No more Russian aid for Trans-Dniester

Ethnic Russians in Pridnestrovie tie themselves in the ribbon of Russia's flag colors. They'll get no financial help from Russia

TIRASPOL (Tiraspol Times) - Their land was part of Kievan Rus a thousand years ago, and later - for hundreds of years - part of the Russian Empire. Their capital city was founded by a Russian general on orders of Catherine the Great. The language which is spoken here is overwhelmingly Russian. But when it comes to financial aid, Trans-Dniester is cut off from Russia's help.

The unrecognized country, whose official name is Pridnestrovie, received its last Ruble in December 2006. Starting on the 1st of January, 2007, Trans-Dniester's government has been on its own: No more money entered the budget from Russia, despite a previous inflow of up to $10 million per month during part of 2006.

Now, says the country's Finance Ministry, Trans-Dniester will also not obtain any financial aid from Russia during 2008.

The Trans-Dniester / Pridnestrovie state budget for fiscal year 2008, which Parliament has started to debate, must be self-sustaining since no financial aid from Russia or any other outside sources is currently expected.

A third of the citizens of Trans-Dniester (Pridnestrovie) are Russians. In this file photo, a schoolgirl in Bendery waves the red-and-green flag of Pridnestrovie next to Russia's tricolor.

This was the conclusion of the report of Pridnestrovie's female Minister of Finance, Irina Molokanova, after meeting with the President of Pridnestrovie Igor Smirnov to discuss the budgetary and tax policy of the coming year.

Others who confirm that Russian aid will not be forthcoming include Helen Chernenko, Minister of the Economy, and Aleksey Melnik, the head of Pridnestrovie's Central Bank. The conclusion was reluctantly seconded by Yevgeny Shevchuk, Speaker of Pridnestrovie's Parliament, who had recently appealed directly to Russia for aid in the face of an increasingly worsening budget situation.

Yevgeny Shevchuk - an ethnic Ukrainian who was born in Pridnestrovie's northern city of Rybnitsa - feels that Russia has a moral obligation to its own citizens who live in Pridnestrovie. Almost one-third of Pridnestrovie's population are ethnic Russians. Many of them hold Russian citizenship in addition to their main citizenship of Pridnestrovie.

Sales tax proposed for 2008

The lack of foreign aid from Russia was announced well in advance of the completion of the 2008 budget so as to avoid the mistake which Parliament made with the 2007 budget.

In the budget for 2007, Parliament had counted on getting checks from Russia which never came. As of 01 January 2007, Russia ended its cash disbursements and Pridnestrovie was on its own, leading to a hole in the budget which had to be covered with stop-gap measures and severe budget cutbacks. In one emergency measure this summer, Parliament used gas debt money to fund pension payments instead.

To compensate for the lack of Russian aid in 2008, the cabinet of ministers has proposed the introduction of a VAT-style sales tax.

The suggested tax rate for 2008 will be 3% on all retail sales except so-called socially sensitive transactions. Such transactions would include basic food items and a number of medicines and other pharmaceuticals which are exempt from taxes pf any kind. Non-essential items would pay the 3% value added tax.

The VAT- or sales tax proceeds would enter the national budget. Based on turnover, the tax is expected to produce 107 million PMR Rubles; equivalent to approximately $13 million.

See also:
» Pridnestrovie's parliament seeks foreign aid for budget shortfall
» Uncertain MPs look to Russia for aid
» PMR Govt dips into $14M of Gazprom debt