Dear heads and representatives of the bodies of legislative, executive and judicial branches! Dear citizens of Pridnestrovie!
On March 20, 2012 the first address of the President of the Pridnestrovian Moldavian Republic was presented. It contained the main theses on top-priority goals of our internal politics in 2012 as well as perspectives of development on nearest future.
I would like to remind about the situation in the beginning of last year when our state did not possess the necessary forex reserves and real incomes in order to conduct welfare payments: to pay wages, pensions and benefits. For the first time the state budget for 2012 was enacted in 2011 with unsecured incomes worth a total of 274 million roubles (about 27 millions of US dollars).
At the same time I would like to notice that due to the efforts of the people, of the economic agents and due to the systemic approach of the state bodies of the Pridnestrovian Moldavian Republic we managed to stabilize our current financial situation and to prevent possible setbacks with wages, pensions and benefits payments as well as to prevent devaluation of national currency (from 11 to 21 roubles per 1 US dollar) and to support the exchange rate in the range of 11,2 roubles per 1 US dollar. This economic stabilization is in a certain sense the unique result, especially if we take into consideration conditions we had in our economy in 2012 and negative internal and external factors.
At year-end 2012 the incomes of the republican budget counted 1,9 billion roubles (175 millions of US dollars) or 118% of planned. At the same time, in comparison with year 2011, the inpayments in the republican budget (excluding humanitarian aid and return of public loans) increased on 54%. In conditions of global economic insecurity this is the good result.
Tax collection in the republican budget valued 1,3 billion roubles (112 millions of US dollars) or 132% of planned. In addition, in comparison with year 2011, tax collection in the republican budget increased on 536 million roubles (48,3 millions of US dollars) or 75,6%. These numbers are demonstrative, though they would be even more tangible if we had no budget deficit.
The incomes of local budgets of cities and districts in 2012 received 878,1 millions roubles (79 millions of US dollars) or 107% of planned. All cities and districts, excluding Rybnitsa and Rybnitsa district, performed above target. Tax collections in local budgets of cities and districts valued 803,2 millions roubles (72 millions of US dollars) or 107% of planned.
It must be confessed that intermediate goal of economic stabilization in macroeconomics is reached.
At the same time critical situation in social and economic sphere became determinative for revision of some existing approaches in implementation of state politics. In some cases it led to negative reaction from persons who enjoyed privileged positions due to earlier-existing individual approaches and ability to avoid payments or to pay only partially customs duties.
On this occasion I would like to express gratitude for understanding and support to the economic agents who continued their active economic operations in such a difficult period for our country and consistently paid all the tax and other payments required by current legislation.
The budget performance index is self-explanatory and thus I would like to thank our Government and local authorities for the tremendous work to stabilize our economy.
The Government of the Pridnestrovian Republic, which was formed for the first time for the last 12 years as an independent body, is called by the law to resolve the whole spectrum of the existing goals and tasks. In spite of some fair remarks and lack of proper resources, the work of the Government of the Pridnestrovian Moldavian Republic demonstrated its general effectiveness.
At the same time it is important to consider that in order to reach results in social and economic and other spheres the appropriate resource base and concrete sums are needed to solve the existing problems. But the resources are not allocated and the tasks are set.
In 2012 the work of the Government was accompanied by the conditions of heavy budgetary deficit, proceeding negative impact of internal and external factors and permanent, lacking any argumentation, imperceptions of the majority of governmental initiatives by the representatives of the parliamentary majority in order to carry out implementation of the Action Plan of the Government for Accelerated Modernization of Social and Economic Sphere (‘Plan-2500').
Currently it became obvious that it complicated activities of the Government and reduced possibilities for more effective and operative decision-making process in order to carry out the tasks set by the people and the President of the Pridnestrovian Moldavian Republic.
Today I would like to give a short analysis of some aspects of state of affairs in our country.
In the Constitution and the laws of the Pridnestrovian Moldavian Republic are declared the state functions and obligations on the whole range of spheres, including public healthcare, education, law enforcement, defence, housing maintenance and utilities, state regulation of prices (tariffs), anti-monopoly measures, etc.
In order to let citizens and economic agents to better comprehend the level of existing problems and to understand the instruments proposed to solve some high-priority tasks I consider it necessary to give some data which characterizes conditions in major social spheres of the Pridnestrovian Moldavian Republic.
Healthcare
It should be noted that the last large-scale equipment supplies to the healthcare institutions have been carried out in 1980s. Medical equipment stock in the majority of medical and preventive centres is highly overweared. In some categories more than 45% of medical equipment is entitled to discard. Significant part of equipment is nonserviceable: about 61% of equipment is technically unfit for usage. Besides, deficit of modern models of equipment leads to overloads and swift breakdown of the existing modern equipment.
Alas, not only villages but also some cities in our republic remain without doctors and paramedical personnel.
Existing situation is caused, first of all, by deep-rooted funding gap of this sphere for decades, lack of resources and lack of political will to conduct timely, though maybe sensitive, but still necessary reforms of the branch.
In order to provide citizens with necessary medical aid, in particular, to equip, repair and supply with medicaments medical facilities, according to experts, about 1,1 billion roubles is needed (99 million US dollars). If we add necessity of at least double increase of wages of medical personnel, 1,5 billion roubles is needed (134 millions of US dollars). At the same time, only 454,9 millions of roubles (41 million of US dollars) or 31% of the required sum was allocated by the budget as for the 2012.
At the same time, in the whole sum the amounts credited to pay for work are only 331 millions of roubles (29,8 millions of US dollars) or 72,8%.
In 2012 actual financing of acquisition of medicaments composed 58,3 millions roubles (5,3 millions of US dollars) out of needed 260,1 millions roubles (23 millions of US dollars) or 22% of necessary. These indices demonstrate that only needs of every fifth citizen on free medical treatment are provided with financially.
At the same time I would like to notice that the amount of funds in 2012 coming from rendering paid services amounted 39,6 millions roubles (3,6 millions of US dollars) or 8,2% from total amount of finance allocated from the republican budget.
It is obvious that further appliance of the existing approaches while retaining the same scope of finance will only compound the matters in this field. Delay in state decision-making will complicate the situation.
The following top-priority tasks predetermine the existing problems:
1) Systematization and careful planning events to reform and reequip the field for 3-5 years;
2) Urgent decision-making in financial stimulation of high-class professionals in the branch (on first stage it will be insufficient due to lack of resources).
Problem of brain drain in the field became topic for discussion during the State Security Council during which it was concluded on the base of existing data that the whole field is in critical situation which calls for immediate decision-making.
It is important to notice that in late 2012 the Government of the Pridnestrovian Moldavian Republic already initiated changes and made decisions which are to increase incomes on the said events in sum of about 3 millions of US dollars which does not allow solving the problem dramatically. But we are planning to attract funds on acquisition of new medical equipment in 2013 in the amount of up to 10 millions of US dollars.
Besides, in order to develop the sphere of healthcare, we need to switch to insurance medicine and to open broader capabilities for investments in private medicine.
Education
I would like to mention the existing problems in sphere of education.
For the last decades we can see brain drain from this field: if in 1995 the total number of teachers counted 7400 in 2012 this number fell to 5742. At the same time number of pupils in basic education schools counted 101,6 thousands in 1995 and 46,1 thousands in 2012.
Nowadays we have 1007 young teachers or 17,5% of the total number of teaching staff, 2735 teachers of middle age or 47,6% and 2000 teachers of preretirement and retirement age, or 34,8%.
In 2012 only 109 people came to work in the institutions of general education. 80 of them are graduates of the Pridnestrovian State University. At the same time, our university prepared 368 specialists in this field which is fivefold higher.
Average salary of the teachers in the general education institutions composes 1800 roubles (about 162 US dollars) and can't be called a factor drawing young specialists to work in this field and to motivate them to develop new progressive methods of education.
It is important to mention that limited budget financing does not allow replacing outdated and decayed schoolbooks timely and in full measure.
Thus, according to data provided by the Ministry of Education of the PMR, availability of schoolbooks, guides and teacher editions comprises:
a) 20% in schools with Russian language of education,
b) 53% in schools with Ukrainian language of education and
c) 32% in schools with Moldavian language of education.
In order to support the sphere of education, including the necessity of modernization of buildings, premises, classes, to equip them with necessary technology, to acquire course books, we need 2 billion roubles (187,4 millions of US dollars) according to our experts.
At the same time, in 2012 to support the field of education 912 million roubles (82,1 millions of US dollars) or 43,8% of the needed amount where allocated (including spending on payment for work).
Payment for work counts 679 million roubles (61,2 millions of US dollars) and 74,5% in total sum of financed expenses.
Current scope of financing of the Pridnestrovian State University in 2012 composed 120 million roubles (11 millions of US dollars) in 2012 or 53% of needed sum of 228 million roubles (20,5 millions of US dollars).
Currently the Government of the Pridnestrovian Moldavian Republic together with the Pridnestrovian State University are developing mechanisms to increase effectiveness of governmental spending in higher education and to provide state with specialists in all spheres of life, taking into consideration the fact of existence of non-governmental institutions of higher education in the Pridnestrovian Moldavian Republic.
In order to overcome the existing situation in sphere of education and to improve it we need decision-making, aimed to changes approaches in management of this sphere. First of all, we need to define sources of financing of the existing tasks.
Law Enforcement and Defence
In 2012 512,8 million roubles (46 millions of US dollars) was allocated from the budget on law enforcement and defence while expensed amounted 948,9 million roubles (85,5 millions of US dollars) thus attaining half of minimally needed.
At the same time I would like to point out that in this field, in spite of reduction of staff on almost 1500 persons, there is increase in effectiveness of work.
It is necessary to proceed with optimization of workforce capacity of the law-enforcement structures bit it does not exclude the necessity of optimal structure of these structures.
Thus, if we take the crime rate, in 2012 there have been 5417 crimes registered on the territory of the republic which is 21% less than in 2011. Among the registered crimes are 1821 grievous crimes which is 20,3% lower than last year and 346 gravest crimes which is 20,8% lower than last year.
General crime solving rate in 2012 comprised 85,6% (in 2011 – 82,7%). At the same time solving rate of grievous crimes comprised 75,5% (5% better then in 2011) and solving rate of gravest crimes – 87,5% (the same level as in 2011).
At the same time we have situation when the state is not able to fully implement the existing guarantees of social security of the personnel of the law-enforcement agencies.
For example, officers of national security, defence and law enforcement agencies working for more than 15 years rent their flats and are not able to exercise the right to receive accommodation fixed in accordance with the law. They pay rent for the accommodation and pay for public utilities; these amounts make up more than a half of their salary. The average salary of police officers:
a) Junior officers – 2 100 roubles (about 189 US dollars);
b) Middle-ranking officers – 3 120 roubles (about 281 US dollars);
c) Senior officers – 3 700 roubles (about 308 US dollars).
Average salary of a serviceman is 2 700 roubles (240 US dollars).
Today top-priority housing queue in the Republic totals 365 officers only of national security, defence and law enforcement agencies.
In the Republic the order of priority of housing for citizens who have the right to receive accommodation and to improve living conditions in accordance with the law makes up 4 203 persons.
If we assume that the average cost of 1 square meter of accommodation is 400 US dollars and if we buy average flats (about 60 square meters), we need 1,1 billion roubles (100 million US dollars) in order to execute the laws and to close the queue that exists for 20 years; at the same time total amount of tax collections into republican budget and local budgets of cities and districts of the republic is 2 billion roubles (185 million US dollars).
The results of activity in conditions of insufficient level of social provision witness the availability of high human potential in given direction and conscientious service of a number of officers of national security, defence and law enforcement agencies of the Pridnestrovian Moldavian Republic.
In spite of the existing reprimands, in the whole it is possible to express gratitude to the officers of the present agencies for accomplished work and service to Motherland.
Energetic and Housing and Communal Services
At present time the sphere of housing and communal services is characterized by considerable deterioration of existing networks and structures and insufficiently stable financial condition of the enterprises – the subjects of housing and communal services, the so-called planned-unprofitable enterprises, functioning in conditions of state regulation of tariffs on services.
The deterioration of water-supply and water disposal networks in the Republic is 68%.
According to the calculations of the specialists, the amount of funds necessary for restoration, reconstruction of water-supply and water disposal networks is 1,2 billion roubles (106 million US dollars).
At the same time during 2012 the amount of payments intended for financing of operational works of the enterprises of water-supply and water disposal made up 111,7 million roubles (10 million US dollars) or 9,5% of the amount necessary for the modernization of water-supply and water disposal networks.
The Government of the Pridnestrovian Moldavian Republic today urgently needs to take measures directed on provision of transparency of the system of formation of tariffs, of spending of insignificant amounts of money, measures directed on specific-purpose expenditures of funds in the sphere of housing and communal services.
At the same time it is necessary to change acting tariff policy.
Current situation of this sector does not allow to attract qualified working force and to complete existing staff with corresponding technical personnel.
In the whole in the sphere of housing and communal services the level of operating personnel staffing is 80%, while the level of technical personnel staffing, for example, of street cleaners, is only 47%.
After the decades of functioning in the conditions of insufficient financing the system of heat supply of cities and districts of the Pridnestrovian Moldavian Republic is characterized by high level of deterioration and power consumption; this lead to inefficient and insecure work. At that, current inpayments are not sufficient for restoration and modernization.
Today wear rate of heat supply networks in cities and districts of the republic makes up from 60% to 100%.
Major part of the equipment of boiler houses of the republic was put into operation in 1960\'s - 1970\'s.
Necessary reconstruction of heat supply networks in Tiraspol, Bendery and Rybnitsa costs today 250,9 million roubles (23 million US dollars), reconstruction of all heat supply networks in the republic costs 1 billion roubles (90 million US dollars).
At the same time the amount of payments received in 2012 for financing of operational works of the enterprises of heat supply is 129,3 million roubles (12 million US dollars) or 13% of the amount required for modernization of heat supply networks.
Besides in 2012 the amount of state support in the sphere of heat supply rendered to the population and other consumers in connection with the fact that the price of natural gas used for generation of heat energy was fixed on the level which is lower than contractual price makes up 879,2 million roubles (79 million US dollars), including:
a) to the population - 756,4 million roubles (68 million US dollars);
b) to state-financed organizations, industrial and other consumers - 122,8 million roubles (11 million US dollars).
As of January 1, 2013, the State assumed obligations (into internal public debt of the PMR) to organizations of power complex and economic agents performing generation, supply and transmission of energy resources (electrical energy, water, gas, heat energy) in the amount of 1,4 billion roubles (125,7 million US dollars) which include arrears of energy resources supplied to the population and of public utilities on preferential terms and arrears of energy resources and public utilities consumed by the population on terms of the difference between cost according to consumption price and the cost in tariff in the amount of 1 billion roubles (92 million US dollars).
The Government of the Pridnestrovian Moldavian Republic, in spite of a huge gaps existing between the needs and current receipt of funds it is necessary to provide urgently the transparency of functioning of given sphere, to discuss with the community the real situation in cities and districts and to consider until the beginning of summer joint plan of top-priority and long-term measures directed to the increase of efficiency, stability and reliability of the systems of life-support for the favour of the population of the republic within the framework of current possibilities. Besides it is necessary to provide the transparency for broad circle of the community of the system of distribution of the payments made by the population for rendered services and of the shares of their distribution according to the directions of expenses.Public Road System
I can not help mentioning the indicative situation which developed in the sphere of public road system of the Pridnestrovian Moldavian Republic. In spring the problem of road condition becomes more acute.
Road construction was held in Pridnestrovie mostly when the Soviet Union existed. Now Pridnestrovie has the roads of maximum of 3rd category intended for the weight not more than 10 tons.
In the republic the length of the roads with asphalt pavement is 2 121 km, the length of the roads with gravel and macadam pavement - 2 396 km.
At that, average terms of service for capital repairs of the improved light-weight pavements constructed in Soviet times are seven-ten years, of gravel pavements - five years.
During the last 10 years the deterioration of the roads located in cities and districts of the Pridnestrovian Moldavian Republic increased by 40-60%.
According to the evaluations of the experts only capital repairs (without new construction) of the roads of the country will cost around 2,0 billion roubles (178 million US dollars).
Over the period since 2008 to 2012 road enterprises purchased only 23 units of automobile transport, technical and other equipment - 5,7% of all that road enterprises have.
Thereby, according to the calculations made by the specialists of the road sphere, minimal amount needed for purchase of new technical equipment instead of old technical equipment with high deterioration is 47,1 million roubles (4 million US dollars).
At the same time the amount of dues to the Road Fund collected from physical persons in 2012 totals 33,3 million roubles (3 million US dollars) or 30,9% of all inpayments to the Road Fund.
In 2012 total amount of inpayments to the Road Fund of the republic totals 107,9 million roubles (10 million US dollars) or 5,3% of the required amount mentioned above.
The specialist ascertain, that if the funds from the Road Fund are spent on capital repairs of the roads only in Tiraspol (including the repairs of corresponding infrastructure (storm water sewer, traffic lights), they will cover only 83% of all needs of the city.
The snowfalls of 2012 showed that it is impossible to clear sidewalks and roads in time using the technical equipment produced in 1970\'s - the beginning of 1980\'s which quantity is insufficient. For example, in Bendery - the second largest city in Pridnestrovie according to the number of population, there are two graders and one mechanism for snow clearing of the sidewalks. At that timely clearing is not possible without additional equipment: three graders, four mechanisms for snow clearing of the sidewalks, one vacuum machine for clearing of the streets and five vacuum machines for garbage cleaning of the sidewalks.
In Tiraspol there are four graders and four mechanisms for snow clearing. At that, timely clearing of the streets is not possible without the following additional equipment: five graders, one vacuum machine for clearing of the streets and five vacuum machines for garbage cleaning of the sidewalks.
Thus, the total tax collection for the Road Fund amounts to 5-7% of the requirements.
At the same time, according to the information of State Service for Transport and National Economy, program of reconstruction of roads in the republic was fulfilled; Slobodzeya and Rybnitsa districts overfulfilled it (the costs were the same as in 2011, the results were 20-30% higher).
The problem of street lighting in cities and districts is very significant too.
At present time street lighting is available in 93 settlements. Existing condition of street lighting does not allow providing all the settlements with lighting in a proper way.
Average annual consumption of electric energy on street lighting is around 12 million kWh. The percent of payment for electric energy used for street lighting is around 20%, 80% are the debts of cities and districts and of the state in whole.
Restoration and reconstruction of the system of street lighting on the whole territory of the republic (replacement and placement of lamps, of wires, of electric equipment) will cost around 299,7 million roubles (27 million US dollars). Average cost of restoration and reconstruction of 1 km of the line of street lighting is 350 000 roubles (31 500 US dollars).
For comparison: in 2012 the maintenance of operable condition of existing system of street lighting cost 1,1 million roubles (99 000 US dollars) – 0,4% of necessary amount.
In whole we can observe similar situation with all sectors of the country.
I would like to notice that inpayments in budget and off-budget funds (without consideration of inpayments from Treasury obligations and inpayments from repayments of the loans) totalled 4 billion roubles (355 million US dollars).
At that, deficit of budget and off-budget funds in 2012 with consideration of needs and necessity of holding of the abovementioned steps in budget sphere voiced by main controllers of budget funds, makes up around 6,3 billion roubles (570 million US dollars).
I deliberately emphasized obvious problems of lack of financing for the range of functions of the state in order to show the scale of the tasks the state faces; these tasks refer not only to the Government but to all bodies of state power and to all healthy powers of our society proceeding from competence, possibilities and responsibility.
One of the tasks – deliverance from wrong beliefs of the last 20 years, the beliefs that meant that market economy is able to find the answers to many questions without active role of the state, without firm and clear perspectives of foreign economic activity.
Over recent years high-performance branches of economy which allowed the state to accumulate partially in the budget the funds for solving of social tasks, were withdrew or simply were lost.
Total privatization of state property did not arouse necessary growth of investments into new technologies, did not expand the production, did not increase the quantity of attractive working places in spite of extremely favourable approaches of the state in quoting of attractive price (in comparison with Ukraine and the Republic of Moldova) on energy resources for the enterprises of the republic. During last ten years energy resources in the Pridnestrovian Moldavian Republic (in particular gas) cost three-five times less for enterprises (including those with Russian capital) than in Ukraine and the RM; now it is twice cheaper.
It is necessary to mention that as of March 1, 2013, debt to the Russian Federation for natural gas supplied to the republic totalled 3,6 billion US dollars, 2,1 billion US dollars from this amount is the sum of debt established in connection with the price of natural gas considered in the process of formation of tariffs, lower than contractual price, in particular for industrial enterprises.
In spite of the fact that as of January 1, 2012, more than 90% of property is concentrated in private hands; enterprises passed to the state and local authorities the burden of maintenance of nonspecialized infrastructure (houses, recreation centres, schools, dormitories, surrounding grounds), there was no breakthrough. But the state created and supports considerable competitive advantage with a view to the development of the enterprises.
This speaks for systematic problems in the organization of economic processes inside the country and for the level of influence of external economic problems on our economy, including the factors of economic pressure.
If we paraphrase the economists of the State Duma of the Russian Federation, it is possible to ascertain, that the last 20 years were marked by estrangement of the state from fundamental economic processes; the state and the state institutes were simply “hanged up” with their strive to leave only control functions in the hands of the state. At the same time in is easy to “buy” “controllers” in existing conditions of remuneration of labour. It is obvious to many. Alas, that is the construction of the system. Such construction is profitable for some people.
The principle of preservation in the hands of the state of only control functions with a broad spectrum of unfulfilled obligations without active participation of the state in the economy (in comparison with directed economies demonstrating stability; in China – demonstrating growth) is imposed on the system of administration.
Not only our country may be illustrative example; there are the examples of different neoliberal models of development of the other countries; when the economy of many countries that once were stable is suffering.
In particular, the results of “Cavallo” plan (Argentina), when the state refused from any kind of monetary and financial control, are indicative. Fast development of foreign economic connections and financial stability in short-term period ended with serious economic recession. Today our failed liberals make the attempts to destabilize situation with the systems of monetary control.
Recession and economic instability can be seen in most countries of the world. The EU members can give an illustrative example. Thus, the level of unemployment in Greece is up to 27%. According to estimation of some experts, current number of unemployed people in the world amounts between 100 and 200 million. This number increases every year by an average of 5 million.
We can not ignore the massive reduction in the number of employees in industry in neighbouring countries. So, for example, the drop in demand for the products of industrial and steel works produced by related enterprises in Ukraine led to the reduction of tens of thousands of people over the past four years.
Disproportionate growth including the speculative financial component in relation to investments in fixed assets and infrastructure projects has led to a situation of “scissors” between demand and production capacity. It is particularly significant for Pridnestrovie.
In this situation, in view of the fact that the business is not ready or often is unable to invest in infrastructure and new technologies there are few modern productions in the country.
Therefore, the question arises: How to provide the necessary resources for economic growth?
The answer is obvious - public investment which should take into account the social projects and should be responsible for the implementation of economic planning.
It is necessary to adjust further the direction of economic policy to joint state participation in investment and infrastructure projects.
Failure of the investment in the infrastructure of cities and villages is obvious with regard to infrastructure.
Figures of real subsidies, infrastructure and development costs to support the MSSR in the late 70's and early 80's are indicative (this amount varies according to the calculations of experts in the annual volume from 1 to 2 billion U.S. dollars equivalent).
For example, targeted subsidies to Ukraine amounted to about 20 billion roubles.
At the same time the share of our country in the MSSR was about 100 to 300 million U.S. dollars annually with low energy costs. These figures indicate support and investment in region development.
For comparison, according to the Ministry of Economic Development of the Pridnestrovian Moldavian Republic, the volume of capital investments from the national and local budgets in 2012 was about 90 million roubles (8.1 million U.S. dollars).
Thus, in view of the crisis and unrecognized status of Pridnestrovie as a subject of international law, public investments are the absolute choice as a source of economic growth.
For that end, the government should have the resources that of course can not be wrung out of the thin air. In view of the current economic situation, we need to search for long-term external investor.
Today, all public authorities should be aimed at raising required investment of more than 2 billion U.S. dollars in the economics of the Pridnestrovian Moldavian Republic in the next 3 years to restore the financial solvency of the country. These are the minimum requirements for the prospects of our economical development for a period of 5-10 years. We should support and extend the projects, primarily aimed at the development of high-tech businesses, and to support the infrastructure at the same time.
We clearly understand that the number of long-term money in the world economy declined approximately by 10 times during the recent global economic crisis. There are no domestic funds that could be available for profitable technology lending, and external market conditions complicate our work.
With regard to the current situation the question of raising resources in such volume is a matter of survival of the country and the matter of existence in the next 3-5 years.
The answer must be found by the public authorities and all those who care about the future of the country.
Today we have an objective assessment of the current situation and our possibilities.
In general, the existing industrial heritage was founded in the former Soviet Union. So, everything has its deadline and is able to compete without technical retooling only a certain time.
Is our business community able today to re-equip enterprises and be competitive in the external open market? I think the answer is obvious - the business is active only when it has clear profit in the short run. There are rare exceptions, but they are so rare that they do not affect the overall economic situation.
Today business community has low competitiveness in foreign markets for many reasons even compared to our neighbours. It can not develop under current energy prices. The resolution is, as mentioned above, the search for external investors and determining by the state of two or three specific areas and their clear planning and public support. These areas should be able to saturate the domestic market in a particular segment and should have the potential to be competitive on the international market.
We must send a clear signal to business community that we need active involvement of new technologies in all spheres, otherwise current uncompetitiveness of most business enterprises in foreign markets will be a problem not only for business and for citizens of PMR, but for the whole state. Government should make decisions on setting clear and transparent rules of investing in new technologies with a view to competitiveness in foreign markets in order to calm the situation.
State support of business community should be based on mutual obligations. Not only the state should encourage business, but business representatives should make efforts to develop and strengthen their position in foreign markets.
I want to emphasize that the state support of business entities due to valuation of natural gas considered while forming maximum tariffs below the contract price amounted to 4.7 billion roubles (421 million U.S. dollars) only in 2012. In 2012 income in budget and non-budget funds (excluding revenue from the state treasury bills and receipts from repayment of loans) increased by 18%.
Today the business community attempts to live by the rules of the twentieth century. It reflects yesterday's mentality, and, thus, their requirements of preferences for operation without reciprocal obligations reflect mentality of the day before yesterday.
The state should support only those areas that will contribute to the development of the economic potential of the Republic for a period of at least 5-10 years.
We should not forget the fact that private property is a pillar of personal autonomy. This is very important! A person shall be free when depending economically on no one. It shall regard the property and regular income of employees at enterprises and authorities.
There is an urgent need to change the law so that property and land should be transferred from inefficient owner (lessee) to effective one in tighter deadlines. This measure shall increase responsibility. Then I give an example: in the U.S. as one of the largest economies in the world up to 1 million companies go bankrupt every year changing their ownership.
In this regard, I expect proposals of the executive and representative bodies in order to develop transparent criteria, since the state offers aid and assists in various areas. The freezing of inefficient enterprises should be the exception to the rule.
In order to calm the situation I suggest beginning of operation planning for a period of at least 3 years in the medium and long term. And the first step shall include planning of the economic priorities for the stipulated period under turning to the 3-year planning budget, i.e. to perform medium plan indicators with a flexible control mechanism instead of annual targets.
The medium-term budget and tariff policy planning will pave the way for achieving concrete results in decision-making in the longer term.
Together we must encourage the formation of public choice of path in a difficult situation.
“Both democratic and dictatorial choices are always abuse of power” (Ruslan Grinberg, Director at Institute of Economics, RAS).
A distinct concentration of efforts in the designated areas by authorities is essential.
Today effectiveness of controls is very important in order to achieve a certain level of stability. Current requirements include not only formal knowledge but also what is called the wisdom of management, i.e. the ability to “fit the circumstances”, understanding “present situation”, staying in a differential relationship with the individual factors of the situation.
This year we should develop measures to engage qualified personnel in the management. “Low-paid brains” in management, formal approach to impetuses in management could further aggravate the situation and to be worth a lot for us even today. That's why one of the priorities shall be improvement of the minimum number of quality authorities by involving professionals and providing sufficient motivation.
Only creative professionals can change this situation. Controls must be optimally minimized on the one hand, but the public service in the administration should be prestigious and allow new forms of governance to implement positive change.
I entrust the authorities with making suggestions as soon as possible.
At the same time improving the efficiency of performance of government functions, it is necessary to change the principles and procedures of motivation employee receiving salary from the budget within optimization (which is obligatory) during 2013-2014.
It is still important in the context of management to increase transparency of government institutions of the Pridnestrovian Moldavian Republic, to create conditions for public control over the government and conditions for the adoption by authorized officials of effective government solutions in different areas of public life and society. In my opinion, it is fair when an official bases material welfare on the economic base of the state. In this regard, I have already initiated a draft law “On prohibition for certain categories of officials to open and maintain accounts (deposits), to store money assets in foreign banks located outside the territory of the Pridnestrovian Moldavian Republic, to possess foreign securities, to have and acquire ownership of real property abroad”. I propose to the Supreme Council of the Pridnestrovian Moldavian Republic to consider this draft law within the shortest possible time.
Besides, shadow merchants should be removed from authorities, and this should be applicable to all branches of government. The mechanism was set out in the projects proposed.
I suppose we must urgently consider expanding the capacity of the legislative branch through its activities on a permanent basis in order to focus efforts on state affairs and not on the personal business. Activity of a part of deputies on a regular basis is a wrong distribution of potential. While implementing this idea, I hope, we will soon feel the flow of innovations from the deputies, half of which are involved in business affairs and are partly distracted from the main task of decision making. The new draft law on this issue was also introduced.
In addition, it is necessary to minimize the external shadow impact on the government or their representatives. The only source of power is the people, so the impact of commercial organizations on the Parliament and other government bodies, as well as lobbying the interests of these commercial companies to the detriment of the state should be minimized and directed exclusively on the development of the country.
Attention must be paid “not to the flags and standards, but to keep an eye on those who give commands that define movement of the troops”. These commands for deputies and other authorities should be given by heart and by people; they should not be defined by other motives. And we must strive for this.
Government will continue to contribute to the understanding of affiliation and will give legal assessment of the actions of individuals who are trying to subjugate the authorities.
Business groups and the state are not synonymous.
In this situation business community is able and should represent its interests through other appropriate civilized mechanisms.
This will allow essential avoiding state solutions of conflicts of interest and will significantly increase the efficiency of management.
I recommend Pridnestrovian oligarchs to rest from politics, so that this occurrence should not be regarded as conferring power through the mechanism of financial incentives and deputies' interest in election and monthly salary. First and foremost, responsibility should be taken by the so-called “deputies supported by commercial organizations”, if any. It shall be unacceptable to form groups in authorities not for the sake of ideology, but for financial interests.
Law enforcement authorities are required to intensify efforts while combating corruption and I expect actual results to be achieved in “cleaning” all branches of government without exception from corrupt practice by the end of the year. The Committee for State Security is required to achieve results in blocking of “people's servants” staying in the service and earning wages, “sharks” of Pridnestrovian business or external moderators of destabilization in Pridnestrovie.
Before targeting corruption it is necessary to deprive the enemy of the vantage point – “beat the enemy's horse at first” as it was said in old time. The “horse” in this case is meant to be shadow economy which representatives often try to turn the state into a structural unit.
Despite the fact that the President has the authority to determine the internal and external concept of state development in accordance with Article 59 of the Constitution presidential decrees on issues of domestic policy are often actually ignored today by the representative body. I pay attention to this fact and put it together with echo of the last election campaign in the ears of some of them, the excessive influence of money on their decisions or with a low legal culture. Political bias in the period of economic instability should go to the sidelines. The front line should be taken by reasoned debate on the adoption of effective solutions, which, alas, is absent as there is no proper political culture in the dialogue between the authorities.
Today verbal contortionists, simply frothy speakers, in government at all levels should be moved away from the lead role and shown to society that would give an objective assessment of the social value of these persons, their ideas. Our task is to get rid of this “ballast” in authorities in the near future. This is especially true for those who penetration into power was based on their own financial or property interests, or was related to the protection and lobbying of commercial interests of groups, companies or external forces.
Many countries pass this way, some of them have already passed, and we are still at the beginning of the path.
We must urgently create barriers to purchase of parliamentary seats by various material tricks.
Along with this, extreme unprofessionalism must be eradicated from all spheres of public life as soon as possible. We have to prepare the site for the involvement of scientific and cultural intellectuals (research community, experienced executive managers and active youth) with enthusiasm, high moral and professional qualities in all public authorities including the legislature.
Our state needs internal readiness, competence and willingness of each person to work not only for his or her own sake but for the sake of others, of all Pridnestrovian people.
We must make every effort to ensure fruitful cooperation between all authorities and to achieve the common goal – the welfare of the people of Pridnestrovie.
Only then we will be able to survive and grow in the competitive external environment.
The time of unrest has passed, and today the question is either we are pushing forward or stay at the level of low professional discussions and verbal skirmish between people frequently having neither proper knowledge of the subject matter nor decent tangible results of work obvious to other people.
Another ongoing challenge is mental approach of a narrow number of government officials and businessmen on the alleged temporary nature of our country.
There should be no place for the temporary nature of the country in consciousness of people.
Temporary workers should leave political platforms, and, paraphrasing the famous expression, the state should be a fist in this case, while state authorities and the public – a kid glove striking out at existing problems within the republic. We must return understanding to the system of government that a glove alone without the fist is little purpose for achieving objectives of the country.
Therefore, executive discipline in all state authorities needs to be strengthened first.
I demand that the leadership of the Parliament should restore control over the work of the deputies: practice of being absent at the job place for 50 working days per year – and such cases are available – must be eradicated.
Moreover, existing practice of sometimes languid and slow execution of the Presidential assignments in the state is no longer tolerated.
For example, instruction to the Ministry of Agriculture and Natural Resources to solve the problem of the decade-long discussions about shares and to work out the corresponding draft law is executed with turtle's speed.
The Ministry of Health needs to be more rapid in addressing issues of changing the form of government which has proved to be ineffective. Going around in circles on the old paths is a waste of time.
In some cases citizens can hardly understand the logic of actions of the State Service of Energy and Housing and Public Utilities when implementing the tariff policy.
I cannot but emphasize – it is not always obvious – that “many of our problems are primarily due to the problems in us”. Morality and high spirituality is the foundation of social development, the fact which we don't always remember about.
Therefore I consider it necessary to intensify efforts in propagating spirituality as a pledge of positive result of any undertaking, by positioning in the mass media information on good examples of reaching results through the spirit of common people who are working at the machine sit, in the field, who are teaching young generation, who are saving lives and health of people, who are standing guard of security and rule of law.
The means of reaching our goals are very important. Public servants, deputies of legislative assemblies of all levels need to understand that we cannot use immoral means to reach righteous goals. Morality is the way to success from the street cleaner to President. Let us together give special attention to it.
Today our country faces internal problems (unemployment, poverty, infrastructural problems, etc.) and is located in rigid external coordinates. We need to take into account dynamics of development of international relations and necessity to fit in new rules of the unbalances global economy.
On the current stage of development of our country, for strategic perspective, we need adequacy of all our political, economic and spiritual centres, of our citizens and public servants on whom shall depend search of new vector of movement. It is important to remember that loss of appropriateness to the situation leads to political turbulences which reshape situation in unknown direction. That is why all inadequate decisions should be minimized and inadequate public servants are to be removed from all state and public bodies. Positive and unifying discussions should be produced in the society in order to develop well-reasoned decisions on the existing problems.
I would like to turn attention to theses of foreign policy.
In accordance with the Constitution we fixed our goals by defining them in the Foreign Policy Concept (Decree Nr. 766 from November 20, 2012) where defence and security of fundamental rights and freedoms of our citizens and of national interests of the Pridnestrovian Moldavian Republic are among the major landmarks.
We are a peace-loving state but we have to admit that lack of international recognition and actions of some of our partners deprived citizens of the Pridnestrovian Moldavian Republic some of their rights and abilities which are guaranteed by the majority of states to their citizens.
For example, why are our economic agents up to now limited in their ability to conduct free economic activity and our export on Pridnestrovian-Ukrainian border is actually blocked?
Why are citizens of the Russian Federation and of Ukraine, residing in the Pridnestrovian Moldavian Republic, limited in their right on consular service?
Will you be able to find many such examples around the world?
Thus, due to absence of a consulate, the procedure of exchange of external passports in Tiraspol is sometimes getting protracted up to 1 year. Isn't it humiliating when people have to come to the field consulate at 3 a.m. every week in order not to miss their place in the queue? And there is more than 170 thousands of citizens of the Russian Federation residing on the territory of the Pridnestrovian Moldavian Republic.
Due to well-known political motives the Republic of Moldova is directly or indirectly influencing, by her actions and inactivity, on the abilities of citizens of the Pridnestrovian Moldavian Republic and is limiting citizens of the Russian Federation who are residing on the territory of the Pridnestrovian Moldavian Republic in their fundamental rights on freedom of movement and other human rights through hindering opening of consulates of Russia and Ukraine in Tiraspol.
Why citizens of Ukraine, residing in the Pridnestrovian Moldavian Republic, are not able to vote on the Ukrainian presidential and parliamentary elections here, in Pridnestrovie, which is the unique example?
Why the certificates of Pridnestrovian schools are to be confirmed in Kishinev and at the same time we are called to grant state support to the Romanian schools through grants to pay for public facilities along with our own educational institutions?
Why is the freedom of movement of citizens of the Russian Federation and of Ukraine, residing on the territory of the Pridnestrovian Moldavian Republic, is not provided through the borders of the Republic of Moldova and of Ukraine? At the same time we are letting citizens of Moldova to cross our borders.
Why are our citizens, who are living on the European continent, in the Pridnestrovian Moldavian Republic, are today deprived of full-scale ability to use elementary passenger service between our settlements and neighbouring countries?
Why are Ukrainian and Moldovan airplanes and other crafts, conducting transit flights, able to pass our territory and we are deprived of such ability?
This list can be continued and our citizens are asking these troublous questions on their meetings with the President and are asking to solve them.
Today citizen of the Pridnestrovian Moldavian Republic is held hostage of unilateral political approaches the goal of which is to reach political victory under the flag of dubious thesis of territorial integrity. In the base of such approach often lies politics of double standards.
I would like to cite words of the spiritual leader of Tibet, the Dalai Lama: “In the conduct of international relations we pay very little respect to truth. Inevitably, weaker nations are manipulated and oppressed by stronger ones, just as the weaker sections of most societies suffer at the hands of the more affluent and powerful… If one's motivation is negative, the action it produces is, in the deepest sense, violent, even though it may appear to be smooth and gentle... a compassionate concern for the benefit of others – not simply for oneself – is the sole justification for the use of force”.
We are proceeding from what is stated in respect of human rights and fundamental freedoms for all people, without distinction of race, sex, language or religion in the Millennium Declaration of the United Nations Organizations, adopted by the resolution 55/2 of the General Assembly in September 8, 2000.
In particular, it is said in the Declaration: “We will spare no effort to promote democracy and strengthen the rule of law, as well as respect for all internationally recognized human rights and fundamental freedoms, including the right to development. We resolve therefore to respect fully and uphold the Universal Declaration of Human Rights”.
But why, then, do we feel another approach towards us?
How the right of Pridnestrovians on development is implemented?
The rights of the people to freedom of movement, of economic activity, of education have been infringed for decades; they must become not only a topic for discussion, but also must lead to taking of measures guarantying the conditions of living in given region of Europe of people regardless of their political predilections or their own vision of organization of their own life.
I consider it necessary to address the guarantor states, the people of good will, international organizations in order to ask for protection of elementary human rights, freedom of performing of economic activity, of movement, of access to education on native language, right to development regardless of the place of residence and of other unshakable elementary rights and of the opinion of the Pridnestrovian people – the inhabitants of Europe.
I also think that we should make the contacts with the regions of the Russian Federation, of Ukraine, with our partners – South Ossetia, Abkhazia and Nagorny Karabakh, more active.
We should closely study the proposals of cooperation with neighboring districts of the Republic of Moldova, especially those interested in it: Gagauzia, Beltsy, Brichany, Edintsy, Kriuliany, Rezina, Soroki, Novye Aneny, Kaushany and other regions of the Republic of Moldova.
It is necessary for the Government to elaborate plan of constant interaction with mentioned regions.
In summary I will formulate basic theses of first-priority directions and measures necessary for stabilization of situation in the country on the basis of principle of market economy with clear state planning of the activity, inviolability of property, creation in market conditions of additional tax mechanisms of regulation, broadening of activity in contacts on international arena for purposes of unblocking of the economy of Pridnestrovie, of achievement of stability in international approach to the right of ownership in Pridnestrovie, of defining of mechanisms of stabilization of banking system of Pridnestrovie:
a) Solving of the problem of international legal status;
b) Elaboration of measures directed on involvement into economy of large-scale long-term external investments for activation of economic processes;
c) Transition to planning of directions of development of the state on three-five years;
d) Planning, submitting to consideration and adoption in nearest future of state budget on three years;
e) Activation of work on unblocking of transport logistics;
f) Development of additional mechanisms of involvement of public opinion to consideration while making state decisions;
g) “Purification” of bodies of state power from external commercial administration and non-professionals holding leading posts;
h) The beginning of the reform of remuneration of labour and optimization of expenses;
i) Broadened study and use of the possibilities of natural resources of the country;
j) Phased restriction of withdrawal of agricultural raw materials and stimulating of export of the derived products;
k) Granting of fixed assets (lands of agricultural designation not less than 1 000 hectare) with mutual obligations on investment in the technology and infrastructure of the village;
l) Emphasizing of attention on the so-called inflation of the expenses with consideration of old equipment on the majority of enterprises and real parity while supporting the development of new technologies of production;
m) Tax preferences (understanding that the business is interested in profit, besides it is necessary while supporting the decrease of unemployment):
- creation of beneficial tax conditions for fading out zones of business activity;
- release from any kind of duties on the import of new equipment to be used in production of goods (services);
- accordance of preferences:
- to organizations providing services of call-centres and elaborating program products;
- to persons producing computer and household appliances;
- to organizations producing new products, for example, to those who express intentions to create assembly departments for agricultural and, perhaps for automobile technical equipment;
- to organizations producing medical preparations;
- to organizations in the sphere of high-tech private medicine, creation of tourist complexes providing medical services;
- to local organizations processing vegetables and fruit, entering international markets with their new product;
- to cultural and entertaining centres, cinemas, restaurants, catering institutions on the conditions of introduction of new technologies of accessible service of high level;
- to organizations engaged in the construction and sale of the housing using advanced technologies in the construction;
- to organizations engaged in the construction and sale of the housing using advanced technologies in the construction;
- to the banks providing loans for the purchase and launch of new equipment needed for the production of industrial goods in areas approved by the Government, subject to loan rates minimization;
- organizations providing passenger transportation services using modern means of transport;
- providing flexible possibilities for the Government to stabilize work of non-operating enterprises through wider use of tax incentives mechanisms;
At the same time, upon provision of the above preferences, the state should carry out strict responsibility for the violation of undertaken commitments;
n) implementation, support and promotion of basic values of the leading world countries in the efficiency of state administration, municipal administration and approaches in economic regulation;
Dear Pridnestrovians, I am sure success of the state is possible and is dependent on all of us, on our thoughts and actions.
We live in the era of dynamic world and constant changes. Nowadays, the distance between projected thoughts and intentions of people and the results is measured not by centuries but years and months, therefore all state authorities should transparently and openly demonstrate their results every six months on the basis of the proposed and implemented advanced solutions. The more positive the basis of work, the more successful the result of transformation of our decisions fitting well into world processes at the regional level.
I am sure, practical reality of the current economic situation can be changed only through a distanced and unbiased vision of the ways of overcoming the existing barriers.
The basis of this path is in the positive vision, positive thinking, faith in God, nature, in our decisions and actions based on the synthesis of eternal spiritual values, moral standards and constructive pragmatism.
Once again I want to emphasize the most important approach in the need to change the mind and attitudes in state authorities – to increase constructivism, to depart from elementary negativity, malice, envy, love for money, to avoid idle talk used to switch attention. Officials of public authorities should understand that squabble and constructive discussions are not the same.
Most of the Pridnestrovian people believe, work and multiply our perspectives. Many trials come from the outside, but I am sure that hard work in many complex situations is the key to success of each person and of the country as a whole.
Using tremendous power inherent in human mind and positive purposes is a real tool to success of the country.
Despite the global economic instability, creation ensuring achievement of spiritual and material goals for the development of life is the way to the dawn of Pridnestrovie.
I believe that joint efforts of all those present here and of all citizens of our Republic will lead to fruitful creative development and growth of material welfare of the people of Pridnestrovie and our beloved homeland.
Thank You for the attention, understanding and support!
