MOLDOVA’S EXPERIENCE

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Moldova's experience - Rcpar.org

Sixth Annual Summer Public Management Institute on “Policy

planning: necessity, institutional framework and tools”

Jurmala, Latvia, 23-27 August 2010

POLICY PLANNING IN THE CONTEXT

OF THE ECONOMIC CRISIS:

MOLDOVA’S EXPERIENCE

Elena Cabac and Inga Iovu, Policy, Strategic Planning and External

Aid Department, State Chancellery of the Republic of Moldova


Crisis for the Republic of Moldova

was…

1) A process recorded since September 2008

with negative economic and social impact

2) A result of the crisis in the financial and public

policy management, promoted by the previous

Government

3) Opportunity for a new approach for the

development of the country, proposed by the

new Government


Political context

5 th of April

2009

29 th of July

2009

Parliamentary

Elections

25 th of September

2009

Anticipated

Parliamentary

Elections

Installment

of the new

Government


How we went through the year 2009!

‣ Economic decline was -6.5%

‣ Remittances fell by about 30%

‣ Foreign direct investment fell 6 times

‣ The general government deficit increased 7 times

‣ Stagnation of the important sectors of the economy

‣ Number of unemployed persons increased 1.7 times

(including the returned migrants)


Steps ahead:

September

25 th , 2009

December 1 st ,

2009

December 29 th ,

2009

• A new comprehensive

Government Program

•Approval of the Economic

Stabilization and Recovery Program

of the Republic of Moldova for

2009-2011 (ESRP)

• Creation of the National Council

for Participation


Commitment to ensure transparency

of decision making

The new Government established the

National Council for Participation with

30 representatives of the civil society:

- Panel for discussing strategic priorities of

developing countries

- Guarantor for monitoring/ensuring

transparent decision making


Either…or…

I. Status-quo

‣ Postpone imperative reforms because of insufficient

financial means (fiscal policy, public expenditures,

education, social security, etc.)

‣ Continue money allocation without due efficiency

analysis

II. Take attitude

‣ Initiation of imperative reforms

‣ Increase public expenditure efficiency through

reduction and redistribution

‣ Release of additional foreign aid in order to

implement urgent public policies and contract the

public budget deficit


ESRP based on 3 pillars

Public

finance

stabilization

Economic

activity

revival

ESRP

(’09-’11)

Inssuring an

efficient and

fair social

protection

KEY PRINCIPLES

Equity Multiplier effect Efficient public

sector

Participative process


Other action steps:

January 12 th ,

2010

•Start of negotiations on the

Association Agreement with the EU

January 29 th ,

2010

•180 mil USD agreed according the

new Memorandum with the IMF

March 28 th ,

2010

•1,8 mil. EUR additional financing

got at the Donors’ Consultative

Group meeting, Bruxelles


10

The process of public policy planning

Gov

ern

ment

al

level

MIDDLE TERM

Activity program of

Government

National Strategic

Documents

Commitments to IMF and

other development partners.

SHORT TERM

Annual Governmental plan of

actions

Publi

c

auth

ority

level

Institutional Development

Plan

Plans of actions for

implementation of public

policy documents targeted

on specific fields, national

problems, new issues

included in agenda

Annual Authority plan of

actions


Correlating NDS, MBTF and Budget

Dec - Feb

Feb - Mar

Apr - May

June –

Aug

September

Oct - Dec

NDS

MTBF

Elaboration

of the main

priorities

doc

Financial

Resources

and

expenditure

ceiling

forecast

NDS action

plan review

Strategic

sectoral

plans

elaboration,

expenditure

ceiling

review

MBTF

elaboration

and

approval

by the

Coordination

group

Linking NDS

&Budget

Elabora

tion of

annual

budget

draft

Approving

NDS action

plan and

Budget

Draft

(by ICSP)

NDS action

plan

approved by

Government

Parliament

approves

annual

budget


A new approach for the economic growth in

Moldova – orientation towards innovation…

Factor driven (2010)

Low salaries

Decreased productivity

Economic growth based on

remittances and import

Economic growth based on

trade activity

Efficiency driven (2015)

Economic growth

based on the

production of

qualitative goods and

services

Investment based

economic growth

Competitiveness based

on due qualification of

the labor force

Enlarged commodity

market

Functional labor force

market

Increased capacity to

assimilate new

technology

Innovation driven (2030)

High salaries

High level standards of life

Competitive business based on

innovative products


As a result in the 1Q of 2010:

GDP +4.7%

Consumer Price Index +5,5 %

General public deficit (neg.) +18.2%

Trade balance (neg.) +12.3%

Average wage(real terms) + 0.9%

Fixed capital investments – 23.4%


Here we are!

September 2008

2009

2010, with ESRP

2010, without ESRP


Next steps…








Strengthening government capacity to provide high quality

public services

Effective management of public spending towards sectors

with growth potential and to the most vulnerable persons

Increasing internal growth potential based on investments,

modern technologies, innovations, sustainable development

Development of communication infrastructure

Stimulate demand for new products, technologies, services

Developing public - private partnerships: Business - Science-

Government-Civil Society

Developing skills for the new knowledge-based challenges

of the global economy


Thank you!

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