Profit
№_12_2023, decembrie 2023
Tema numărului
№_6_2020 (279), iunie 2020Some key macroeconomic indicators for Romania during the pandemic times. The case of Moldova.
On 1 June 2020, the BNE Intellinews, London published a full article on how is Romania coping with the impact of Covid-19. The current pandemic crisis hit Romania in a way similar to many other Eastern European countries1. Specific to Romania, however, was the fact that the infection rate was accelerated by the large number of Romanians returning from other developed EU countries such as Italy, Spain, France and Germany, and from Great Britain. This large group of emigrants were labourers in various sectors of those countries such as agriculture, social assistance, construction, hospitals, retail, etc. They simply wanted to get the protection of a more isolated Romanian space than the "hot regions" such as northern Italy or large metropoles such as Paris or London. According to the Romanian government, some 1.3 mn Romanians decided to come back as of May 2020 and the influx has continued since.
So far, nothing special. However, the Romanian macroeconomic equilibrium before the crisis was very fragile, to put it mildly. In November 2019, a new government assumed office with no majority in the parliament, a fact which complicated the economic fragility of the country even more. The new government formed by the National Liberal Party blamed (like in many other cases) the Social Democratic Party for the disastrous inheritance it left, with a much high budget deficit, trade and current account deficits and increasing foreign debt. On top of all of these disequilibria, Romania's large retired population and the "special pensions" have created unbearable pressure on an already very frail budget. A few key macro-economic indicators are presented in Table 1 (on a yearly basis (2015-2019) and on a monthly basis for 2020 to reflect the pandemic’s impact).
A few striking features of the current evolutions could be easily detected. To start with, when looking at the loans to the population and other non-governmental entities granted by banks and other non-bank financial institutions, one could observe the slow pace of increase during the last four months when the pandemic crisis hit Romania in full (see Graph 1). Also, the level of overdue loans started to nudge up due to the evident difficulties of the borrowers to pay the due instalments to the banks. The government also issued guidelines to commercial banks to grant short holidays for repayments to their borrowers or to postpone repayments. This picture will be even worse when the full impact of the pandemic is assessed and until such times when the Romanian economy will start to recover. Some international financial institutions (IMF, World Bank, EBRD and others) predicted that 2021 will be a year of growth for Romania assuming that the pandemic crisis will be over for good. As no vaccine is yet available against COVID-19, this could be a heroic assumption.
Second, the level of deposits made by the population and other non-governmental entities with banks slightly increased. While such a trend is almost difficult to believe, it has an explanation though. The 1.3 mn Romanians returning home brought with them some money which they deposited in foreign currencies with the Romanian banks. The increase of foreign currency deposits is one of the most unexpected features of the population's behaviour during this turbulent pandemic crisis. In addition to this, the population was quite prudent in buying white goods such as TV sets, furniture and clothing, which are not immediate needs at such times. The situation could also be explained through "stay at home" measures and the "national emergency status" introduced by the Romanian authorities in April 2020, followed in May by the "alert status" in force up to June 15. Practically all large shopping centres were closed and the acquisition of non-food products by the Romanian population was almost impossible. The modest increase in the population's savings has been a good development. The government, the National Bank of Romania (NBR) and the commercial banks should implement adequate measures to consolidate such a good trend. The level of interest rates, which should be adequate, and the quality of banking services (including through electronic means) are crucial in this respect. The current attitude of some commercial banks and Romanian politicians that the savers should bear alone the costs of the pandemic crisis is wrong.
One other major topic during this pandemic, apart from the health security and restrictions, is the fate of some 5.2 mn pensioners which Romania has, out of a total population of 19.4 mn residents (23.5 mn as of December 1989). The pension system is very unfair with an average pension of 1,292 RON/month, with two unbelievable extremes of the lowest social pension of 700 RON/month and 70,000 RON/month in the case of "special pensions". The whole of society is now focused on this in the context of a law promulgated in 2018 which stipulates an increase of 40% of all pensions starting on September 1, 2020. There is no money for such a large increase proposed by the Social Democratic Party in a populist attempt to gain the votes of this large group of voters. As previous attempts to eliminate some special pensions were declared "unconstitutional", the government needs to focus first on taxation of up to 90% of the special segment. Second, the government should explain to the 5.2 mn retired Romanians that a 40% increase is unsustainable. If the increase goes ahead, then next year the increase of expenses from the budget will be of high magnitude (81 bn RON in 2021 alone). Either way, many people will be disappointed.
Finally, all of the above developments put high pressure on another key indicator, namely the foreign debt of the country. Needless to remember that Romania started its transition period 30 years ago with zero foreign debt. Meanwhile, as of end-February 2020, its level surpassed €110 bn (see Graph 2).
The pandemic will build up the pressure on Romania's current account even further. Most likely the government will continue to borrow from external markets. According to some analysts, this has been made unfortunately at interest rates which are much higher than those of Bulgaria, Poland and Hungary due to the high level of already accumulated debt and the fragility of country's economic recovery. The ratio of foreign debt/GDP which so far was calculated at 35-45% will increase sharply, especially this year when the Romanian GDP will contract (various projections put this decline to 5% or more).
To control all these macroeconomic correlations, Romania needs a set of domestic measures, amongst which are relaunching the economy, developing its infrastructure, agriculture, tourism and IT sectors, stimulating further the savings of the population, taxation of special pensions and manifest prudence in increasing pensions starting with September 1, 2020, improving the education of young generation and many similar long-term measures. However, in the very short term, the Romanian authorities and the whole of society should first and foremost focus on the grants and loans offered by the EU (€33 bn, of which €19.6 bn as grants and the rest as loans) that were allocated for Romania out of the €750 bn Recovery Fund against the negative impact of COVID-19. Only by acting together (internally and externally) can Romania succeed.
The case of the Republic of Moldova (Moldova in this article) although similar in many ways to that of Romania is still different and would deserve a distinct and detailed presentation. The pandemic crisis hit also Moldova with clear economic consequences on the country's macroeconomic indicators, as presented in Table 2 below. Differently as compared to Romania, both deposits and loans had very flat trends which are clear indications of populations prudence in very uncertain times.
Moldova has also a good segment of the retired population, out of 2.68 mn residents in the country, with very modest pensions. They manage their day-to-day life with the help of remittances (decreasing) sent by someone million of Moldovans working abroad. The total gross foreign debt of the country increased to $7.55 bn as of end-2019 (Moldova also started its transition with zero foreign debt, but for very different historical reasons). The ratio of this key indicator to GDP was already at 63.1% as of end-2019, which is much higher as compared to Romania's similar indicator. Such a ratio will likely increase this year as Moldova will continue to borrow from external partners (mainly the Russian Federation) and other IFIs and its GDP will probably contract. Efforts to keep the level of the country's indebtedness under control are required, but this will be difficult in the wake of the incoming elections.
Both Romania and Moldova started to relax their restrictions introduced due to pandemic crisis but for now, they are still in 'uncharted waters' from the economic point of view, like in fact many other countries in the world.■
_____________________________________________________________________________________________
Alexandru M. Tănase is an Independent Consultant and Former Associate Director, Senior Banker at EBRD and former IMF Advisor. These represent the author’s personal views. The assessments and views expressed are not those of the EBRD and/or the IMF and/or indeed of any other institutions quoted. The assessment and data are based on information as of end-May 2020.
Câţiva indicatori macroeconomici cheie ai României în timpul pandemiei. Cazul Republicii Moldova.
În data de 1 iunie 2020, publicaţia BNE Intellinews, cu sediul la Londra, a publicat un articol despre cum face faţă România impactului economic al crizei declanşate de pandemia COVID-19. Actuala criză pandemică a lovit România într-un mod similar cu ţările din Europa de Est1. Specific pentru această ţară a fost faptul că rata de infectare a înregistrat o creştere accelerată, din cauza numărului mare de români, care s-au întors din alte ţări dezvoltate ale Uniunii Europene (UE), în special din Italia, Spania, Franţa, Germania şi Marea Britanie. Acest grup mare de migranţi erau muncitori încadraţi în diferite sectoare ale economiei, cum ar fi agricultură, asistenţă socială, construcţii, comerţ etc. Populaţia întoarsă acasă îşi dorea protecţia unui spaţiu românesc mai izolat, decât cel al „zonelor roşii”, ca, de exemplu, nordul Italiei sau marile metropole, cum ar fi Parisul sau Londra. Potrivit datelor Guvernului României, până în luna mai, circa 1,3 mil. de români au decis să se întoarcă în ţară, iar acest influx a continuat şi de atunci încoace.
Până aici, nimic special. Cu toate acestea, într-o exprimare eufemistică, echilibrele macroeconomice ale României erau foarte fragile înainte de criză. În luna noiembrie 2019, un nou Guvern a preluat puterea fără a avea însă o majoritate parlamentară, ceea ce a influenţat şi mai mult fragilitatea economică a ţării. Noul Guvern format de Partidul Naţional Liberal (PNL) a blamat (ca şi în multe alte cazuri) Partidul Social Democrat (PSD) pentru moştenirea dezastruoasă pe care i-a lăsat-o. De nenumărate ori, PNL s-a referit la faptul că datoria externă este în creştere, la fel ca şi deficitul bugetar, iar deficitul de cont curent se adânceşte tot mai mult. În plus, pe lângă toate aceste dezechilibre, marea majoritate din populaţia României este de vârstă pensionară. Respectiv, pensiile pentru limită de vârstă, precum şi „pensiile speciale” au creat o presiune de nedescris asupra bugetului, care şi aşa era fragil. Câţiva indicatori macroeconomici cheie sunt prezentaţi în Tabelul 1 (pe o bază anuală (2015-2019) şi pe o bază lunară pentru anul 2020 cu scopul de a reflecta impactul pandemiei).
Câteva trăsături evidente ale evoluţiilor curente sunt uşor de desprins. În primul rând, dacă analizăm împrumuturile acordate de bănci şi alte instituţii financiare nebancare populaţiei şi organizaţiilor neguvernamentale, observăm ritmul lent de creştere al acestora, în ultimele patru luni, pe fondul pandemiei de coronavirus (vezi Graficul 1). De asemenea, este în creştere nivelul împrumuturilor restante. Împrumutaţii înregistrează întârzieri la plata ratelor la credite din cauza dificultăţilor financiare. În acelaşi timp, Banca Naţonală a României (BNR) a permis împrumutătorilor, instituţii bancare şi nebancare, să amâne la plată creditele persoanelor fizice afectate de pandemia COVID-19. Această situaţie va arăta şi mai alarmant, atunci când va fi analizat impactul total al pandemiei şi va continua până când economia României va începe să se redreseze.
Presupunând că această criză pandemică se va termina definitiv, unele instituţii financiare internaţionale (Fondul Monetar Internaţional (FMI), Banca Mondială, Banca Europeană pentru Reconstrucţie şi Dezvoltare (BERD) şi altele) au prognozat pentru anul 2021 o revenire economică care va duce la o expansiune a PIB-ului României. În acelaşi timp, având în vedere că vaccinul împotriva COVID-19 încă nu este disponibil, această presupunere ar putea rămâne una eroică.
În al doilea rând, a crescut uşor nivelul depozitelor populaţiei şi ale entităţilor neguvernamentale în băncile comerciale. O asemenea tendinţă se manifestă prin faptul că cei 1,3 mil. de români, care au decis să se întoarcă în ţară, aveau resurse financiare disponibile, pe care le-au depus în valută la băncile comerciale româneşti. Majorarea soldului depozitelor în valută este una dintre cele mai neaşteptate trăsături ale comportamentului populaţiei în această perioadă tulbure a crizei pandemice.
În plus, populaţia României a fost foarte prudentă şi a renunţat în această perioadă la achiziţionarea bunurilor de consum mai puţin importante (de exemplu, televizoare, mobilă, îmbrăcăminte etc.). Această situaţie poate fi explicată prin decretarea stării de urgenţă naţională la mijlocul lunii martie, urmată de starea de alertă valabilă până la 15 iunie. Respectiv, toate centrele comerciale au fost închise, iar achiziţionarea produselor nealimentare neesenţiale de către populaţie a fost practic imposibilă.
Deşi modestă, creşterea continuă a depozitelor populaţiei a cunoscut o evoluţie vizibilă. BNR şi băncile comerciale trebuie să implementeze măsuri adecvate pentru a consolida aceste tendinţe pozitive. Rata dobânzilor, precum şi calitatea serviciilor bancare (inclusiv prin mijloace electronice) sunt cruciale în acest sens. Atitudinea existentă a unor bănci comerciale şi a unor politicieni români, precum că cei care deţin depozite trebuie să suporte singuri costurile crizei pandemice este total greşită.
Pe lângă securitatea sanitară, unul dintre subiectele majore abordate, în perioada pandemiei, a fost situaţia celor aproximativ 5,2 mil. de pensionari români, din totalul populaţiei de 19,4 mil. de persoane (23,5 mil. de persoane la sfârşitul lunii decembrie 1989).
Actualmente, sistemul de pensii în România este foarte inechitabil. Pensia medie lunară constituie 1 292 lei româneşti. În acelaşi timp, pensiile sunt extrem de discrepante. Cea mai mică pensie socială lunară constituie 700 de lei româneşti, iar în cazul „pensiilor speciale” suma poate ajunge până la 70 de mii de lei româneşti. În prezent, întreaga societate este concentrată pe acest subiect, întrucât, în anul 2018 a fost promulgată o lege ce stipulează o creştere de circa 40% a tuturor pensiilor de la 1 septembrie 2020. Este evident faptul că astăzi autorităţile nu pot să aloce resurse financiare suplimentare pentru a asigura o asemenea majorare a pensiilor, propusă de PSD cu scopul de a obţine voturile alegătorilor. Deoarece încercările repetate de a elimina „pensiile speciale” au fost declarate ca fiind „neconstituţionale”, Guvernul trebuie să se concentreze, în primul rând, pe taxarea cu până la 90% a acestui segment special.
În al doilea rând, autorităţile trebuie să explice celor 5,2 mil. de pensionari români că o creştere de circa 40% este nesustenabilă. Dacă, totuşi această majorare va avea loc, anul viitor cheltuielile bugetare vor spori semnificativ (81 mlrd. de lei româneşti în 2021). Orice decizie se va lua, mulţi oameni vor rămâne dezamăgiţi.
Toate evoluţiile menţionate mai sus influenţează un alt indicator cheie – datoria externă a ţării. Acum 30 de ani, România a intrat în perioada de tranziţie fără a avea vreo datorie externă. Între timp, la sfârşitul lunii februarie 2020, nivelul acesteia a depăşit €110 mlrd. (vezi Graficul 2).
În viitor, pandemia va pune o presiune şi mai mare pe contul curent al României. Cel mai probabil că Guvernul va continua să împrumute de pe pieţele externe. Potrivit analiştilor financiari, din cauza fragilităţii relansării economice a ţării, precum şi a nivelului existent al datoriei externe, România a beneficiat de împrumuturi externe la dobânzi mult mai mari, decât cele acordate Bulgariei, Poloniei şi Ungariei.
Raportul datoriei externe faţă de PIB, care până acum a constituit 35-45%, va spori considerabil, în special, în anul curent, când PIB-ul României, potrivit unor estimări, se va reduce cu aproximativ 5% sau mai mult.
Pentru a controla toate aceste corelaţii macroeconomice, România are nevoie de un set de măsuri interne pe termen lung. Acestea ar trebui să se refere la relansarea economiei, la dezvoltarea infrastructurii, agriculturii, turismului şi sectorului IT, la stimularea depunerilor individuale ale populaţiei, precum şi la taxarea pensiilor speciale. De asemenea, autorităţile trebuie să manifeste maximă prudenţă în majorarea pensiilor începând cu 1 septembrie 2020.
În acelaşi timp, pe termen scurt, Guvernul român şi întreaga societate trebuie să se focalizeze pe sumele nerambursabile şi împrumuturile oferite de UE (€33 mlrd., dintre care €19,6 mlrd. – ajutor nerambursabil). Aceste sume au fost alocate României în cadrul fondului de refacere economică pentru ţările UE afectate de impactul epidemiei de coronavirus. Doar acţionând împreună, atât pe intern, cât şi pe extern, România va reuşi să depăşească criza economică, cauzată de COVID-19.
Cazul Republicii Moldova (Moldova în acest articol). Deşi, cazul Moldovei e similar cu cel al României la mai multe capitole, există totuşi diferenţe şi ar merita o prezentare distinctă şi mai detaliată.
Criza pandemică a lovit Moldova cu consecinţe economice clare asupra indicatorilor macroeconomici ai ţării (vezi Tabelul 2). Comparativ cu România, atât depozitele, cât şi împrumuturile atrase de băncile comerciale moldoveneşti au avut tendinţe foarte plate. Acest fapt se explică prin instituirea regimului de autoizolare şi, respectiv, îndemnul autorităţilor de a fi prudenţi într-o perioadă atât de nesigură.
Moldova deţine, de asemenea, un număr semnificativ de pensionari. Din numărul total de circa 2,68 mil. de persoane rezidente în ţară, 703,8 mii sunt pensionari, majoritatea cu pensii foarte modeste. Aceştia îşi duc viaţa de zi cu zi cu ajutorul remitenţelor (în scădere) trimise acasă de cei circa un milion de moldoveni care lucrează în străinătate.
La finele anului 2019, datoria externă brută a ţării s-a majorat până la $7,55 mlrd. La fel ca şi România, dar din motive istorice foarte diferite, Moldova a intrat în perioada de tranziţie cu datorii externe zero. La sfârşitul anului trecut, raportul acestui indicator cheie faţă de PIB a constituit 63,1%, aproape dublu comparativ cu indicatorul similar al României.
Există probabilitate că, în anul curent, această raţie va spori, întrucât Moldova va continua să atragă împrumuturi de la parteneri externi, în special de la Federaţia Rusă, precum şi de la alte instituţii financiare internaţionale. În acelaşi timp, cel mai probabil PIB-ul ţării se va contracta. Astfel, sunt necesare eforturi bine determinate pentru a menţine sub control nivelul de îndatorare al ţării, fapt dificil de realizat în lumina alegerilor care se vor desfăşura în 2020.
Atât România, cât şi Moldova au început să-şi relaxeze restricţiile introduse, din cauza pandemiei COVID-19. Totuşi, în prezent, ambele ţări „navighează pe ape necunoscute” din punct de vedere economic, ca de altfel multe alte state din lume.■
_____________________________________________________________________________________________
Alexandru M. Tănase este Consultant Independent şi Fost Associate Director, Senior Banker la BERD şi Consilier la FMI. Acestea reprezintă părerile personale ale autorului. Analiza şi opiniile exprimate nu sunt cele ale BERD şi/sau FMI şi/sau ale oricărei alte instituţii citate. Analiza şi datele sunt bazate pe informaţiile existente la sfârşitul lunii mai 2020.
Далее...
Moldovan economy and coronavirus: impact and recovery
In 2019, the Moldovan economy grew by 3.6%, with strong investments benefiting from heightened construction activity, private consumption and robust export growth being the main drivers of gross domestic product (GDP) growth. But that was before the coronavirus pandemic left Moldova, along with the rest of the world, grappling with uncertainty. Currently, the EBRD expects GDP to decline by 4.0% in 2020, followed by a swift recovery of 5.0% in 2021, as laid out in its newest Regional Economic Prospects.
The impact
Covid-19 will affect the Moldovan economy in four key ways: it will lower private consumption, there will be a drop in remittances, there will be a weaker demand for exports and investment will be delayed.
The containment measures will affect private consumption, meaning smaller firms will feel the impact first. Consumer-focused sectors such as retail, hospitality and recreation will suffer an immediate blow. These sectors account for around a quarter of the GDP, employ approximately the same share of the workforce and are mainly composed of small and medium-sized enterprises (SMEs), which contribute to 70% of overall value added and employment in the Moldovan economy. Due to low levels of liquidity, SMEs tend to have more difficulty accessing financing and are likely to face financial difficulties sooner than larger enterprises. High levels of informality in the economy, which further constrains the ability to obtain bank financing, among other consequences, will amplify the supply shock and lead to further disruption of demand.
A likely drop in remittances will weigh on disposable incomes and exacerbate the drop in consumption and investments. Remittances accounted for about 15% of GDP in 2019, making Moldova one of the most dependent economies in the EBRD regions. Up to one-third of all households receive remittances from family members abroad, and these transfers contribute to more than half of the disposable income of such dependent households on average. The inflow of remittances is expected to shrink this year since the EU and Russia, hosting the large majority of Moldovan emigrants, are facing recession as well. Given that temporary workers account for around 30% of total migrants, the International Organisation for Migration estimates that up to one-fifth of migrants were planning to return to Moldova in April. This will exacerbate the drop in consumption as well as investments, particularly in the construction sector.
Weaker demand from trade partners, including from the free trade zone, which is well-integrated into the global supply chains, will lower Moldovan exports. The automotive industry has been severely hit around the world due to supply chain disruptions and plummeting demand. Based primarily in the free trade zones and catering to the EU market, Moldova’s automotive sector was one of the main drivers of export growth in previous years. It currently accounts for 20% of total goods exports. According to some estimates, foreign direct investment (FDI) in free trade zones accounted for half of all FDI inflows pre-crisis, meaning a delay in investments is likely as well. On the other hand, the country’s low reliance on tourism will cushion the economy against the shock of the collapse of international travel.
Uncertainty, compounded by turmoil in the financial markets, and adverse economic conditions will postpone private-sector investment decisions. The construction sector, which has been growing at double-digit rates in recent years, is expected to slow, given the uncertainty regarding the economic outlook, driving down capital investments. While the sector was expected to slow down in 2020, even before the outbreak, the increase in state subsidy for the First House programme may partly support demand for residential buildings. Other investment decisions will likely be postponed by the private sector in the face of uncertainty, in line with dynamics in other countries.
The response
The Moldovan economy is entering the crisis on a good macroeconomic footing. The economy has been expanding in recent years at decent rates, with a significant contribution of capital investments and exports. At nearly US$3 billion and covering around six months of imports, international reserves held by the National Bank of Moldova (NBM) are at comfortable levels. While inflation was slightly elevated at the end of 2019, monetary policy decision-making is credible. Public debt is estimated at around 28% of GDP in 2019, leaving ample fiscal space for policy response. Multi-year efforts to clean up the financial system succeeded in putting it on significantly better footing, with tightened regulatory and governance frameworks and stronger regulator and foreign strategic investors in the banking sector. The successful completion of the last IMF programme shows the authorities’ commitment to maintaining macro-financial stability.
The emergency policy response worth around 2% of GDP is focused on tax deferrals, a temporary increase in social benefits, monetary policy easing and liquidity provision. Guaranteed minimum income has been raised from MDL 1107 to MDL 1300, while the unemployment benefit was set at MDL 2775 per month. The government also announced faster VAT reimbursement and will provide subsidised lending to SMEs. Moreover, the VAT rate for the hospitality sector was reduced from 20% to 15%. Firms that ceased operations during the state of emergency will have their payrolls (PIT and social contributions) fully compensated by the state and those that continue operating will receive up to 60%. The National Bank of Moldova cut the policy rate in the face of shrinking aggregate demand and lowering inflationary pressures. It also allowed banks to defer loan payments until the end of June 2020 and decreased the MDL reserve requirement to support liquidity among the firms and the banking sector. Moldova’s emergency response is in line with policies in the rest of the EBRD regions; 86% of economies where the EBRD invests implemented some form of tax and loan payments deferral, monetary policy was eased in two-thirds of the regions and social benefits were boosted in over 40% of the economies.
The initial policy response was designed in conjunction with ensuring financing. With the budget deficit estimated at around 7% of GDP, fiscal space and capacity is a significant challenge for the extent of the response. Declining remittances and export receipts will exacerbate an already weak current account position, albeit partly compensated for by the expected import compression. External funding sources are needed to cover the arising fiscal and external gaps – the government already obtained access to emergency funds from the IMF and other development partners, which will cover some of the financing needs. The authorities could also tap into the domestic market, as banks have expressed decent interest in previous issuances.
The opportunities
The Covid-19 crisis may lead to reconsidering the over-concentration of global value chains, thus creating an opportunity for Moldova. The crisis revealed the importance of resilience, including through placing greater emphasis on the closer markets, in relation to cost optimisation, which will likely lead to global players reorienting their supply chains. With existing experience of successful FDI attraction in the free trade zones and competitive advantages of proximity to the EU, in addition to the well-educated but cost-efficient labour force, Moldova has an opportunity to attract investments that will relocate from Asia and other developing economies back to Europe. However, the competition for FDI in the region will likely be high, and solving bottlenecks such as infrastructure, simplifying red tape and strengthening the rule of law will be critical to attract investments.
Addressing longstanding infrastructure priorities can provide stimulus to the economy in the recovery phase as well as increase its growth potential. Moldova is in dire need of significant capital investments in its road, rail and municipal infrastructure. Advancing infrastructure will improve people’s lives as well as increase productivity, enhance Moldova’s attractiveness to foreign capital and set the ground for long-term growth potential. For it to support the economic recovery and create jobs in the short-term, the speed at which infrastructure projects are implemented is crucial. Deploying additional resources to address bottlenecks to public finance project management and speeding up the implementation of capital investments would bring significant economic returns.
This crisis can and should act as an accelerator to boost digitalisation in different areas. Although the country has made a steady progress in the area of digitalisation, its usage is still relatively low. Digital solutions including e-signatures, e-commerce and e-banking are quickly becoming new business norms and the state should expand e-government platforms to provide more services. In addition, online education may become more regular – proving particularly useful for children in remote and rural areas. Appropriate digital infrastructure and regulatory framework development will be crucial in this sense, providing a much-needed boost for the country’s rural and regional development.
Authorities should encourage returning migrants to remain in Moldova. Since the recovery is likely to be subdued as long as the health crisis is not completely addressed, many returning migrants could remain home for some time. According to some estimates, the share of such Moldovans represent around 10% of the working-age population. As the private sector has been facing serious skills shortages in recent years, these people could become a significant source of labour. State-sponsored incentives to enter the domestic market could be helpful in the short term. However, and much more importantly, reintegrating Moldovans into the Moldovan labour market calls for a reinvigorated pursuit of structural reforms that would help create economic opportunities and environments conducive to the private sector and entrepreneurial initiatives.■
____________________________________________________________________
The views expressed in the article are those of the authors only and not of the EBRD.
Далее...
