Interview with Minister of Economy of Moldova

Moldova recovers from crisis

 Many western companies move their production to our country – said Moldavian Minister of Economy to Rzeczpospolita daily

Rz: To what extent has the financial crisis affected Moldova?
Valeriu Lazar: In 2009 the Moldavian GDP experienced a 6-percent slump. The crisis hit also Moldova, but in a different way than other countries. The banks retained financial liquidity. Yet, we rely on external trade and other factors, such as job migration. In fact we are a global leader in that area. Before the crisis in 2008 transfers from our citizens working abroad topped one billion US dollars a year, which is 33 percent of our GDP. Stagnation in the countries of their employment had a negative bearing also on the condition of our economy.
Deteriorated situation at our main partners, Russia, Romania or Italy, hit also Moldavian exports. In 2010 the GDP recorded a 7-percent growth, but it only allowed us to compensate for the losses incurred in 2009.
Rz: Where do Moldavian citizens work?

A half of them find employment in the countries of the European Union, others – in Russia.

Rz: What steps were taken by the government in Kishinev in the fight against the crisis?

In September 2009 we have elaborated a programme for economic recovery and financial stabilization.We introduced tight budget discipline and departed from such stumbling blocks as monopolization of import and export trade. We started from anti-crisis decisions, which did not require great investment, but political will and skilful implementation. Improvement of external situation helped us in recovery from the crisis. Financial aid from outside stabilized the Moldavian budget and aided in fulfilment of the obligations without the necessity of dismissing people or cutting wages. We established cooperation with the International Monetary Fund. Moldova has overcome the crisis, but the situation is not stable. Transport and construction industries still struggle to recover from the stagnation. The economic downturn has revealed distortions in the economic system. That is why it is the task of the authorities in Kishinev to prepare agreements aimed at changing the principles governing the economic growth. It cannot be achieved in one year, but instead we can expect that it will last for decades.
Until the crisis we had illusion of financial stabilization. 70 percent of Moldavian GDP was composed of import duties. New workplaces were not created. There was no improvement in the political system. We have to change it. We want to attract investment and change the business climate.

Rz: Has Moldova improved the climate for investors?

We have prepared regulations establishing so called industrial parks (special economic zones). It is a good instrument to attract investment. We have many interesting projects. A great number of western companies have already moved their production to our country. Moldova is an attractive place for entrepreneurs intending to optimize their expenses. That is why we work on improvement of the investment climate and the judicial system; we prepare guarantees for investors, fighting with such negative phenomenon as corruption. A good example of the operations of western companies in the Moldavian market is a German concern Draexlmaier producing automotive accessories. It has five plants in Romania. However a part of its production is located in our country. Within two years of operations the company has become fourth on the list of the biggest Moldavian exporters. Enormous potential for investors is offered also by the agricultural sector. We work on reforms, which are expected to provide for investors access to such assets as land.

Rz: Who are the main trading partners of Moldova?
As regards the group of countries, 50 percent in the structure of Moldavian exports is represented by the European Union. 40 percent by the Community of Independent States. A leader among exporters is Russia with a 25-percent stake in exports. Subsequent positions behind Russia are occupied by Ukraine and Romania. We maintain trade relations with the East as well as the West. A half of our fellow countrymen work in the West and the same number in the East. In connection with the above we should carry out a balanced external policy.
Rz: Do Moldavian banks credit the economy?
The banks have resisted the crisis and people did not loose confidence in them. Yet their share in crediting the economy is small – more than 10 percent.

Interview conducted in Kishinev by Tatiana Serwetnyk

Valeriu Lazar, Deputy Prime Minister and Minister of Economy of Moldova since 2009. In the years 2004 – 2005 he acted as a deputy minister of economy. Earlier he was a councillor to the deputy prime minister, minister of economy and the head of a department for external economic contacts in the Ministry of Economy and Reforms. In 1994 he worked in the Foreign Investment Agency in a department responsible for foreign cooperation.