Democratic Party of Moldova Will Account for the Economic Crisis

The Democratic Party will be appointed the main culprit of the future unpopular measures in the economy and the public sector After the ACUM-PSRM alliance came to power, a ‘code red’ was put out in the Moldovan economy. The new Finance Minister hastened to state that the country’s budget has a “huge hole” of four billion lei. According to representatives of the ruling coalition, the deficit of the state treasury is a direct consequence of the “hasty” and ineffective decisions of the previous government. Although the reasons for Moldova’s current financial problems have been well known for a long time, it’s not comforting the new authorities. Worst of all, the set of available tools to rectify the situation they have is extremely scarce and the use of any of them will have consequences – for the most part negative. First of all, we are talking, of course, about Western loans. Despite the deblocked macro-financial assistance from the European Union, the authorities have long been in contact with the IMF to continue the loan program. However, as known, the Fund allocates funds only under certain conditions – usually very strict. Perhaps that is why from the first days of the new government there were rumors in the country about the upcoming ‘shock therapy’ in the economy. The government itself added fuel with its members hinting at a possible increase in tariffs, excise duties and taxes. Today it is already clear that the belt-tightening policy is an objective reality. This is directly evidenced by the measures initiated by the Ministry of Finance: taxation of food vouchers, cancellation of personal tax exemption for individuals with income over 360 thousand lei per year, increase of excise duties on tobacco products, etc. The country took particularly sensitive the decision to increase VAT to 20% for restaurants and hotels – which was reduced by the Democrats in the course of the tax reform just a year ago. Many experts expressed fears that such turbulence will worsen the already not great business climate in the country, forcing the business to finally go into the shadows. The government has to justify itself by saying that these measures is a requirement of the IMF. This was confirmed in an interview with NewsMaker by Volodymyr Tulin, IMF’s Resident Representative in Moldova, noting that all the changes were discussed during the negotiations on the new tranche. He also implicitly hinted that failure to fulfill the conditions set by the Fund is fraught with ‘zeroing’ of negotiations and delay in receiving money. The government, in fact, found itself in a stalemate, without even the slightest possibility of economic maneuver. There are simply no internal reserves for rapid growth, and loans are given only under draconian conditions. In this situation, the authorities are forced to waste a huge trustworthiness from the population for the implementation of unpopular measures. Perhaps this caused the increased pressure on the PDM, which can be clearly seen in recent weeks. The ruling alliance is not only trying to shift the attention of the public from the poor state of the economy to those who led to it, but also creates the ground for punishing the personalities of the previous regime for all the costs in public image suffered by the current coalition. It is not surprising that the tone of statements regarding the PDM and its leader is becoming increasingly harsh. Opinions about the need for vetting of corrupt officials, criminal prosecution of members of the PDM and even the liquidation of the party sound louder and bolder from the experts and politicians. Vladislav Kulminsky, adviser to the Prime Minister of Moldova, Maia Sandu, also expressed confidence in the fact that Vlad Plahotniuc “will return to Moldova in prison cell”. There are reasons for this optimism: last week, Ilan Shor was finally put on the national wanted list. This is an important step, since the scandalous businessman is considered by many to be the key that will open the door to a barrage of criminal cases – both against Plahotniuc himself and influential members of the PDM. The prosecution of the former ruling elite will be an excellent opportunity to take out of the closet all the dirty linen of the Democrats, simultaneously lay the blame for the current economic problems of the country. The accusations machine against the PDM will be fed more, the more ‘bad’ decisions in the economy the new government will be forced to take. If the ruling alliance manages to get key witnesses, to cope with internal collaboration and to arrange the accusatory process properly, the PDM will experience hard times. Most likely, the final destination in the prosecution of its most ‘stained’ representatives will be expropriation of the property of the party members under the banner of ‘return of the loot’ and ‘recovery of losses’. Apparently, with the full support of the population and partners in the West and East. In this case, the Democratic Party of Moldova as an organized political force is likely to finally fall into oblivion.