Moscow, October 17. /Novosti Pridnestrovya/. The previous day, one of the most prestigious universities in Russia held the "Day of Pridnestrovie." At the Financial University under Government of the Russian Federation, students from the PMR distributed booklets and talked about their country. Everyone could take part in the round table “Economy and Investment Attractiveness of Pridnestrovie”. Experts, teachers and students presented a report on the state of affairs in the Pridnestrovian economy by Chairman of the Government Alexander Martynov.
The round-table discussion was opened by Dmitry Sorokin, Doctor of Economics, University Scientific Director.
“A similar event was held at Moscow State University, at other venues, and we are very pleased that today it is being held at our university. A lot of students from your republic study there, and such a presentation is a recognition of us as an expert community,” he said.
Economists, financiers, financial lawyers, mathematicians, IT specialists, sociologists and political scientists graduate from the Financial University under the Government of the Russian Federation. The university also provides services to the Government of Russia in various expert reviews and development programs.
How to Overcome the Crisis
At the meeting, Prime Minister Alexander Martynov spoke about economic indicators from 2012 to 2016. It should be recalled, back then, ineffective management led to almost catastrophic consequences: industrial output fell by 20%, fixed capital investment went down by 30%, retail sales declined 27%, export of goods fell by a quarter. In general, GDP decreased by 8%. Almost half of GDP was redistributed to social benefits (salaries, pensions, allowances).
“43% of GDP is Government spending on wages in the public sector and social benefits. In fact, the entire budget was a payment of salaries and pensions. Everything else was taken into account in minimal proportions. Capital expenditures amounted to 1.5% of GDP,” the Prime Minister explained.
The improving of the situation was made in stages. After analyzing the income tax, it was decided to reduce the tax burden, otherwise the enterprises would leave without working capital. Work with enterprises of natural monopolies was held, in which the tax burden was also reduced. In general, its decline occurred from 36% to 27-28% of GDP (as in the countries of the Eurasian Economic Union). A number of reforms were carried out: administrative barriers were reduced, the Roadmap was developed, in which 100 points out of 125 ones have been already completed. This work was in collaboration with business. From this year, the Entrepreneurship Development Fund began to work.
The share of the shadow market was stabilized and reduced. The work of Russian Federation Federal Tax Service of the works together with law enforcement agencies was as the basis. The same approaches were applied in Pridnestrovie. If tax-audit control identified signs of tax concealment, then the information was sent to the appropriate structures.
“In general, the effect for the state amounted to several percent of GDP, and taking into account blocked overlapping schemes, this is almost 5% of GDP. By the Pridnestrovian standards, this is a fairly significant indicator, which allowed us to reduce the budget deficit in a relatively short time and to abandon the issue of money, which is very important,” Alexander Martynov added.
Financial Recovery
The task to prevent a systemic banking crisis was solved. Thorough checks of all credit organizations were carried out. Banks were cleared of bad assets, financially unstable banks were nationalized and merged with a state bank. So it was possible to prevent the crisis and save investors. As a result, there was an increase in household deposits, which indicated the restoration of confidence in the banking system. The emerging liquidity in the banking system was then used to lend to the real sector of the economy.
“I would like to express my gratitude to Sergey Glazyev. He consulted us systematically and has continued to advise. And many of the tools that work in the Pridnestrovian economy today, work according to his recommendations,” the head of the Government said.
Interest Rate Subsidies, Infrastructure Development and Housing
The Prime Minister also touched on lending to the real sector of the economy. The bank rate is about 12%, some of which are subsidized by the state. Thus, the loan costs to a company in 3-4%. Businesses began to grow and create jobs. The process continues today.
The Prime Minister also focused on capital investments in infrastructure. Since 2018, the Capital Investment Fund was created in the budget, the funds from which are used to repair kindergartens, hospitals, schools, housing facilities.
Affordable housing programs are also being developed. Budget workers got the opportunity to buy apartments at an inexpensive cost. And next year, a transition to subsidizing home purchases is proposed:
“The situation when a family with or without children receives a subsidy from the state to finance 50-60% of the cost of housing. If you have more children, you’ll get the higher subsidy. Primarily such program is used by doctors, teachers, and the power structure. But with economy developing and the budget situation improving, we plan to increase it.”
Investments were also mentioned. The best practices of Eurasian Economic Union - Russia and Kazakhstan investment legislation became as a basis. Specialized department was created. As the first results, a number of agreements were concluded last year; a number of these is in the framework of the seventh investment forum, which took place the day before in Tiraspol.
They also touched upon the implementation of administrative reform in the republic. In this sphere, Pridnestrovie is actively cooperating with experts from Russia.
Interaction with Social Activists
Cooperation with public figures became important in the work of the Government. Meetings are held with all professional unions and public organizations.
“I’ll share my opinion: you will almost never hear from any official the problems and advice given by social activists, and all the more, you will never see them from the bureau’s office window. And this connection with civil society is hard to overestimate. I can say that about 30% of the bills, both in the framework of lowering administrative barriers and social policies, were initiated after talking with representatives of civil society ... Of course, there is criticism, but this work has very good potential,” the head of Government concluded.
Results
Alexander Martynov concluded his speech with the results of economic management for two years. The growth of industrial production in 2018 was 9%, investment in fixed assets - 42%, the volume of retail trade increased by 10%, export growth - 30%, import - 18%. GDP growth - 4%.
After that, representatives of the scientific and expert community, as well as student economists, were able to ask questions.
