Experts say Moldova to face difficult economic year in 2015, to get out of crisis in 2016

Chisinau, 15 April /MOLDPRES/- The year 2015 will be difficult from the economic viewpoint, and the public authorities seem not to be sufficiently ready to cope with difficulties, according to a new MEGA report, launched today by the Expert Grup independent analytical centre. Experts forecast a 0.2-per cent decrease of the Gross Domestic Product in case of optimistic developments, while pessimistic forecasts show a 1.8-per cent reduction.

The constraints are both external and internal. In particular, the worsening of the economic situation in Russia and Ukraine, aggravation of the security crisis in Ukraine, maintenance of Russian trade restrictions, as well as slow recovery of EU economies will continue putting pressure on the Moldovan economy, the report's authors said.

They also noted that "these constraints are enhanced by internal evolutions, worsening of the situation in the banking sector and national currency volatility lowered much level of confidence of consumers and companies in economy, and therefore, most sectors are to register decline."

Moreover, Moldova enters recession "largely unprepared, with a weak banking sector, minimum confidence of people in banks and national currency, a budget deficit that does not leave much room for maneuver and a level of currency reserves close to the admissible minimum." These economic and financial shocks "could have been foreseen", the experts said.

"The crisis in the banking system continues to represent the main danger for the country's national security, and the way the authorities were involved in settling it is inadmissible", the executive director of the Expert Grup centre, Adrian Lupusor, said. "The authorities limited themselves to several superficial actions", although they had all legal and institutional instruments necessary to improve the situation.

The fundamental reasons that enabled the outburst of the crisis in the banking system have not yet been removed and hence, there is a risk for similar shocks to be repeated in the long run. The situation is worsened by restriction of the monetary policy promoted by the National Bank of Moldova, which, given the recession situation, inhibits even more the economic activity. In this context, Expert-Grup recommends relaxation and not toughening of the monetary policy, in order to direct liquidity excess from the banking system into the economy. The problem of the three banks "must be solved through other levers than the ones of monetary policy".

The economists recommend that the authorities implement a stimulatory fiscal policy and not a restrictive one for entrepreneurial activity, and the budget gaps should be covered through adjustment of public expenditure and not by toughening the tax burden.

Signing of a memorandum with the IMF will provide guarantees necessary for the country's macroeconomic stability, by unlocking other funds from development partners, modernising infrastructure, enhancing the demand for the workforce and providing technical support for the government and National Bank of Moldova, the centre also said.

The Economics Ministry forecasts a one-per cent decrease of the economy in 2015, after a 4.6-per cent growth in 2014.

 (Reporter V. Bercu, editor L. Alcază)