s Office.

Parliamentarians have accepted the resignation of Mihail Plamadeala from the post of SCJ judge.

1.2. Legal acts

Law on management and privatisation of public property. The document regulates the activity linked to gaining, exercising, modification and cessation of the property right of the state and/or administrative-territorial units (administration), as well as transmission of public patrimony to private property, concession, transmission of state-owned enterprises to property of administrative-territorial units, and other activities aimed to reduce the state participation in administration of property (privatisation). The public patrimony, except for public finances, patrimony of public institutions, farm land and dwellings fall under the incidence of this law. A distinct article describes the property that cannot be privatised, with the list of these enterprises becoming part of the law. The declared goals of the law are among others: to enhance the efficiency of administrating the public patrimony, to increase extra-fiscal incomes, to develop the competition, to restructure and to boost the competitiveness of national economy. A new round of privatisation, a process which is actually frozen, is planned after enforcement of the new regulation.

Law on ratification of the agreement on amendment and accession to the Central European Free Trade Agreement (CEFTA). Albania, Bosnia and Herzegovina, Croatia, Macedonia, Moldova, Montenegro, Serbia, and the United Nations Interim Administration Mission in Kosovo (on behalf of Kosovo) remain the members of this agreement.

Law on modification of Article 2 of the Law # 121-XV from May 3, 2001 concerning additional social protection of war invalids, participants in the World War II and their families. Under amendments, monthly allocations for these categories of beneficiaries grow by 50 percent (war invalids and participants in armed conflicts will be paid the highest allocations, notably 600 lei, and holders of orders and medals awarded for assiduous labour and impeccable military service on battle-front will be paid the least – 75 lei). This legislative initiative was launched by chief of state and the draft was concomitantly voted in two readings, and it will be enforced starting May 1, 2007 (the cost of amendments is evaluated at approximately 37 million lei a year). Opposition lawmakers have asked that victims of political repressions benefit of substantial rises of state allocations, but the parliamentary majority turned down these proposals because of the lack of funds. Opposition representatives noted that this is an electoral amendment because it was performed prior to the general local elections and the first increased remunerations for May will be paid right before elections.

Law on religious denominations and their components. The document is part of the package of commitments towards the Council of Europe and it has undergone international surveys more than once. Representatives of the Metropolitan Church of Moldova have protested against this law after it was adopted, demanding the chief of state not to promulgate it.

Law on ratification of the World Health Organisation Framework Convention on Tobacco Control. Once the convention is ratified, Moldova will be able to benefit of technical and financial assistance of international organisations to reorient the agriculture from growing tobacco to other crops.

The draft law on organisation of (alternative) civil service. The document approved in the first reading aims to substitute the present framework dating from early 1990s and to introduce a number of innovatory regulations (reduction of service term, appropriate record of means, etc.).

Government

2.1. Appointments. Reshuffles

The Government has given green light to proposals of the Ministry of Foreign Affairs and European Integration seeking the appointment of certain ambassadors:

• Nicolae Chirtoaca, Moldovan ambassador to the United States, was also appointed permanent representative to the World Bank and International Monetary Fund, Moldovan ambassador to Brazil and Mexico.
• Ion Robu, Moldovan ambassador to Azerbaijan, was also assigned ambassador to Georgia.

2.2. Decisions

Decision on creation of the organisation for development of small- and medium-sized businesses. The organisation is created under the law on sustenance of small- and medium-sized businesses and it will advise the Ministry of Economy and Commerce as a successor of the fund for entrepreneurship sustenance and small business development.

Decision on activity of the State Building Inspection in 2006 – 1st quarter of 2007. It evaluates the activity of the inspection and indicates a series of shortcomings of activity, outlines tasks for the near future.

Decisions on elaboration and endorsement of some concepts/programmes:

• The development strategy of civil aviation for 2007–2016;
• The national programme Transfusion Security and Self-Ensuring of Country with Blood Products for 2007–2011;
• The national strategy on prevention and combat of money laundering and financing of terrorism and the 2007 action plan for implementation of the strategy;

Decisions approving some draft laws:

• Concerning formulation of Moldova’s statements on Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment;
• Concerning modification of some legal acts (interdiction of dual citizenship).

Decision on allocation of finances. Although it was created a couple of months ago after a years-long delay, the executive has decided to allocate 920,000 lei to the Agency for the Protection of Competition.

2.3. Sittings. Decisions. Statements

Committee on supervision of invalid decisions

Although these amendments to legislation did not come into force yet, the Government created on May 2 a committee to supervise the monitoring of implementation of presidential initiatives on economic liberalisation. This committee will supervise the implementation of legislation in effect, will monitor processes and trends linked to fiscal amnesty and liberalisation of capital, will coordinate the drafting of normative acts by competent central public administration bodies.

Reduction of number of seats in institutions of higher learning

The Government has reduced by at least 17 percent the number of youths who will be admitted at institutions of higher learning in 2007, compared with 2006. At the same time, the number of youths who will be admitted at colleges will grow by about 10 percent compared with 2006. The executive invoked the need of personnel on labour market.

Presidency

3.1. Decrees

Decree on modification of structure of the Moldovan President’s Apparatus. The chief of state has modified the structure of his apparatus, introducing offices of advisers in charge with administrating the Presidential Library, which has recently opened at the Presidency.

3.2. Sittings, Decisions. Statements

Building railroads is still a priority

Moldova’s president has convoked a working sitting on organisation of building works at the Cahul-Giurgiulesti railway, with participants being reported the achieved tasks. The chief of state was told that this project undergoes a building and ecological survey. It is expected that the railway portion will be 50 kilometres long and will be built by November 2008, and it will link the Giurgiulesti Terminal with transportation infrastructure of Moldova and with Ukrainian and Romanian railroads. The cost of project is estimated at 837 million lei, with the chief of state asking the Government, the Ministry of Economy and Commerce and the Ministry of Finance to identify the resources needed to finance the project, including foreign funds. Also, Vladimir Voronin has recommended the executive to make a decision on this issue and to support the State Railway Company of Moldova to build the Cahul-Giurgiulesti railroad. The chief of state outlined the importance of a tight interdepartmental coordination of actions related to implementation of this project.

Participation in Congress of Farmers

The chief of state has addressed the 3rd Congress of Moldovan Farmers, summarising the situation in this field, revealing accomplishments and proposing a conceptual change of the vision on endowment of agriculture with agricultural equipment – purchase of modern agricultural machines, creation of enterprises to process the agricultural production and consolidation of farm land.

Concerns with reconstruction of Curchi Monastery

Vladimir Voronin has visited the Curchi Monastery in the district of Orhei and collected facts regarding rebuilding works at this Monastic Complex. The chief of state was told the level of restoration of the monastery and raised concerns with violation of terms and bad quality of rebuilding works. He recommended competent authorities to work out a detailed action plan aimed at a strict execution of restoration works in the due time, inviting the participating sides to be more responsible and to do their best for durability and functionality of buildings of the Monastic Complex.

Economic Policies

1. Inflation and prices

Inflation does not seem to be a problem for the time being…

Apparently, the inflation is perfectly fitting the monthly schedule needed to reach the 10-percent target wanted by Government and National Bank of Moldova (NBM).The monthly inflation rate in April was 1 percent, and the consumer price index rose by 3 percent in January-April 2007, compared with December 2006. Prices of food products rose by 2 percent in April mainly due to higher prices of fresh vegetables. Prices of manufactured goods have grown by 0.5 percent, while tariffs of services granted to population have increased by 0.4 percent.

However, we consider that the April decision of the NBM Management Board to reduce the base interest rate^[1] (monetary policy interest) from 14.5 percent down to 13.5 percent could resuscitate the growth of inflation. Structural dysfunctions like in industry, foreign trade, business climate gathered in economy, as well as the growth of consumer credit could increase the inflation up to dangerous levels.

2. Financial-banking sector

Consumer credits could grow…

Banking representatives have recently said that banks have now an excess of liquidity capable to sensibly increase the consumer credit soon. Consumer credits are released for a short term, so that banks will find the possibility to use these sources which the National Bank is sterilising. Bank representatives and experts forecast a substantial rise of consumer credit for the next years, after the supply of consumer loans increased by more than 60 percent in 2006 and by over 43 percent in the 1st quarter of this year.

Even more, some banks have lowered the interest rates on credits. In this respect, the range of products and services will be diversified and, therefore, credits will be more accessible. Thus, the consumer credit will become a financial solution for more people. For example, the consumer credit in Russia has reached 17 percent of all contracted loans, 15 percent in Romania and less than 12 percent on domestic market.

All deposits in banking are estimated at about 33 percent of GDP…

The monetary mass M3^[2] has increased by 22.3 percent and accounted for 19.9 billion lei in late March. The evolution of monetary mass was particularly due to the growth of deposits in domestic and foreign currencies and of volume of circulating money. For example, deposits in foreign currency amounted to 7.2 billion lei on April 1 and rose by 37.8 percent compared with the 1st quarter of 2006, while deposits in lei are estimated at 7.8 billion lei. Deposits in lei count for about 55 percent of savings and deposits in foreign currency count for approximately 45 percent. All bank deposits are estimated at approximately 15 billion lei or 33 percent of the GDP of 2006, and all assets of the banking are estimated at about 24.9 billion lei (2.02 billion dollars).

3. Foreign trade

Textiles become main exports of Moldova…^[3]

Textiles and items held the biggest share in export in the 1st quarter of 2007 after the foreign trade with wines has dramatically declined because of Russia’s embargo. Moldova exported textiles worth 62 billion dollars in the first three months of 2007, which is about 23 percent of all exports, growing by over 22 percent compared with the same period of 2006.

The share of food products, drinks and tobacco in all exports has dropped more than two-fold, from 38 percent in January-March 2006 down to 16 percent in the 1st quarter of 2007. Moldova exported food products, drinks and tobacco worth 43 million dollars in three months, which is a 55-percent decline. Spirits deliveries have declined the most, notably by 81 percent. Finally, Moldova exported products and services worth 270 million dollars in the 1st quarter of 2007 (by 7.8 percent more than in the similar period of 2006), while imports were worth 747 million dollars (and rose by over 39 percent). The import/export coverage rate was only 36 percent, while the deficit of trade balance was approximately 476 million dollars and increased 1.7-fold compared with the 1st quarter of 2006.

Foreign Affairs

Republic of Moldova – Council of Europe

The Council of Europe (CoE) turned 58 on May 5. The CoE is a pan-European intergovernmental organisation which aims at consolidating democracy, ensuring the principles of the rule of law, protecting human rights, etc., on the European continent. The CoE was founded by 10 European states. It has now 47 member states, with Montenegro acceding on May 11.

CoE Commissioner for Human Rights Thomas Hammarberg has been on a fact-collection visit to Moldova shortly after this anniversary. He met Moldovan Deputy Prime Minister Andrei Stratan, minister of Foreign Affairs and European Integration, in Chisinau. The two officials discussed the CoE-Moldova cooperation and respect for human rights and fundamental freedoms in Moldova. Hammarberg was generally satisfied with the dialogue between CoE and Moldova and outlined the need of a systemic approach of how the Chisinau authorities protect the human rights.

Strasbourg hosted the 117th session of the CoE Committee of Ministers on May 10–11. Eugenia Kistruga, deputy minister of Foreign Affairs and European Integration, represented Moldova at the session. According to the Ministry of Foreign Affairs and European Integration, the session focussed on optimisation of relations between CoE and the European Union (E.U.), consolidation of the CoE human rights system, activity of CoE in the field of intercultural dialogue.

The European Court of Human Rights (ECHR) sentenced Moldova in two cases on May 10.

The Strasbourg-based Court found the following violations in the case Modirca vs. Moldova: illegal detention of applicant, improper detention conditions, insufficient and irrelevant reasons to issue an arrest warrant, inadequate conditions for confident discussions between applicant and his lawyer. The ECHR told Moldova to pay 7,000 Euros in non-pecuniary damages and 1,800 Euros in costs and expenses to the applicant.

In the second case, Mazepa vs. Moldova, the ECHR found the violation of rights of the applicant after a judgment awarding her victory was not executed and proceedings were excessively long. The Court told the Moldovan Government to pay 2,900 Euros to the applicant in non-pecuniary and pecuniary damages and 100 Euros in costs and expenses.

Republic of Moldova – European Union

Europe Day

Fifty-seven years ago, on 9 May 1950, French Foreign Minister Robert Schuman launched a declaration inviting France, Germany and the other interested European states to place their basic industrial resources – iron and steel – under the authority of a supranational body, as "the foundation of a European Federation." The document, also known as the Schuman Declaration, made the first move towards the creation of what is now known as the European Union (E.U.). That is why during the Milan Summit of E.U. leaders in 1985 it was decided to celebrate May 9 as "Europe Day". All EC/ E.U. member states and those willing to accede to the E.U. celebrate the Europe Day since then.

Moldova almost ignores the formal celebration of this day, though it insistently seeks a European destiny. Chisinau continued this year the tradition of formally celebrating the victory over fascism on May 9, while the E.U. served champagne for European reconciliation and solidarity in the name of peace, stability and prosperity of the European continent.

Although Moldova did not hold official manifestations on the Europe Day, President Voronin said, however that "Moldova’s European route linked to its membership to the European culture and civilisation finally aims at our integration into the common European area and, for this reason, the Moldovan nation shares the joy of this holiday along with E.U. member states." This is a pertinent message but without any actions to prove that Moldova is really sharing this joy.

Cooperation with civil society in European integration context

The Ministry of Foreign Affairs and European Integration has convoked a consultative meeting with civil society representatives after the Report by Euroforum Consortium and the 6th issue of  Euromonitor, which feature the progress achieved by Moldova in implementing the E.U.-Moldova Action Plan (EUMAP) in 2005–2006 and, respectively, the 1st quarter of 2007, were launched.

Ministerial officials and representatives of nongovernmental organisations participating in assistance, monitoring and assessment of the EUMAP implementation process exchanged opinions at the meeting. They studied deficiencies and problems encountered during implementation of EUMAP objectives, in particular, in the fields of justice, mass media, central public administration and cooperation between authorities and civil society. The ministry posted readiness to provide the necessary information for assessment of actions aimed at implementing the EUMAP.

Republic of Moldova – Romania

Moldovan President Vladimir Voronin has met Romanian Prime Minister Calin Popescu Tariceanu on occasion of meetings within the South East European Cooperation Process (SEECP). The officials agreed that the two countries must resume the bilateral dialogue, with Tariceanu saying that Romania is ready to share with Moldova the experience it has gained during the European integration process, at the extend wanted by Chisinau.

Earlier, Romanian Foreign Minister Adrian Cioroianu has told the Commission for European Affairs of the Romanian Parliament regarding an eventual Russian plan on Transnistria that the alleged plan is disliked by Romania, because it would take Moldova farther from the E.U. and would harbour it into the Russian area of influence. Cioroianu noted that he would be ready to visit Moldova in order to restart the bilateral dialogue.

Republic of Moldova – SEECP

Moldovan President Vladimir Voronin and Deputy Prime Minister Andrei Stratan, minister of foreign affairs and European integration, represented Moldova at the summit of heads of state and government of the South East European Cooperation Process (SEECP) and at the meeting of SEECP foreign ministers. The events took place in Zagreb, Croatia, on May 10–11.

The participants discussed issues related to reorganisation of regional cooperation processes once the Regional Cooperation Council (RCC) is created in January 2008. It will take over the activities of the Stability Pact for South East Europe (SPSEE) in tight cooperation with SEECP.

Hidajet Biscevic was appointed Secretary-General of RCC and the RCC Secretariat will be based in the capital of Bosnia and Herzegovina, Sarajevo.

Bulgaria has taken over the SEECP Presidency from Croatia. According to Moldpres, SEECP member states have decided by consensus that Moldova takes over the SEECP Presidency from Bulgaria in May 2008.

Republic of Moldova – CEFTA

The new CEFTA accord, which institutes a free trade regime between states participating in this regional arrangement, Albania, Bosnia and Herzegovina, Croatia, Macedonia, Moldova, Montenegro and Serbia, came into force on May 1, 2007. The new CEFTA, also known as CEFTA 2006, was signed in Bucharest on December 19, 2006. CEFTA 2006 replaces 32 bilateral and free trade agreements between South East European countries.

CEFTA 2006 annuls the customs duties on import and export, quantity restrictions and other taxes with equivalent effect for trade with industrial products and majority of agro-industrial commodities. The accord also includes provisions related to the trade with services, intellectual property, public procurement, promotion of investments, customs management and preferential origin rules, procedure and conditions for applying safeguard measures and commercial protection tools. CEFTA 2006 corresponds to WTO norms and commitments of the signatory parties toward E.U.

Studies, Analyses, Comments

Strong leu, great leu or new heights for the dollar?!
Iurie Gotisan, 15 May 2007

Beyond various figures advanced by economists, bankers or analysts of financial market in their commentaries on exchange rates, two words revealing a convergence of opinions are often found

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