Tiraspol, 27 June. /Novosti Pridnestrovya/. Prime Minister Alexander Martynov presented a report on the work of the Pridnestrovian government in 2017. Novosti Pridnestrovya tells about the most important points from his report.
What the new team inherited from their predecessors
- state expenditures accounted for more than 50% of GDP;
- expenditures on salaries and social payments exceeded 41% of GDP;
- the budget deficit was formed within 20% of GDP;
- the amount of unsecured issue reached 921 million rubles.;
- negative currency assets amounted to $42 million;
- the tax burden on the economy was within 30% of GDP;
- the share of bad assets in the banking system was 27%;
- one pensioner and one public sector employee accounted for one employee in the private sector.
In 2015-2016, there was a reduction in production (by 20%), foreign economic activity indicators (foreign trade turnover by 41%; exports by 25.9%; imports by 47.5%). The financial condition of real sector entities and, first of all, industry sharply worsened. In 2016, industrial enterprises incurred a net loss of hundreds of millions of rubles.
Nobody cherished illusions that the situation would be simple; we understood what challenges would confront us, but when we carried out an additional analysis of the main areas, the situation was worse than we expected.
Improving economic transparency
Priority measures taken by the government were aimed at increasing the transparency of public finances and the economy as a whole. They eliminated the schemes which prevented hundreds of millions of rubles from being placed to the gas account, which is used cover the budget deficit.
The transparency of state-run enterprises also increased. New management teams were invited to MMZ, Pridnestrovian Railway and Biokhim; all middleman companies were eliminated. As a result, the enterprises increased production output and deductions to the budget.
There was a problem of supplying electricity to Moldova. The main principle that was taken as a basis is the conclusion of a direct contract without intermediary firms. Not everything went smoothly - our electricity supplies were suspended for nearly two months, and only by mid-June 2017, with the support of the Russian government, a direct and transparent contract had been concluded.
Despite the fact that as a result of the two-month suspension, the budget lost funds in 2017, the conclusion of the direct contract compensated for that loss.
Another area of work to identify and suppress "grey" schemes was the agrarian sector. In 2017, a seasonal customs duty was introduced for the export of grain and oilseeds. The duty was levied on companies that tried to underestimate the price of the supplied goods in order to hide part of the foreign exchange earnings abroad. As a result, increased transparency of export operations was accompanied by an increase in foreign exchange earnings coming to the country, which had a positive effect on the parameters of the foreign exchange market. Proceeds from agricultural products are not subject to income tax, and in this case, the main effect was the stabilisation of the foreign exchange market.
Another direction was tax evasion control. Last year 28 crimes in the field of taxation were registered. Unpaid taxes amounted to 48.9 million rubles. Compensatory damages reached 40.7 million rubles, of which 33.6 million rubles was transferred to the budget.
Support for the real sector of the economy
Tariffs for energy resources and tax burden were optimized; payment for an entrepreneurial patent was reduced. In cooperation with civil society, roadmaps were drawn up to support exporters and improve the domestic conditions of doing business. Thanks to agreements with Russia, Pridnestrovian enterprises took advantage of simplified access to the Russian market and were able to increase the volume of supplies there. The duty-free trade regime with the European Union was also retained.
According to the results of 2017, the volume of industrial production increased in the comparable estimate by 15%, including in ferrous metallurgy by 100%, in engineering by 21%, construction materials by 4%, light industry by 4%, food by 15%. There was an increase in retail trade, exports and imports. This trend continued into the first quarter of 2018.
Budget process
Last year, the government had to make two budgets - a 2017 budget, as the one submitted to the government in 2016 had many unsecured revenue sources and thus could not be approved, and a 2018 budget. The key moment of 2017 was that it was possible to limit the issue.
If the money had been printed in the volume they were printed in 2016, the exchange rate corridor would be different now and we would talk about the parameters nearing 30 rubles per 1 US dollar. One of the great achievements of 2017 was the increase of transparency and the fact that we began to live according to our means, at the expense of our own incomes. This is important.
The 2018 budget was formed according to the new principles. It provides for a significant amount of funds to repair social infrastructure.
At the same time, a 2018 and midterm concept of budget and tax policy was developed with the involvement of Russian and international experts. Now it is under consideration in the Supreme Council.
Administrative reform and the work of public authorities
"The concept of administrative reform in the Pridnestrovskaia Moldavskaia Respublika for 2018-2020" was developed in cooperation with the Russian auditing company "Financial and accounting consultants". The concept provides for the optimization of the structures and functions of state bodies, measures to counteract corruption, the transition to service-oriented activities with a focus on providing public services to citizens and legal entities.
A pilot project to optimize the number of employees of the Ministry of Economic Development and a web portal of state services, which is almost ready for launch, are the components of this concept. The pilot project helped to increase salaries in the Ministry of Economic Development by 35-40%.
This is a striking example of how to increase salaries within the existing wage fund. We will propose to apply this way to a number of areas in the budgetary sphere, given that the Pridnestrovian budget is still deficit-ridden.
Healthcare
Fixed prices for the 100 most popular drugs were introduced in 2017. Great Patriotic War veterans can now undergo free dental prosthetics not once in 5 years but out of turn as needed. The possibility of an extraordinary return of money spent on prosthetics outside the established queue for treatment is established. Work was started to resume the activities of first aid stations in villages.
The Ministry of Healthcare drafted a project in 2017 according to which Pridnestrovian doctors would be able to upgrade their skills without going abroad. The implementation of distant learning projects is also under consideration.
An estimate for the Capital Investment Fund was made up. 36.6 million rubles is supposed to be allocated for the improvement of the material and technical equipment of hospitals and polyclinics. It is also planned to spend 28.8 million rubles to purchase X-ray machines, fluorographs, a disinfection chamber, a set of equipment for a histological laboratory, a mobile dental office.
In general, I want to note that we failed to achieve a major breakthrough in this direction in 2017 because this sector needs significant funding, which is relatively small in comparison to the size of the economy. It is necessary to increase salaries for healthcare workers; it is necessary to take further steps in the acquisition of high-tech equipment; it is necessary to increase the procurement of medicines for hospitals. I want to note that as the situation in the economy stabilizes, the government will act in these directions.
Social protection of citizens
100% benefits for gas supply were introduced. The social norm of natural gas for the purposes of heating residential premises was increased. Free transportation in trolleybuses for pensioners and other benefit recipients was returned. The period of work in organizations operating in Pridnestrovie but under the jurisdiction of other states began to be included in the work record.
Persons with disabilities and Great Patriotic War veterans are exempt from all types of payments and charges. The established allowances for Defenders of Pridnestrovie are preserved when adopting other countries' pension provision.
Housing benefits are granted to lonely disabled people, as well as to families of two or more visually impaired and (or) deaf and dumb citizens.
Combatants enjoy the opportunity to import vehicles to the republic for personal needs without customs payments.
A program of annual medical check-ups is being implemented in medical and preventive institutions, including the medical centre "Tiramed", during which privileged categories of citizens, war veterans can undergo necessary types of medical examination free of charge. The payment for a bed in medical institutions for nonresidents was abolished.
Inflation control
In 2017, the Pridnestrovian ruble was devalued, which accelerated inflation. The national currency fell by 37.2% against the foreign currency; the consumer price index increased by 11.8%.
However, in addition to the devaluation of the ruble, the price rise was also affected by high inflation in the states to which Pridnestrovie imports a significant part of goods. First of all, Ukraine.
The state authorities adopted a number of measures aimed at curbing inflation. Tariffs for energy carriers and basic utilities for all Pridnestrovians were frozen. According to approximate calculations, it cost the budget about 130 million rubles. These funds, in fact, were allocated to compensate for citizens' falling costs. This compensation was provided to all categories of residents.
When indexing in monetary terms proceeding from the 5% stipulated by law, public expenditures would have amounted to 105 million rubles and would have been selective.
