Ionita: Moldova Is to Experience an Unprecedented Budget Deficit This Year

This year, for the first time in history the Republic of Moldova is to experience an unprecedented budget deficit: the amount will exceed 15 billion lei. They plan to patch the hole through external loans received to fight the coronavirus and not through the government and that is not very skilled in obtaining loans. So says economist Veaceslav Ionita commenting on the authorities’ statement saying they are making every effort to find resources so that the country can overcome the crisis caused by COVID-19. Opposition MPs also criticize government actions, tvc.md reported. They argue that even though the country is in debt, the anti-crisis measures taken by the authorities are populist. Economic expert Veaceslav Ionita believes that this year, without attracting external loans worth at least $ 500 million our country will not be able to cope with the crisis caused by the COVID-19 pandemic. “This year, the deficit will be more than 15 billion. This is unprecedented in our history. Even previous years we were not able to repay loans and this year, due to coronavirus and not to the government (which is not able to receive loans) this deficit will increase It’s conditioned by the crisis and the fact that the IMF understands that if countries are not helped then social revolutions that should not happen may occur, ” the economic expert stated. According to Veaceslav Ionita, the crisis consequences caused by COVID-19 are becoming more tangible both among the population and economic agents and among state employees. Unfortunately, even with millions of loans the government cannot support everyone because the state budget is experiencing a constant lack of money due to the weak economy. To reach economic growth, the expert says, the government must develop a concrete plan of action since it is impossible to survive through loans all the time. "The government should think about how to attract investment in the economy, make factories work, provide jobs. And if there are jobs there will be everything else. The government should think about why investors do not come to Moldova. They do not invest, because they don’t trust justice. They don’t come because there is a high level of corruption. Our legislation is imperfect, and the government knows about it,” Ionita said. Opposition deputies also believe that although the country owes millions the government’s anti-crisis package is populist They proposed two programs. The first is interest coverage for all economic agents who will take loans by December 31 and VAT refund for all economic agents. Very little. This does not include ordinary people: retirees, workers, patent holders, doctors, representatives of small and medium-sized businesses. “This is a populist project that we, the deputies, must analyze at the parliamentary meeting on Thursday or Friday. We will sharply criticize it because the authorities have no specific measures to support ordinary citizens,” Vadim Fotescu, the member of the SHOR Political Party informed. Note that the government approved amendments to the state budget for the current year taking into account the economic effects of measures introduced due to the epidemiological situation. Thus, the budget deficit after amendments will amount to 15.9 billion lei. This is 7.52% of GDP. According to the amendments, an increase in the budget deficit of 8.6 billion lei is planned to be covered by loans provided by the Russian Federation, the International Monetary Fund, the World Bank and the European Union.