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Activity of Public Institutions

Parliament
Government
Presidency

Political year 2008 by Igor Botan
Economic retrospectives for 2008 by Iurie Gotisan

Activity of Public Institutions

Parliament

At the end of the session, the Parliament has proceeded to the emergent examination and adoption of some key legislative acts and drafts regarded as controversial and imperfect. The process was not transparent enough and in spite of abusive practices signalled by the opposition and civil society organizations, the law on legislative acts, Parliament’s Regulation and the concept on cooperation between Parliament and civil society were breached obviously or even deliberately when some documents were examined. This hasty legislative activity both reduced the confidence and infirm cooperation between the Parliament and NGOs, and will generate to other more serious problems in future, in particular, deficiencies in applying and interpreting the legislation, launching of unprepared reforms; lack of social and economic conditions to implement some regulations, etc. A distinct aspect is that the parliamentary majority has acted this way after the adoption of the law on transparency of the decision-making process, which did not enter into force so far, but should be taken into account anyway. And not the last, after two years of enforcing the concept on cooperation between Parliament and civil society, the formal condition to organize an annual conference aimed at assessing the cooperation and deciding new directions of cooperation between Parliament and civil society organizations was not respected. In these conditions, added to harmful developments linked to abuses by law enforcement bodies and some public institutions, the civil society was probably right to redirect its priorities for a while and turn from legislative cooperation towards more active monitoring on governance during the electoral campaign, protesting and signaling breaches and ignorance of democratic standards to local and international public opinion.

1.1. Legislative acts

Law concerning the Chamber of Auditors. Under new regulations, members to the Chamber of Auditors will not be elected any longer accordingly to principles set after the 2005 parliamentary political consensus, which awarded the majority to the opposition. They will be appointed at the initiative of chairperson of the Chamber of Auditors with a majority of votes by legislators.

Education Code. The document was initiated by the chief of state and regulates aspects relating to the educational doctrine; social principles, functions, objectives and general organisation of education; basic priorities and state guarantees in education sector etc. The education system will be structured on levels, rounds and degrees: early education and pre-school education; elementary education; gymnasium education; secondary education; vocational/technical education (professional school and college); higher education; bachelor’s degree; master’s, doctorate’s and post-graduate degrees. The education system will also include subsystems: extra-school education, recovery education, art and sport, professional institutions and continuous education.

Note by ADEPT: The Code was promoted in a hurry and even abusively, without necessary public discussions and debates, fuelling grounded criticism by parliamentary and non-parliamentary parties, experts, civil society organisations, representatives of education system etc. Objections include among others: the failure of the document to rally the education system to European standards; it introduces inconstancy and uncertainty in the education system; promotes restrained (departmental) interests of representatives of the Academy of Sciences of Moldova; stipulates a multitude de subordinated normative acts, which will require a long time in order to be drafted, adopted and enforced, so that it will be impossible to apply the Code and this will jeopardise the functioning of the education system.

Law concerning the legal status of adoption. The document regulates legal relations relating to the protection of rights of the child through adoption; establishes the legal status of adoption; cooperation between public administration authorities and nongovernmental organisations and international cooperation in the area of protection of the child through adoption. The necessity of drafting this law was established by the Supreme Security Council, which decided at a sitting in early 2005 that interventions in this field are required. The document introduces some child adoption interdictions: it bans the adoption between brothers; prohibits the adoption of a child by several persons, except for husband and wife simultaneously or successively; minimum and maximum age limits, etc.

Law concerning the prosecution. The new adopted document is promoted to execute recommendations by the Council of Europe and brings great innovations; in particular, it stipulates the formation of a Superior Council of Prosecutors (a self-administration body of prosecutors), disciplinary and qualification colleges’ introduces the patrimonial responsibility of prosecutors; social rights and guarantees, etc.

Note by ADEPT: Although it was introduced as a major progress aimed at meeting international standards, the draft was criticised by the parliamentary opposition and independent experts, with key objections envisaging the maintenance of possibilities to exert political influence; inadequate regulation of mechanisms designated to ensure the independence of prosecutors; setup of a parallel self-administration system when the Superior Council of Magistracy is operational, etc.

Law concerning the control on entities and candidates to public functions. It establishes principles, goals, procedure, forms and methods to verify information about Moldovan citizens who run or apply for public functions. The Information and Security Service will verify the information with the purpose to prevent, identify and combat some risk factors: activities contrary to public function, conflicts of interest; tolerating treason, espionage, terrorism, diversion, calling for overthrowing or violently changing the constitutional order or violent violation of territorial integrity, direct or indirect propaganda of war and other extremist actions; actions taken within the public function in the detriment of the Republic of Moldova, public authorities, society, human rights and fundamental freedoms; illegal disclosure of secret information protected by law. Entities and applicants to public dignity functions, public functions of high-ranking public functionaries and leading public functions, offices run by contracted military or other persons with a special status in public authorities which include military or special service, functions run by delegates to diplomatic or consular missions will be checked. Once receiving the SIS decision, the public authority will decide on compatibility/incompatibility of the entity (applicant) of the public function with interests of this office and will be able to decide on suspension or dismissal of the entity.

Note by ADEPT: According to independent experts, the promotion of this draft is not well-argued in compliance with the appropriate law, while the extended control and application of the law on public servants is unconstitutional and may illegally restrict the right to work and public function, which have been legally confirmed.

Law concerning the asylum in the Republic of Moldova. It establishes the legal status of foreigners seeking protection in the Republic of Moldova, the legal status of beneficiaries of protection, the procedure of awarding, ceasing and annulling a form of protection in the Republic of Moldova. The law covers aspects relating to the status of refugees in Moldova, abrogating the previous regulation in the area.

Law concerning the formation of the historic-cultural and natural-landscape reservation "Orheiul Vechi". The draft law stipulates the building of the historic-cultural and natural-landscape reservation "Orheiul Vechi" in the gullet of the Raut River, the micro-zone of villages Trebujeni, Butuceni and Morovaia in the rayon of Orhei. It allocates about 500 hectares of land with a special status to the reservation. The activity of the reservation will be funded from the state budget, budgets of administrative-territorial units, landowners’ means, special funds, donations by individuals and legal entities.

Law on modification and completion of the law on citizenship. According to new regulations, only nationals residing abroad will be allowed to apply for the renunciation of Moldovan citizenship and they will have to apply to the diplomatic representation or consular institution of Moldova.

Note by ADEPT: The necessity of restrictions is linked to a recent important rise of the number of nationals who renounce the Moldovan citizenship, compared with the number of applicants. Authorities fear that this situation disadvantages Moldova, and they decided to restrict the renunciation of citizenship by forcing nationals to keep legal relations with the state, because they could not find other methods to make citizens stay home.

Law on ensuring the construction of the Clinical Hospital of Traumatology and Orthopedy. Through derogation from the law on management and privatisation of public property, the law exceptionally declares as private property the buildings and fields covering 2.0261 hectares on which the Clinical Hospital for Trauma and Orthopedics is located. The Ministry of Health will organise a public contest accordingly to the law on public procurement, in order to select investors for the "key" construction works, including the endowment with technological, medical equipment and furniture to meet necessities of the Clinical Hospital for Trauma and Orthopedics with a capacity of 210 beds, in exchange for getting the ownership on the buildings concerned. The investor will be able to get the right to ownership on the real estates concerned within 3 months after completing the construction and finally receiving the Clinical Hospital for Trauma and Orthopedics.

Law concerning the construction of a hostel for the State University of Physical Training and Sports. Through derogation from the law on education, it exceptionally authorises the construction of a 420-bed hostel by an investor, which will become owner of the building after completing the building works.

Note by ADEPT: The parliamentary opposition and independent experts have signalled normative shortcomings of this draft, fearing that it promotes some interests contrary to the public interest.

Law on ratification/accession to international acts:

• The Convention on Succession of States in respect of Treaties;
• The Convention for the Unification of Certain Rules Relating to International Carriage by Air (signed in Montreal in 1999);
• The Convention on Temporary Admission (adopted in Istanbul in 1990);
• The Agreement on Development Cooperation between the Government of the Republic of Moldova and the Government of Austria; the funding agreement (loan and grant) between the Republic of Moldova and the International Fund for Agricultural Development (IFAD) with the purpose to implement the Rural Financial Service and Marketing Programme in Moldova;
• The decision by the CIS Council of Heads of State concerning the concept on cooperation of CIS member states in combating terrorism and other violent extremist actions (signed in Kazan in 2005);
• The decision by the CIS Council of Heads of State concerning the programme on cooperation of CIS member states in combating terrorism and other violent extremist actions for 2008–2010 (signed in Dushanbe in 2007);
• The decision by the CIS Council of Heads of State concerning the Interstate Council of supreme financial control bodies from CIS member states.

Law for modification and completion of some legislative acts (on organisation and functioning of the judicial system). The law changes the modality of formation of the Superior Council of Magistracy (it will be made of 5 judges, 4 entitled professors and 3 ex-officio members: minister of justice, Prosecutor-General and head of the Supreme Court of Justice); the modality of repeated nomination by SCM of a candidacy turned down by political authorities (only with the votes of 2/3 of SCM members); principles of constitution of the qualification college and composition of the disciplinary college of judges (to include the majority of entitled law professors).

Note by ADEPT: The new law initiated and promoted emergently by Moldovan President annuls in fact the principles of the reform carried out on the basis of the parliamentary political consensus established after the 2005 elections and reintroduces possibilities to politically control the judicial power via the SCM and its bodies, in which the majority will be formed by persons supported and promoted executive and parliamentary power. The status of SCM as a judicial self-management body is also affected, since the management becomes "external" and the poor independence of judges may become a major problem.

Decision approving the strategy on development of civil society in 2008–2011. The document sets up principles and values of cooperation and relations between public administration and civil society and establishes the following priorities:

• The institutionalisation of the framework on consultation, monitoring and assessment of public policies;
• The building of a legal and fiscal framework to advantage a long-term development of the associative sector;
• The development of the civic active spirit and volunteerism.

The Government jointly with non-governmental organisations will work out and approve within 4 months an action plan on implementation of the strategy, and will annually report the execution of its regulations to the Parliament.

Decision approving the strategy of the national referrence system for the protection and assistance of victims and potential victims of trafficking in human beings. A special system in the area is needed because the existing one is not part of the state social protection system and the state does not carry any responsibility. The strategy will be a basic instrument for the implementation of the law on preventing and combating the trafficking in human beings.

Decision on completing the State-Protected Monuments Register. The State-Protected Monuments Register was completed with objects built in the Soviet period (in the 1950–1980s) which evokes controversial historical events: the Monument of Grigore Cotovschi; the monument of Komsomol Heroes; the Monument of Fighters for the Soviet Authority; the Monument of Serghei Lazo; the Monument of Liberators from Fascist Occupation.

Government

2.1. Appointments. Dismissals

Ghenadie Cosovan was appointed deputy minister of interior. Previously, he has headed the operative service department of the Ministry of Interior.

Valeriu Mironescu was assigned chief inspector of the State General Inspectorate on Phytosanitary Supervision and Seed Control. Previously, Mironescu was director-general of the Agroindustrial Agency "Moldova-Vin" and he was relieved from office "upon own demand".

Gheorghe Rata was assigned head of the Ungheni territorial administrative control directorate of the Ministry of Local Public Administration.

Alexei Virlan was relieved from the office of deputy minister of transport and road management, as the ministry was dissolved.

Note by ADEPT: The Ministry of Transport and Road Management was dissolved under Law # 162-XVI from 09.07.2008 and the Government should take all necessary actions by the end of October 2008.

Andrei Pogurschi was assigned general director of the Sports Agency. Previously, Pogurshi was a deputy minister of interior.

Victor Coada was appointed general director of the Main State Tax Inspectorate. Previously, Coada headed a direction within the Control and Inspection Department of the Centre for Combating Economic Crimes and Corruption.

2.2. Decisions

Decision approving the regulation on signalling and monitoring of corruption rate within public authorities. According to the approved mechanism, participating in the signalling procedure will be: the monitored institution, monitor (a scientific institution, sociological agency or specialised NGO), public functionaries, and people. The signalling procedure will be internal and external and will develop the following way: employees of the institution concerned or beneficiaries of its services will anonymously fill up some reporting forms and the confidentiality will be respected. Under new regulations, reporting forms will be printed and special boxes will be installed for this purpose. Starting 2010, the mechanism will be implemented in all central public administration authorities and their territorial subdivisions.

Decisions approving some regulations:

• Concerning the sale-purchase of afferent plots;
• Concerning the operating of public acquisitions from a single source;
• Concerning the mode of calculation of the estimated value of public acquisition contracts and planning of public procurements.

Decision concerning the information service of financial reports advising the National Bureau of Statistics. The opening of this service is argued through the implementation of the accounting law; the new structure in charge with collecting and processing reports will have 56 employees, of them 40 will work in 2nd-level territorial administrative units.

Decision concerning working days and days-off in January-March 2009. The Government has declared January 2, 5, 6 and 9, 2009 days off, so that the winter holidays will cover the period from the 1^st of January to the 11^th of January 2009, while January 17 and 31, February 21 and March 14 will be working days.

Decisions approving some plans, strategies, programmes:

• The national plan on harmonisation of legislation for 2009;
• The national programme on building the integrated social service system for 2008–2012;
• Plan for development of accounting and audit in corporative sector within 2009–2011;
• The national youth strategy for 2009–2013.

Decisions approving some draft laws:

• The Code of Fiscal Procedure;
• Concerning the protection of morality;
• Concerning the rectification of the state budget law for 2008;
• The Subsoil Code;
• The Land Code;
• Concerning the electric power;
• Concerning the regime of foreigners in Moldova.

2.3. Sittings. Decisions. Statements.

Governing not willing to depoliticise the function of Moldovan President

The Government has turned down a legislative initiative on incompatibility of the quality of chief of state and membership to a certain party, alleging that it restricts the constitutional rights of people to freely join parties and participate in their activity. The executive considers that the chief of state must respect the Constitution and laws of the country, protect democracy, human rights and freedoms, which means to be equidistant with political parties and all citizens, "excluding the legal possibility to promote partially the interests of a certain party."

Note by ADEPT: It is worth noting that the Government did not comment the situation of other public servants whose membership to a party is prohibited by law, and did not provide arguments in favour of such a differentiated treatment of public servants.

Funding agreements with EU

Three funding agreements have been signed in the context of the European Partnership and Neighbourhood Instrument, in particular concerning 1) the co-funding of the project on renovation of the Republican Clinical Hospital; 2) renovation of roads; 3) implementation of the joint operational programme Republic of Moldova – Romania – Ukraine 2007–2013. Grants worth 3 million Euro and 12 million Euro will be released for components 1 and 2, while the overall budget of the joint operational programme Republic of Moldova – Romania – Ukraine 2007–2013 is 137.4 million Euro. The funds will go to local public authorities, public associations, universities, research institutions, etc., which will contribute to the project with a 10-percent co-financing.

New calls upon bankers

Like her predecessor in the post of prime minister, Zinaida Greceanii has invited the bank community "to sustain the real sector of economy." During a meeting with members of the Association of Moldovan Banks the prime minister has reported macroeconomic factors, which would create conditions for the banking sector should they develop. But the premier was astonished that some commercial banks keep raising the interest rates on credits, affecting the economic stability this way. She called upon the banking system to sustain the real sector of economy, which faces difficulties to accede to funding.

Meetings with trade unions and employers

The prime minister has met representatives of the National Confederation of Trade Unions of Moldova in a broad format, with talks focussing on the need to impel efforts of the tripartite commission on labour and social-economic matters. It was noted the importance of jointly examining drafts and initiatives relating to economic and social reforms, particularly on social protection, and jointly settling collective work conflicts at national level, optimising the system of negotiations and social partnership. Trade unionists appreciated the Government’s work, but raised concern with possible consequences of the financial crisis on Moldova, being sure that the resolution of these problems requires a complex approach and participation of all competent factors. The premier noted that Government’s actions that helped reduce inflation and increase the GDP by the end of the year have also created conditions to consider opportunities for raising salaries and social indemnities, "but populist declarations in this regard shall be avoided."

At the meeting with members of the National Confederation of Moldovan Employers (CNPM) the prime minister has summarised Government’s social-economic actions and stressed that the real sector of economy has already experienced consequences of the world economy and 2009 could be more difficult in this respect. By stressing the importance of consolidating efforts in this situation, Premier Zinaida Greceanii reiterated the intention of her cabinet to focus on ensuring the social-economic stability, particularly in connection with the forthcoming parliamentary elections. CNPM representatives remarked among accomplishments of 2008 the promotion of legislative modification on remuneration and the organisation of meetings with Government members, at which they raised proposals and their initiatives were considered when governing policies were worked out. Representatives of sectoral employers asked the prime minister to order the mandatory coordination of draft legislative and normative acts on social-economic issues with employers at ministerial level. The premier assured that such a draft order is available and it will be signed shortly, promising that the execution of this order will be monitored rigorously but the cooperation shall be based on reciprocity principles.

Press conference by prime minister

Zinaida Greceanii held a press conference on December 16 and reported the activity of her cabinet for 2008. She talked about economic aspects, external activities and achievement of key indicators of the Government’s Action Plan. In particular, Mrs. Greceanii emphasised that the GDP has grown by 7.6 percent in January-September 2008; the inflation rate for 12 months was 16.9 percent in May and it declined below 10 percent for the first time in November, down to 8.5 percent; foreign direct investments have grown by more than 70 percent in the first semester and they exceeded 2.2 billion dollars; the inflation rate has decreased from 5.1 percent in the 3^rd quarter of 2007 down to 3.6 percent in 2008, with job seekers counting for about 48,700 people and 38,800 job seekers were registered with employment offices; the national currency has grown by 9.0 percent versus USD and by 24.0 percent versus Euro in nominal terms; the National Bank of Moldova operated net purchases of foreign currency worth 222 million dollars on interbank monetary market in January-November 2008; foreign currency reserve assets amounted to 1.6 billion dollars in late November 2008; the evolution of the trade balance continue to raise concern, with its deficit reaching 2.7 billion dollars in January-October 2008, up by about 900 million dollars compared with the similar period of 2007.

Presidency

3.1. Decrees

Moldova’s President has decreeted the appointment of Mihail BODEAN and Alexandru LUNCARI as deputy directors of the Information and Security Service.

Sergiu PUSCUTA was appointed adviser to the President of the Republic of Moldova in financial matters, a position especially created for this occasion.

Note by ADEPT: Previously, Puscuta headed the Centre for Combating Economic Crimes and Corruption (CCECC) and the Main State Tax Inspectorate. Following the meeting of the Supreme Security Council of 19 November 2008, the Government decided to dismiss Sergiu Puscuta as CCECC director at "his own request". Puscuta acted as a presidential adviser in economic and financial matters during the mandate of President Petru Lucinshi.

Serghei SIRBU was assigned deputy chief of the directorate for law and public relations of the Moldovan President’s Apparatus, and Mariana SACAREANU was appointed deputy chief of the service for presidential acts of the law and public relations directorate of the Moldovan President’s Apparatus.

Nicolae GUMENII was nominated Moldovan Ambassador to Ukraine and Eugenia KISTRUGA was appointed Ambassador, Moldova’s Resident Representative to the Council of Europe.

Andrei NEGUTA was nominated Moldovan Ambassador to Russian Federation.

Croatia’s President Stjepan MESIC was awarded Moldova’s supreme order, the Order of the Republic.

Decrees awarding the Labour Glory Order to:

• Valeriu SAVA, advising minister, ad-interim charge d’affaires of the Moldovan Embassy in the Russian Federation;
• Constantin ANDREEV, manager of the state-owned enterprise Editura Universul.

Natalia MOLDOVANU, deputy chairwoman of the Supreme Court of Justice, was awarded the honour title Emeritus Person.

3.2. Meetings. Decisions. Statements

Concerns with public security and rule of law

The Moldovan president has convoked heads of some law enforcement bodies in a working meeting on optimising actions aimed at ensuring the state security and rule of law, invoking the discovery of an arsenal of weapons, munitions and explosive substances in the city of Comrat. The chief of state signalled the inactivity and non-vigilance of territorial bodies and stressed that such action of criminal groups threats the national security and worsens the crime rate. Vladimir Voronin instructed competent authorities to take necessary actions in order to find persons involved in storing illicit weapon and ammunition arsenals in Comrat and punish them accordingly to the law, as well as to prevent such criminal actions in the future.

Concerns with economic-financial situation

Aspects of the current situation in the context of the world financial-economic crisis and actions to be taken in case of pessimistic developments for Moldova were presented and discussed at the meeting. The president underlined the necessity to strictly monitor the economic-financial situation and markets in neighbouring and farther countries by setting up a strict interaction between economic bloc of Moldovan Government and National Bank of Moldova. Mr. Voronin emphasized the imperative of fulfilling strictly and in the spirit of economy the budgetary expenses foreseen for 2009, with a special attention being reserved to social-humanitarian programmes, functioning of healthcare, education, social protection, and ensuring the continuity of investment projects on modernisation of infrastructure.

Urgent reforms relating to management of judicial system

Participants in a presidential meeting have exchanged opinions regarding ways to improve actions by law courts, enhance the judges’ liability for their decisions and ensure the correctness of judicial proceedings in general. They raised proposals on necessary actions aimed at improving the current situation in this area.

Note by ADEPT: Shortly after the meeting, without holding any public debates and providing details about researches and concrete shortcomings in the functioning of justice, the chief of state has signed a legislative initiative on reforming the mode of organisation and functioning of the Superior Council of Magistracy, College of Qualification and Attestation of judges and Disciplinary Board of judges, recommending a serious reduction of the number of magistrates in these bodies and granting more possibilities to executive and legislative authorities to exert influence.

Meeting with ambassadors in Chisinau

Few days after stating that his agenda does not include meetings with representatives of public missions, the Moldovan President has met ambassadors of EU member states, U.S., Turkey, European Commission and OSCE "to discuss latest developments and prospects to develop cooperation." Vladimir Voronin highly appreciated the cooperation with EU member states, OSCE, CoE, U.S. in political, social-economic and cultural areas. In particular, he highly appreciated the dialogue between Moldova and EU, stressing that implementing previous commitments, negotiating and signing a new cooperation agreement, opening dialogue on visa liberalisation and a free exchange agreement which would provide Moldovan economic agents with new possibilities along with possibilities provided by the Autonomous Trade Preferences are priorities.

Speaking about Transnistrian settlement, Vladimir Voronin stressed Moldova’s actions aimed to ensure an international support for promoting the "package" initiatives on conflict resolution and reconfirmed that the "5+2" format must be the basic formula of negotiations.

President Voronin informed ambassadors about social-economic and political situation in Moldova, revealing that positive results are due to the political stability. Speaking about the forthcoming electoral campaign, Vladimir Voronin promised that Moldovan authorities will do their best to organise a scrutiny based on law principles, in compliance with European norms, will invite EU, OSCE observers, competent organisations to observe the electoral process throughout the campaign and elections in general.

The chief of state assured that Moldovan authorities call for a complete freedom of the media and journalists "who are legally doing their job" did not and will not face pressures. He invoked a recent decision by the Audiovisual Coordinating Council, which introduced a moratorium on contests for licenses expiring before the end of the 2009 electoral campaign, with Voronin adding that nor the license of PRO TV Chisinau will be proposed at a contest before the end of the campaign. Finally, Voronin reiterated the firm readiness of the state leadership to strictly respect the national legislation and advanced experience of democratic countries in terms of equal treatment of all participants in electoral process in ensuring and protecting the freedom of the media.

Economic Policies

1. Prices and inflation

Inflation "perfectly" suits governmental forecasts…

According to official statistics, average consumer prices in November 2008 were at the level of October 2008. They were influenced by the fall of prices of manufactured goods by 0.6 percent and the rise of tariffs for public services by 1.1 percent, while prices of food products were at the level of October. Therefore, the inflation for 11 months was 7.5 percent.

Prices of key food products have decreased in the period concerned as follows: prices of vegetal oil declined by 14.1 percent, rice by 5.1 percent, fresh fruits by 3.3 percent (citric by 10.5 percent, apples by 6.3 percent), potatoes and mutton by 3.1 percent each, pork by 2.3 percent, sugar by 2.4 percent, wheat flour by 2.2 percent and fish by 2.0 percent. Food prices have degreased in connection with appearance of the new crop.

Prices of manufactured goods have declined as follows: fuels by 12.1 percent, bottled natural gas by 8.8 percent, drugs by 0.7 percent and building materials by 0.5 percent, etc. On the other hand, heating tariffs for households (Balti municipality and Ungheni city) increased by about 21 percent in November 2008, influencing the general price index.

Thus, the inflation rate for this year will be below 10 percent and it perfectly suits the governmental forecasts. But this rate could have been influenced, that means the state intervention into some administrative tariffs or prices. In addition, it is worth to mention the appreciation of leu, which helps reducing inflation, but directly hits domestic exporters and producers.

2. Currency

External pressures on leu…

NBM governor has recently stated that unlike neighbouring countries, the Moldovan leu is strengthening due to market relations and there are no premises for its fall. He noted that the central bank purchases up to 60 million dollars on market and it does not buy much currency now, just 50 percent of the existing daily volume. The governor added that the central bank cannot prevent the appreciation of the leu because of a major external pressure on the exchange rate of the leu. Many economists say that the appreciation of the leu is influenced by the central bank and less by demand and supply. However, the governor assured that the exchange rate depends on the demand and supply on market. "We do not have a fixed exchange rate, we did not ever have and we will never have one," he added.

At the same time, minister of economy and trade has stated that the currency available on market influences the exchange rate of domestic currency. Exports, foreign investments, remittances are main currency inflows in Moldova. However, Moldovan nationals sent home by 17 million dollars less in October than in September. According to NBM, remittances transferred from other countries via commercial banks amounted to 139.4 million dollars in October 2008. In spite of a fall of inflows in 2008 compared with 2007, the import price of some products, energy resources, gas will also fall. It means that less currency will go to imports, and this fact brings equilibrium in this situation as well. Therefore, both IMF and NBM assure that there are no factors at present to influence the situation on currency market of Moldova like those in Ukraine, Russia or Romania. Anyway, further forecasts will depend on developments by February-March.

NBM policy targets at 9-percent inflation rate for 2009…

The monetary and currency policy of the National Bank of Moldova will focus on ensuring and maintaining a 9-percent annual inflation rate by the end of 2009, with a possible deviation of +/- 1 percentage point. It is based on a 6-percent GDP growth in real terms, a 19-percent rise of exports and services, and a 24-percent advance of imports. "Rise paces of monetary aggregates will be at the level of 2008", reads the document.

The central bank promises to keep the positive basic interest rate in 2009, while the mandatory reserve norm will be established depending on inflation rate, inflationist expectations, economic situation and conditions of domestic monetary market. It will keep optimising monetary policy tools with the purpose to improve operations on open market. The monetisation of economy will be sufficient to ensure the planned economic growth. The floating regime of exchange rate will be maintained.

In 2009 the National Bank of Moldova will keep implementing the Action Plan on enforcement of the inflation targeting strategy, which aims to optimise monetary policy operations of NBM, build a centralised database and analysis, regulation and forecast framework, work out and improve public information models regarding actions to enhance confidence of civil society towards NBM monetary policy. The central bank will establish the basic rate, maintaining it at a real positive level, depending on accomplishment of fundamental objectives, situation on monetary, currency and credit markets and evolution of domestic economy, world situation, expectations and forecasts concerning the economy of the country.

3. Real sector

Elements of economic growth…

According to official accounts, GDP for January-September 2008 was worth about 47.15 billion lei and it has grown by 7.6 percent, compared with the similar period of 2007. The gross value added in commodity sector has increased by 11.2 percent compared with the similar period of 2007 and influenced by about 3 percent the real GDP growth. The rise was conditioned by a significant growth of gross value added in agriculture – by about 24 percent, while this indicator decreased by more than 32 percent in January-September 2007, compared with the same period of 2006.

The gross value added in service sector contributed by more than 62 percent to the GDP, compared with 61 percent in the similar period of 2007, while the rise pace has decreased from 110.3 percent in January-September 2007 to 106.4 percent in January-September 2008. It was particularly linked to an important decline of rise pace of the building sector, from more than 127 percent in January-September 2007 down to 108 percent in January-September 2008.

Although the share of taxes on product and import in GDP has increased from over 17 percent in January-September 2007 up to 18 percent in January-September 2008, their rise pace has decreased from 124.2 percent in January-September 2007 down to 110.4 percent in January-September 2008. It was linked to depreciation of the U.S. dollar versus domestic currency (the average exchange rate of USD versus Moldovan leu has decreased from 12.4 lei in January-September 2007 down to 10.4 lei in January-September 2008) on one hand, and rise of price index on imported goods (from 109 percent in January-September 2007 down to 120 percent in January-September 2008), on the other hand.

The GDP growth on expense elements was particularly linked to the rise of the gross fixed capital formation by 9.3 percent, compared with the similar period of 2007, ensuring a 2.4-percent real GDP rise. This element contributed by 27.6 percent to GDP in the period concerned, compared with the similar period of 2007. The investment rate (the gross fixed capital formation compared with the gross value added) has advanced from over 30 percent in January-September 2007 up to more than 33 percent in January-September 2008 due to the rise of investments.

The final consumption, another important element of use of GDP, has increased by 7.3 percent, compared with the similar period of the precedent year. The rise was particularly due to the final household consumption, which increased by more than 8 percent, compared with the similar period of 2007. The overall internal demand (final consumption and gross capital formation) went 78.8 percent to the final consumption and 21.2 percent to collections, compared with 79.1 percent and 20.9 percent in the similar period of 2007.

Governmental economic syntheses for 2008…

According to macroeconomic data, the national public budget has grown by 15 percent in 2008, compared with 2007. The inflation rate for 11 months of 2008 was 7.5 percent and the GDP for 9 months was 7.6 percent. The Government has appreciated the macroeconomic achievements as "very good". According to officials, these accomplishments are due to the fall of prices of some products and efficient governmental policies, a fact confirmed by IMF as well.

Foreign direct investments have doubled this year, compared with 2007. They exceeded 307 million dollars in the first semester of 2008, compared with 500 million dollars attracted in all 2007.

Exports. In 2008 domestic products were particularly exported to the EU – 51.4 percent, CIS 39.3 percent, and other countries 9.3 percent, and Moldova exported, in particular, textiles – 19.7 percent, food products 10.4 percent, vegetal products 11.6 percent, electronic appliances 10.9 percent.

Imports by Moldovan economic agents went, in particular, to EU – 44 percent, CIS 39.3 percent, and other countries 21.3 percent. Moldova imported above all mineral products (natural gas, fuels, etc.), electronic appliances 15.8 percent, chemical products 8.5 percent, transportation means and materials 8.1 percent, etc.

As regards human resources, 1.36 million people were declared employable in 2008, of them 49,000 were job seekers, and the unemployment rate was 3.6 percent, compared with 6 percent in 2007. The action plan for 2009 stipulates salary rises as well.

In spite of positive results for 2008, minister of economy has stated: "The Government is aware of challenges Moldova will face in the first months of 2009. In this regard, drafts are being worked out to prevent such crisis situations."

4. External economic position

IMF "praises us"…

A mission from the European Department of the International Monetary Fund (IMF) led by Mr. Graeme Justice visited Chisinau on December 4–15, 2008. The key purpose of the mission was the fifth assessment of results of the programme supported via the Poverty Reduction and Growth Facility (PRGF). Despite criticism and objects against governmental policies, the recent IMF mission has appreciated and even praised the governmental economic policies, in particular, the way the executive is managing potential effects of financial crisis, stressing that the financial system of Moldova resists to global crisis.

The mission welcomed the great performance within the programme, the reduction of inflation rate below 10 percent and the robust economic growth. Reforms planned within the programme have been generally implemented on time, but with some exceptions. The financial system resisted to the global financial crisis. At the same time, the mission shares Government’s worries with the impact of slower regional economic growth paces and discussed adequate actions aimed at promoting policies on reducing the impact on Moldova. The mission stressed the increased importance of promoting prudent macroeconomic policies in 2009. This fact was reflected in the updated Memorandum of Economic and Financial Policies (MEFP) for 2009. As a rule, the IMF leadership will revise the agreement and will further submit it to the IMF Executive Board in order to be examined.

PRGF is the IMF’s low-interest lending facility for low-income countries. Loans under PRGF carry an annual interest rate of 0.5 percent. Repayments are made semi-annually, beginning 5.5 years and ending 10 years after the disbursement. The PRGF programme in Moldova foresees a credit worth about 168 million dollars, of which about 133 million dollars has been disbursed. The IMF will give green light to the next tranche in early 2009 and the next IMF mission within PRGF is set for late February 2009.

5. Forecasts for 2009

Economic growth paces will slow down in 2009…

The economic growth rate of Moldova will slow down from 6.5 percent in 2008 to 4 percent in 2009. It will stay at the same level in 2010. According to the Global Economic Prospects 2009 by the World Bank, this is the lowest growth among CIS member states. The report says that the current account deficit will suddenly decrease from 4.4 percent of GDP in 2009 and 5.8 percent in 2010. The European Bank for Reconstruction and Development and the Economist Intelligence Unit also forecast a slowing of the economic growth pace down to 4.1 percent and 4.0 percent respectively for 2009.

The International Monetary Fund expects an economic growth in Moldova of at least 6.5 percent and a 9-percent inflation rate in late 2008. "The economic crisis did not hit so far the Republic of Moldova, which has a good enough performance due to unimportant integration into international financial markets, and governmental policies," Graeme Justice, head of the IMF European Department mission, has recently stated. WB analysts note that Moldova could gain about 25 percent of the GDP after the reduction of fuel prices. The fall of prices of goods expected in 2009 will suddenly reduce the correlation between export and import prices. About 30 countries including Moldova will gain from cheaper fuel.

Transdnistrian Problem

Annual Ministerial Meeting of OSCE

The 16^th Meeting of the OSCE Ministerial Council took place in Helsinki on December 4–5, 2008. Mr. Andrei Stratan, minister of foreign affairs and European integration, has addressed the meeting, approaching the Transnistrian settlement and OSCE’s role:

• The OSCE shall prove its viability by effectively contributing to a peaceful resolution of conflicts, with respect for sovereignty, territorial integrity and internationally recognised borders of countries;
• The artificial fuelling of regional conflicts and protracted processes to settle them, inclusively the Transnistrian conflict, are reprehensible and counterproductive;
• The failure of Moldova’s efforts may be explained first of all by political unwillingness of some players and imminent geopolitical nature of the Transnistrian problem;
• Moldova has cogently promoted a complex "package" approach of all conflict-related issues – political, economic, social and humanitarian – in the last two years, by taking into account interests of all parties concerned;
• The strategy proposed by Moldovan authorities stipulates the elaboration and adoption of a special legal status of the Transnistrian region as part of the Republic of Moldova within the "5+2" negotiation format; the consolidation of the neutrality status and the withdrawal of foreign troops from the country; the recognition of property rights and the granting of sure guarantees to people from the region;
• The military contingents introduced in the conflict zone accordingly to the 1992 Moldovan-Russian ceasefire agreement had completed their tasks long ago;
• The current operation from the Transnistrian region shall be replaced by an international multinational civic mission;
• Moldovan authorities highly appreciate the direct EU participation in combating defiance against security in the region, particularly the EU Border Assistance Mission to Moldova and Ukraine, which has a worthy contribution to securing the Moldovan-Ukrainian state border, especially the Transnistrian section;
• Moldova shares concerns relating to critical situation of the Adapted CFE Treaty, which it regards as an angle-stone of European security;
• The withdrawal of Russian military and munitions from Moldova in compliance with commitments assumed at OSCE Summits shall be unconditional, complete and transparent (according to www.mfa.md).

Voronin-Smirnov meeting from 24 December 2008

President Vladimir Voronin had a meeting with Transnistrian leader Igor Smirnov in Tiraspol on December 25, 2008. According to a communication released by the Ministry of Reintegration via Moldpres agency, the sides have discussed as follows:

• Perspectives to resume the "5+2" negotiations, actions to be taken in order to activate working groups in charge with strengthening confidence and security;
• Actions to ensure the free circulation of people and commodities between the two banks of the Dniester;
• Continuation of the dialogue and consultations in the "2+1" format (Russia, Transnistria, Republic of Moldova) with the purpose to resume negotiations and settle the Transnistrian conflict definitively.

The next day, Transnistrian leader Igor Smirnov stated that there is just one solution to the Transnistrian conflict – recognising the independence of the Transnistrian region – while Moldovan dignitaries resumed the rhetoric about negotiating a solution in the "5+2" format only.

Economic developments

Industrial production has decreased by 20–30 percent in the 4^th trimester and sales dropped by 40–60 percent. In consequence, budgetary collections have declined by 20–30 percent. Developments in the metallurgical plant and cement factory in Ribnita raise the worst concern. For example, output of metallurgical plant has dropped twofold and sales fourfold. The Tiraspol Supreme Soviet has sought financial aid from Russian authorities. At the same time, the budget of the region was adopted; it foresees incomes worth about 132 million dollars, expenses in the amount of approximately 234 million dollars, a deficit of about 102 million dollars (which will probably covered with Russia’s support).

Perception of situation in Transnistria by people

The newspaper "Novaiya Gazeta" has published findings of a survey conducted in the Transnistrian region by the think tank Novyi Vek in the 4^th quarter, which reveal that effects of the financial crisis are experienced. Only 3.6 percent of Transnistrian respondents consider that the economic situation in the region is satisfactory. As regards incomes of people, ¼ said that their earnings are insufficient for the strictly necessary; 47 percent can afford only the strictly necessary; 23.4 percent can afford a decent living, without affording luxury objects; 3.8 percent earn enough to buy luxury objects as well. In 2008, living standards of 40 percent of Transnistria’s population have worsened, while another 26.6 percent experienced a serious decline of their living standards. At the same time, 20 percent of respondents said that their living standards did not change, 8 percent consider that their living standards have improved, and they improved much for approximately 1 percent. The general climate in the Transnistrian region is pessimistic, as 35.7 percent of respondents fear that the economic situation in the region will not improve, while another 37.9 percent consider that the very bad situation would be redressed through radical changes, and only 10 percent are sure that the situation will improve soon.

Concerns of labour unionists

Representatives of education unions from Transnistria convened in a plenary assembly in early December 2008 to discuss the massive withdrawal of teachers from the education system. Statistics are alarming, since 412 teachers have left schools in Tiraspol, 346 in Ribnita and 142 in Dubasari in 2008. The reason is very low salaries of teachers. Unionists say that teachers with a work length of more than 15 years and maximum charge earn approximately 180 dollars a month. On the other hand, minimum wage in non-budgetary sector is approximately 200 dollars. Given existing economic difficulties, the condition of teachers will unlikely improve in 2009 and many teachers decide to quit the education system.

Foreign Affairs

European Integration

European Commission releases Eastern Partnership Concept

The Eastern Partnership Concept, a new initiative by the European Commission aimed to develop political and economic relations with 6 neighbouring ex-Soviet countries – Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine, was released in Brussels on December 3, 2008. It stipulates a deeper political engagement by the states concerned, including the prospect of a new generation of Association Agreements, far-reaching integration into the EU economy, easier travel to the EU for citizens providing that security requirements are met, enhanced energy security arrangements benefiting all concerned, and increased EU financial assistance. All these advantages will be granted on a differentiated basis, depending on progresses and specific requirements of each country. The Eastern Partnership aims to encourage internal reforms in the countries concerned by building 4 multilateral policy platforms on democracy, good governance and stability; economic integration and convergence with EU policies; energy security; contacts between people to further support partners’ individual reform efforts. In addition, EU will support the social and economic development of the 6 countries via five high profile flagship initiatives (integrated border management programme; small and medium sized enterprise facilities; regional electricity markets, renewable and energy efficiency; southern energy corridor; and prevention of, preparedness for, and response to natural and man-made disasters). The European Union will provide 350 million Euro to fund this initiative in 2010–2013 and will redirect another 250 million Euro allocated within regional programmes under the European Neighbourhood Policy. The Eastern Partnership will be launched on spring 2009.

Note by ADEPT: The European Partnership does not provide univocally a European perspective to countries concerned, including the Republic of Moldova, but stipulates more differentiated relations with EU compared with EU southern neighbours. On the contrary, European officials have emphasized that the new EU initiative is not a prelude for a future EU enlargement.

European Commission concerned with media freedom in Moldova

On December 12, Mrs Benita Ferrero-Waldner, European Commissioner for External Relations, released a statement concerning the decision of the Moldovan Audiovisual Coordinating Council (CCA) to refuse the prolongation of the broadcasting licence of the PRO TV Chisinau television channel. The European commissioner raised concerned with the CCA decision and warned that media freedom is one of the fundamental principles of a functioning democracy, which Moldovan authorities must respect, especially in the run-up to the spring 2009 parliamentary elections.

Meetings of the National Commission for European Integration

The National Commission for European Integration convened in ordinary meetings on December 3 and 25, 2007. As usually, the chief of state, Mr. Vladimir Voronin chaired the meetings. The meeting from 3 December 2008 discussed the results of the Moldova-EU cooperation and of the European integration process, in particular:

• The results of the November 12 meeting of the Moldova-EU Cooperation Subcommittee 1 "Trade and Investments" and Regional Working Group COEST Troika;
• Progresses relating to Moldova’s efforts to join the Energy Community Treaty;
• Actions taken to ensure institutional and financial conditions needed to implement European sanitary-veterinary standards;
• Presentation of legislative acts adopted by Moldovan Parliament in 2008 and legislative documents planned to be adopted by the end of 2008;
• Progresses in implementing priorities of the European Integration Agenda for 2008.

At the December 25 meeting, the commission reviewed results of implementation of the European Integration Agenda for 2008 and discussed issues related to the drafting by Government of the European Integration Agenda for 2009. A report on implementation of the 2008 Agenda, as well as the new European Integration Agenda will be released in January 2009. Another topic discussed by the commission was the concept of the scheme of the Moldovan negotiation delegation for the new EU-Moldova Agreement, worked out on the basis of experience of Baltic countries, Croatia, Western Balkans and Ukraine. It was noted that Moldova has six months to form and train the negotiation team and get ready for negotiating the new agreement with EU. The nominal composition of the Moldovan negotiation delegation will be introduced to the Government in early 2009 in order to approve it.

Bilateral cooperation

Republic of Moldova-Romania

Relations between Moldova and Romania did not marked some qualitative evolutions; the events happened during December 2008 only highlighted the contradictory efforts of Chisinau authorities to animate the relations with Romania.

On the one hand, on December 24, the Ministry of Interior of Moldova accused in a press-release an employee of the Romanian Consulate in Chisinau of being involved in illegal activities of granting Romania visas to Moldovan citizens in their absence. As response, the Romanian Ministry of Foreign Affairs declared that the Romanian Embassy in Chisinau has repeatedly signalled the dubious activities of the accused touristic firm to the Moldovan MFAEI, presenting documents attesting that illegal acts were filled out receiving a Romanian visa.

On the other hand, on December 29, the newly-nominated Romanian minister of foreign affairs, Cristian Diaconescu, met the Moldovan ambassador to Romania, Lidia Gutu, who transmitted the congratulations of the Moldovan minister of foreign affairs. During the meeting the parts "has expressed their wish to continue the open and pragmatic collaboration between the two states for further development and deepening of bilateral relations, including for supporting Moldova’ s rapprochement to the EU". At the same time, Cristian Diaconescu has expressed his wish to meet as soon as possible Andrei Stratan. This wish of the Romanian minister of foreign affairs sticks to the main lines of Romanian foreign policy toward East, drew by the Romanian President Traian Basescu when investing the new minister of foreign affairs. Especially, Traian Basescu mentioned the need to hold on the relations with the Republic of Moldova that remains the main concern of Romania. Nevertheless, Traian Basescu affirmed that Romania made it all possible to dynamise the Moldovan-Romanian relations from both diplomatic point of view and by supporting Moldovan cause at the EU, what is not valid in the Moldova’s case.

New foreign ambassadors accredited in Chisinau

On December 16, Moldova’s President received credentials from the following foreign ambassadors:

• Extraordinary and Plenipotentiary Ambassador of Australia, Mrs. Margaret Eileen Twomey;
• Extraordinary and Plenipotentiary Ambassador of Egypt, Mrs. Sanaa Esmail Atalllah Eesmail;
• Extraordinary and Plenipotentiary Ambassador of Thailand, Mr. Suphot Dhirakaosal;
• Extraordinary and Plenipotentiary Ambassador of Ireland, Mr. John Morahan;
• Extraordinary and Plenipotentiary Ambassador of Italy, Mr. Stefano De Leo;
• Extraordinary and Plenipotentiary Ambassador of Japan, Mr. Tadashi Izawa;
• Extraordinary and Plenipotentiary Ambassador of Georgia, Mr. Levon Metreveli.

Multilateral cooperation

Republic of Moldova – Council of Europe

ECHR decisions

The European Court of Human Rights (ECHR) has pronounced decisions in the following cases in the period concerned: Unistar Ventures GmbH vs. Moldova, Tudor-Auto S.R.L. (no. 1), Triplu-Tudor S.R.L. and Tudor-Auto S.R.L. (no. 2) vs. Moldova, Avram vs. Moldova, Levinta vs. Moldova, and Navoloaca vs. Moldova.

In the first case, the Court has unanimously established violation of the property right, as the Moldovan Government had refused to reimburse the applicant company the amount of money it had participated with in forming the statutory capital of a joint air agency, after the Moldovan Government unilaterally decided to cancel the contract on building of the joint company concerned. The Court granted 6,700,000 Euro to the applicant in pecuniary damage, 3,000 Euro in non-pecuniary damage and 9,855 Euro in costs and expenses.

As regards the cases Tudor-Auto S.R.L. (no. 1), Triplu-Tudor S.R.L. and Tudor-Auto S.R.L. (no. 2) vs. Moldova, the Court indicated violation of the right to a fair trial, property right and right to an effective recourse. The Court is further due to establish the size of pecuniary damage.

In the cases Avram vs. Moldova and Navoloaca vs. Moldova, the Court established violation of the right to a fair trial, granting 5,000 Euro in non-pecuniary damage to applicant Navoloaca.

The Court established in the case of Levinta vs Moldova the torture and violation of the right to a fair trial, granting 16,000 Euro to applicants in non-pecuniary damages and 2,000 Euro overall in costs and expenses.

Republic of Moldova has ended its Regional presidencies exercised during 2008

In December 2008, Moldova ended its Presidency in 4 regional arrangements: Central European Initiative (CEI), Centre for Security Cooperation – RACVIAC, CEFTA, and the South Eastern Europe Health Network. On this occasion on December 23, 2008, the Ministry of Foreign Affairs and European Integration posted the activity reports on the official web page of Moldovan Presidencies to regional initiatives – www.chairmanship.mfa.md.

Studies, Analyses, Comments

Political year 2008
Igor Botan, 26 December 2008

The political year 2008 was special. In fact, it crowned the eight-year rule of the Party of Communists of the Republic of Moldova (PCRM). Many events recorded in 2008 will have a long-term impact, others have just impressed. In this regard ten events are worth to be mentioned

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Economic retrospectives for 2008
Iurie Gotisan, 31 December 2008

In economic terms, 2008 seems to be one of the best years for Moldova after 1998. The economic growth pace of about 8 percent (according to official statistics) made 2008 a special year in terms of dynamic of Moldovan economy in the last years (despite all disasters that hit it, climatic, financial or economic) and any critical spirit should probably admit this fact

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