Self-supporting budget rules out financial aid for Transdniester in 2008

Based in Tiraspol, Transdniestria's Central Bank maintains the small country's own currency, the PMR Rouble

TIRASPOL (Tiraspol Times) - The 2008 budget of the Pridnestrovian Moldavian Republic (PMR), better known as Transdniestria, is based entirely on income from domestic sources. For the coming year, no financial aid will be received from abroad, forcing the unrecognized country to survive entirely on local tax revenue and other state income generated within the borders of the 4,163 square kilometer territory.

For 2008, the republic's budget envisions income of 329 million US dollars and expenditures of 385 million dollars, with a projected budget deficit of approximately $56 million.

The President of Transdniestria, Igor Smirnov, told journalists on Wednesday that "the 2007 budget originally included assumptions that Russia would give financial aid to the republic," but added that "for a number of reasons this did not happen, and a difficult situation followed as a result."

This time around, Transdniestria will not make the same mistake twice in a row.

" - The legislative branch and the executive branch have now worked out ways to reduce the budget deficit for 2008," said President Smirnov. He added that from now on, the state which he leads will have to only rely on its own means, and not count on income from any outside source.

" - We will live based on our own economy, and we need to strengthen it under any circumstances, independently of what happens in Ukraine, in Russia or in Moldova."

Central Bank with own currency

Following the initiation of a Moldovan customs blockade against Transdniestria in March of 2006, Russia aided the economy with emergency help to make up for a shortfall in export earnings. Due to a fall in exports caused by Moldovan customs restrictions, more than $500 million dollars were lost in the first year alone.

Russian aid ended on the last day of December, 2006. From the first of January, 2007, Russia has not given the unrecognized country any financial support. In September, the PMR Parliament announced that there were no expectations that 2008 would be any different, and started work on a draft budget which did not include any assumptions of financial aid from any foreign source whatsoever.

Transdniestria mints its own currency, the PMR Rouble, and has an autonomous Central Bank which is based in Tiraspol and which is responsible for maintaining a stable exchange rate.

Although no foreign financial aid was received in 2007, the exchange rate of the PMR Rouble withstood pressure and held steady at approximately 8.45 to the dollar. It is feared that the situation will be hard to maintain in 2008, and that in the face of a lack of foreign financial aid the PMR Central Bank might be forced to devalue.

There are no currency controls in Transdniestria, and the PMR can be freely traded. Foreign exchange is available with no restrictions from a number of private banks throughout the length of the country.

See also:
» No more Russian aid for Trans-Dniester
» Clampdown on free trade causes economic hardship