Weird 2020: humility, depression, rebellion, accepting a new reality
InfoMarket Agency’s comment
Actually, the 2020 promised to be not boring for Moldova – the country was expecting presidential elections to take place, negotiations on a new program with the IMF, and important geopolitical changes at the international level, hence, “bread and circuses” ought to be anticipated. But, with a light greeting from the Chinese city of Wuhan, the year passed in the spirit of the best apocalyptic movies, granting us a new experience and "unforgettable" impressions. We were tested for economic sustainability, mental stability and survival in the literal sense of the word. By and large, "we have learned all types of rain: vertical rain, slanting rain, horizontal rain, and even rain that comes from the bottom up," exact as in the movie "Forrest Gump."
InfoMarket Agency reminds the most resonant events of 2020.
The world has gone a little crazy. Moldovans are no strangers to living in an era of change. But this year the entire planet turned out to be surprisingly small, and humanity was strong and vulnerable at the same time. The pandemic has spread to all countries and continents. The UK has officially left the EU. Australia suffered from large forest fires, billions of animals died, an ecological disaster occurred in Kamchatka. Oil prices have collapsed. The presidential terms of the Russian head of state Vladimir Putin were reset, and Alexander Lukashenko was again elected President of Belarus, which caused large-scale protests. Joe Biden became the President of the United States, outstripping Donald Trump. A military conflict erupted between Armenia and Azerbaijan in Nagorno-Karabakh. Destructive earthquakes occurred in Turkey, Greece, and Croatia and many more “inhuman” events took place: mass protests and the strengthening of the Black Lives Matter movement in the United States, a wave of protests due to the brutal murder in France on religious grounds, etc. For the first time in the history of the earth planet, a private company has sent people into space, the largest medical corporations have started to develop a new type of vaccine against COVID-19, a new, "British" strain of coronavirus has been identified...
Pandemic, lockdown and state of emergency. Ten days after the first case of COVID-19 was officially confirmed in Moldova (on March 7, a Moldovan citizen “brought” the virus from Italy, where the epidemic had reached colossal proportions by that time), a state of emergency was introduced in our country for the first time in history. From March 17 to May 15, there was a strict lockdown in the country: business activities got limited, educational institutions switched to a remote mode, increased sanitary security measures were taken, government agencies started working on a special schedule, and international movements of people were strictly limited. Everything turned upside down, but such a "respite" was at first perceived even with cautious optimism. It should be noted that external donors, development partners and international organizations offered assistance to Moldova in managing the “pandemic crisis”. For example, the European Commission has provided a €9 million grant in support of the COVID-19 crisis response and reforms under the Association Agreement with the EU; the Council of Europe Development Bank has allocated a €70 million loan for emergency response to COVID-19 and support for the SME sector; in late 2020 Moldova received from the European Union the first €51.62 million tranche from the new EU macro-financial assistance Omnibus totaling €100 million, etc. Economic agents also rallied to provide assistance to medical institutions: they provided funds for the procurement of medical equipment, protective equipment, etc.
Uncertainty and recession. It turned out that the state of emergency did not help contain the spread of the virus, and the ensuing targeted restrictions under the "state of emergency" regime seriously hit all spheres of life and the economy. The authorities approved a package of measures to support businesses and citizens, several times adapted the state budget to new realities, loosened and tightened the regimes. Nevertheless, many companies and entire industries were unable to fully restore their work (HoReCa, tourism, cargo transportation, etc.), unemployment increased (especially in the II and III quarters), as well as imports (-9.9%) and exports (-12.5%), the industry recorded a decline of almost 7% (over 10 months), the volume of investments decreased (-4.4%), etc. Against the backdrop of the crisis, the summer decline in electricity prices and the November reduction in natural gas tariffs (by 11.1% and -12.2% for residential consumers) became good news. It is expected that in 2020 the decline in Moldova's GDP will exceed 6.5-7%, but the economy is expected to recover in the next two years (4-4.5% growth by per year).
The severe drought was a double blow to the economy. Unfavorable weather conditions affected many crops, especially sunflower and corn crops. Gross agricultural production in Moldova in January-September 2020 amounted to about 21 billion lei, having decreased by more than 25% compared to the same period in 2019. In the crop sector, the decline was 35.5%. To support agricultural producers affected by drought and other unfavorable weather conditions, the authorities have provided special terms in the Interest Rate Subsidization Program and the VAT Refund Program. Farmers received subsidies to compensate for losses, and a moratorium has been introduced on inspections of agricultural producers affected by natural disasters. Despite such privileged assistance, agrarians consider these measures insufficient to support Moldova’s main industry and went out to protests. During the protests, agricultural producers (on the off-chance) demanded the resignation of the government and snap parliamentary elections...
The contract with Avia Invest on the Chisinau airport concession was terminated, since, according to the official version, the company did not fulfill its contractual obligations regarding the construction of concession facilities, and its investment debt amounted to about €66.2 million. Avia Invest, in turn, announced that it has invested more than €90 million in the development of the infrastructure of the Chisinau airport and fulfills all investment obligations in accordance with the plan and contract on the Chisinau airport concession, accusing the Moldovan authorities of an attempt to raider the company. Avia Invest has filed a €885 million claim with the Stockholm Arbitration Court against the Moldovan government and stated that the European court forbade the termination of the concession agreement until the final decision of the arbitration in this case. While the fate of Moldova’s main "air gates" is being decided, measures have been taken in the country to develop the small airfields. In the autumn, a regulatory act took effect that will allow legalizing the activities of small airfields in Moldova, for example, for sports activities – the airfield in Vadul lui Voda, for commercial and transport activities – the airfield in Marculesti, for tourism activities and promotion of Moldova’s wineries - in Et Cetera, etc.
The "billion law" has been abrogated, and the Republican stadium will return to public ownership, but this is not for sure. In late 2020, Moldovan parliament abolished the so-called “billion law”, which was shifting onto the shoulders of citizens the debt generated by "the theft of the billion." Moldovan authorities have decided to abolish this additional tax pressure on the population and economy of Moldova, aiming to direct the money intended for paying off the debts of the three liquidated banks to the NBM to support farmers. In addition, the MPs approved a bill providing for the return of the former Republican stadium’s territory into state ownership and the cancelation of the transfer of this site to the United States for the construction of its new embassy. But Moldova's partners immediately warned of the risks of practical application of these initiatives: the IMF, the WB and the US Embassy said that the abolition of the "billion law" could pose a serious threat to Moldova’s macroeconomic and financial stability, and the US Embassy called on the Moldovan authorities to “rethink” the decision on the Republican stadium and fulfill the previously reached agreements. The effect of both laws was suspended by the Constitutional Court; a final decision on them has not yet been approved.
Mission Impossible: A new program with the IMF has not been signed. This year, the IMF has disbursed the last $20 million tranche to Moldova under the previous program, and in late July, an agreement was reached at the level of experts of the IMF Mission on a new $558 million three-year economic reform program with Moldova. To sign the new program, the Moldovan authorities had to take a number of preliminary measures. They concerned the independence of the National Bank, supervision of the financial sector and transparency in the fiscal area. The only unfulfilled obligation of the Moldovan side is related to the parliament’s appointment of three vice-presidents of the National Bank. But in December, the government led by Ion Chicu resigned, so further negotiations on a new program with the IMF will take place in 2021 with the new government and taking into account new circumstances, for example, the cancellation of the pension reform launched in 2017 and the standard retirement age (from 2022 for women - up to 57 years, and for men - up to 62 years). By the way, on the eve of its resignation, the government adopted a number of important decrees to be "raked" by the next Cabinet, as well as the total national debt, which in late December exceeded 66.9 billion lei (33.2 % of Moldova's GDP).
#NeamPornit or welcome home! Against the background of the general depressed mood and irritability, the wonderful, by its essence and degree of patriotism, #NeamPornit campaign to promote domestic tourism, launched by the Investment Agency, became a ray of light. Moldovans discovered new locations, tourist sites, and historical facts about our small country. By the way, at the start of the pandemic outbreak, Moldova was perceived as the safest haven for labor migrants. Thousands of Moldovan guest workers, as well as representatives of the Diaspora, returned home to wait out the troubled times in their homeland. And although they don’t have a job here, all their civil rights have been preserved, and even death is calmer at home. The events of this year have brought us closer to each other. Although, not for long: the closer to the elections, the more often sympathy and empathy were replaced by mutual hostility: who is investing more in the development of the country - the permanent population or labor migrants / Diaspora? This is a topic for a separate analysis.
The new reality is a virtual one. The pandemic year has cut off the path to life without internet. Business processes, government, education and even entertainment in the future will be built with an eye to online accessibility. There is quite a lot of progress in the field of electronic government in Moldova - the Public Services Agency continues to methodically strengthen information systems, the government service portal is expanding, permits are issued through a "single window" (SIA GEAP), banks and financial institutions are introducing modern applications for remote customer service, the fiscal authorities are building up their capacity to have access to all the money turnover of citizens and economic agents. The turnover of cash is gradually limited, online stores are developing, modern payment instruments are being introduced, etc. But this year was absolutely disastrous for the education system, which turned out to be not ready for remote work. Moreover, remote learning has exposed other systemic problems in education along with its conservatism and unwillingness to change. Good or bad, everyone who works with the Gen Z will have to adapt.
Doctor - the profession of the year. Despite the fact that there has emerged a whole movement of Covid-dissidents who believe that the pandemic is a new type of biological weapon, developed artificially, everyone had to rethink the value of the doctors’ work. The majority has the virus in asymptomatic or mild form, but about 2% of those infected still die from the complications caused by the coronavirus. Perhaps, only after being under the hood of the virus we start realizing that “while we are alive, we can fix everything,” and doctors are real heroes of our time. Piety and admiration for doctors were expressed in deep gratitude, including by financial means. In 2020, doctors have had their salaries increased three times (by 70% in total) and next year they will be increased by another 40%. The state promised allowances and special payments for specialists who are involved in the fight against COVID-19, and the relatives of doctors who died from complications caused by the coronavirus are entitled to a one-off allowance worth 100 thousand lei.
For the first time in Moldova’s history, a woman became President. A historic event for patriarchal Moldova - a woman takes the presidency. The pro-Western candidate Maia Sandu won the presidential elections, outstripping in the second round of elections in terms of votes (57.72%) the incumbent head of state Igor Dodon who is considered one of the supporters of Russian President Vladimir Putin in the post-Soviet space. The new President announced that she will take urgent steps to rebuild the country after the crisis and improve the situation in the justice system. Maia Sandu also intends to tear down the walls that the previous leadership of Moldova erected in order to renew relations with partners and neighboring states. Just a few days after the inauguration of the President-elect, for the first time in the past five years, Romanian President Klaus Johannis arrived in Moldova on an official visit. This event marked the beginning of a reset in relations between Moldova and Romania. At the beginning of 2021, Maia Sandu is scheduled to visit Kiev at the invitation of her Ukrainian counterpart Volodymyr Zelensky.
The 2021 New Year promises to be no less interesting for the whole world. Moreover, there is a high probability that Moldova will hold snap parliamentary elections. Yet, in the struggle for power, I wouldn’t like to see the fight against the spread of COVID-19 and economic recovery going in the background. I wish us to take from the 2020 year the unity, the solidarity and the mutual support that we provided to each other! //31.12.2020 - InfoMarket.