Coronavirus Chronicles in Moldova: Anticipating Economic Crisis

Marina DRAGALIN The coronavirus pandemic has significantly hit the global economy. Its consequences will particularly affect poor countries, including Moldova. More than 2 million people worldwide have already been infected with the new coronavirus, with nearly 150 thousand fatal cases. Moldova has already realized how sweeping and devastating COVID-19 is. The number of officially confirmed infected people increased to 2154. The virus claimed the lives of 54 Moldovan citizens. It is worth noting that the country managed to reverse the tendency observed since the beginning of April to a triple increase in the number of confirmed cases and deaths per week. However, despite a slight decrease, the epidemic growth rate is still extremely high - the figures doubled over a week. Using mathematical models developed by experts based on other countries' dynamics analysis, the number of real COVID-19 cases is likely to be reported as ranging from 43 to 200 thousand. By the way, almost 40 thousand people are officially monitored. The country continues to set world worst records in terms of infected medical workers: one fourth of the total number, which is 552 cases. High incidence among health workers is an extremely dangerous factor that affects the epidemiological situation dynamics as a whole. Firstly, they become a source of infection. PAS leader Maia Sandu said that "after a month of the emergency state, some hospitals became real COVID-19 hotbeds." And most importantly: doctors do not just get sick and become temporarily disabled, they die, and the system loses key and often the most experienced personnel forever. It is enough to give an example of the district hospital of Falesti, where only 6 doctors out of 47 work, enduring three shifts. Against this background, cases when medical workers do not receive in full the risk premiums promised by the authorities due to coronavirus do not look very good. Corresponding complaints are received by the Ministry of Finance, which has declined responsibility for this, referring to the fact that the size of the increase in basic wages is determined by a particular medical institution. However, it is likely that the system simply does not have funds. Suffice to say that the purchase of more than 50 thousand protective suits and lump-sum payments to some people who became infected with COVID-19 at the workplace were made not at the budget expense, but thanks to 18 million lei of donations that were collected on special accounts of the Finance Ministry. At the same time, the economic situation continues to deteriorate rapidly. Prime Minister Ion Chicu said that the country's financial resources are currently extremely limited and generated through taxes and fees of the Customs Service for January-February 2020 and $ 20 million provided by the International Monetary Fund. “Since March 17, state budget revenues have halved. At present, we can pay pensions, salaries solely from what we collected additionally in the first two months of six months. We do not print money. We spend money that we have  collected,” Chicu emphasizes. The head of the Cabinet of Ministers acknowledged that now "all hope is for an IMF loan of 4 billion lei", which is expected until the end of April. Indeed, one only has to rely on external assistance - from the IMF, the EU and Russia. IMF forecasts for Moldova's economy are extremely disappointing. If in March the fund’s experts predicted only a certain slowdown, then this month they predict a 3% drop in GDP. Stabilization should not be expected until next year. However, in 2021 Moldova will face increased inflation, as well as the inevitable “hangover” after the autumn elections. The situation is aggravated by a sharp drop in employment. Due to quarantine measures, about 150 thousand people were left without work in the country. In addition, about 200 thousand citizens returned to the country in connection with the epidemic, and in a few months they will also need work. Whether the Moldovan economy will cope with so many labor resources is a big question. Moreover, no one offers any viable recipes how to quickly create tens of thousands of jobs - neither the authorities, nor the opposition. Experts predict serious pandemic losses for European countries. According to IMF economist Gita Gopinath, in 2020 the global economy will face the worst crisis since the Great Depression of the 1930s, and the consequences of the financial crisis of 2008 fade compared with the results of the coronavirus epidemic. And that means that labor migrants' return to their previous positions in the near future is out of the question. Accordingly, money transfers that fed the Moldovan economy for many years will have to be forgotten about for some time. Officially, only in 2019, one billion two hundred thousand dollars reached Moldova in form of transfers from our diaspora, and if we take into account the amounts transported “in the pockets,” we get about 2.1 billion dollars. For comparison: total exports give Moldova $ 2.8 billion. The situation with transfers is aggravated by the fall of the Russian ruble. It should be recognized that the coronavirus pandemic quite vividly highlighted all the distortions of the country's economic system, for many years tied to the services and consumption sector, fed by the money of migrants. Now this system naturally fails. Expected loans from Russia and the IMF, as well as hypothetical tranches of macro-financial assistance from the European Union, will only help plug current holes and prevent catastrophes right now, but they will not change the situation fundamentally. The country's leadership is now faced with the overwhelming task of completely reformatting Moldova's economy - and the sooner this is done, the better.