Moldova's economic turmoil. Report of "Picture of the World"

Moldova's economic turmoil. Report of "Picture of the World"

Do you know the difference between recession and economic crisis? Recession is when your neighbor loses his job. And when you have it all bad at home - this is a crisis. Apparently, Belarus is seeing a slight downturn. Crisis is raging in Ukraine.  This week, the hryvnia was depreciated to historic low. Moldova is also affected. We do not report on that country so often. And the last information peak fell on the last year's visit of President Lukashenko to Chisinau. By the way, Moldova is among the five main trade partners of Belarus. What's going on there? Olga Petrashevskaya knows.

On the eve, the Moldovan national currency went into a steep dive. In one day, the lei fell by almost 20% against the dollar. This is despite the fact that in general since the beginning of the year, the fall is already 35%.

On that "black" Tuesday, people bought everything that was on the shelves: cereals, canned food and sugar before prices go up. 

People, however, hope for changes after the recent and long-awaited appointment of the Cabinet. Moldova lived without a full government for 2.5 months.

Vitaly Andrievsky, a political scientist:
The long process of election of the Government caused terrible discontent in society. Because society, by supporting pro-European parties, expected rapid reforms.

Cyril Gaburici, 38-year-old businessman, is the new prime minister. He is the owner of several companies and was immediately remembered by not being able to answer how many residents now pay for butter, potatoes and firewood. However, he promised to deal with the currency crisis and resolve the issue of the embargo.

After the signing by Moldova of the agreement on trade association with the EU, Russia imposed a ban on products of Moldovan agricultural sector. Slight relief was granted only for apples (several companies).

Rain from export bans seriously damped plans of owners of Moldovan vineyards. It is unknown whether locally produced noble drink will get to Russian stores, but farmers of course hope for the best and expect heavy vines.

After the collapse, the national currency of Moldova began to rapidly strengthen. British Financial Times one day called the lei the strongest currency in the world. And now those who have recently switched their savings to dollars and euros, brought the currency back to exchange booths. The trend was so massive that today in Chisinau, it is harder to find the lei than the US dollar. Some banks do not put up exchange rates.

Under the hype of currency fluctuations, some Moldovan banks got hundreds of millions of dollars, while others just took astronomical sums out of the country. This is more than the external debt of Moldova.

When corruption reaches such levels, what could we expect from local officials and ordinary civil servants, says Viarel Tanase recognizing that he does not even remember when he paid fines officially last time.

Viarel Tanase: 
This is a disease in Moldova that everyone accepts bribes. You violate rules, you pay and continue. No one hesitates to do it. I do not know the price of what I voilated.

Viarel is a driver who work day and night but has not been able to spare some money even for a new windshield. Assessing all the economic metamorphosis in Moldova, the young man wonders why prices jumped in only one direction after the exchange rate had changed.

Viarel Tanase:
It rose very significantly and prices went up. But when it came down, prices remained the same.

Perhaps the only place in Chisinau where many things became cheaper is the seasonal market.

Elena Kapatsyna, the seller:
We have poor sales. People have no money. Even apples and beans became cheaper.

Selling a kilo of apples for 23 cents, Elena cannot recoup the fuel spent on the road. Therefore, in parallel with fruit the woman brought homemade bread, and even conserves. She hopes to sell them.

Elena Kapatsyna, the seller:
Yes, I have losses but what can I do? There is no alternative. Should I leave it all so that it is spoilt?

The Chisinau budget for 2015 has not yet been adopted. This is because after two months from the date when the counting started, the dent in the capital's wallet increased by tens of millions of dollars.

So the country is now trying to save on everything, including food in schools and kindergartens.

Unemployed Vadim has been looking for a job for the third month. He says he does not want to work for a pittance but he may soon give up and take anything.  The young man is not going to go to work in Russia, as many of his friends.

If someone goes there, they already have permanent jobs. And to go there just hoping for luck is meaningless.

By the way, Moldovans working in Russia, due to the collapse of the ruble, cannot pleased their native economy. The volume of remittances to Moldova in comparison with 2014 severely reduced. Note that money from migrant workers makes up a quarter of the country's GDP.

Oazu Nantoi, a political scientist:
Low-paid jobs at the lower levels of the social ladder is an objective reality. None of the immigrants, often illegal, can claim to become the country's president or chief capitalist. This process is dramatic, we have to pay for not making any reforms during 20 years.

Svetlana, a resident of the village of Bardar:
How to live? Everything is expensive: products and other things.

Svetlana sends us on a tour to the village shop. There, we saw cornflakes from a Vitebsk enterprise. But the price for sausage is about BYR 90,000, which is very expensive.

Svetlana herself is a seasonal worker in the greenhouse. Her husband does not have a permanent job and is trying to earn where he can. Svetlana's son found a job as a cashier at a supermarket. Somehow they make ends meet, sometimes thanks to their own garden or neighbors' help.  They have money only for the most necessary things but they can only dream about some more.

Svetlana, a resident of the village of Bardar:
My daughter will have to celebrate 8 March soon. Believe me, I do not have a piece of fabric to make a skirt for her.

Politicians promise to turn Moldova's economy from a mini-skirt to a good respectable suit but experts are skeptical while people are just waiting.