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Parliamentary Speaker Yevgeny Shevchuk, 39, says the blockade by Moldova is the top economic problem right now

TIRASPOL (Tiraspol Times) - The Speaker of Pridnestrovie's Parliament, opposition-leader Yevgeny Shevchuk, says that the top problem for Pridnestrovie is the continued economic blockade by Moldova. This was reported during a meeting with local journalists in the parliament building of the unrecognized country.

" - The main problem is still the lack of settlement of relations between Pridnestrovie and Moldova and as a result unfavorable conditions for foreign trade of Pridnestrovie’s private economic entities, unstable rail and automobile traffic," the 39 year old Shevchuk said. "Thus it didn’t encourage investment in Pridnestrovie. The economic entities suffer losses and can’t raise salaries. Pridnestrovie becomes less attractive for investors. This results in labor migration."

The Speaker, who is also one of the leaders of the largest opposition party in the country, Renewal, added that "Parliament’s priorities are to resolve political and foreign trade problems, in order to create a favorable environment in Pridnestrovie."

Pridnestrovie is raising taxes with the aim of entering 2008 with a balanced budget, Yevgeny Shevchuk informed.

" - As you know Parliament passed main tax laws, the conception of the 2008 tax and budget policy, namely outlined our financial opportunities for the coming year. Considering Parliament’s decisions, about which the Parliamentary press-service has already informed you, we’ll have a chance to balance the pension fund budget, though there’s a lack of money according to preliminary estimation. However, I think the final decision will be taken when considering the 2008 republican budget. Our key task is to ensure timely payment of salaries, pensions, allowances," he said. "Low wages, pensions and benefits is the main challenge that faces the government."

" - As to taxes, we levied an extra 0,9% tax to balance the revenue of the pension fund. So as a result of decisions taken by Parliament we expect over 20 million dollars to enter the budget," he said, adding that the executive - led by President Igor Smirnov - is at odds with Parliament on this issue. "Here we have different viewpoints," Shevchuk noted.

Cancellation of migration fee part of an open borders initiative

Despite the desire of President Igor Smirnov and the Ministry of Internal Affairs, Parliament decided earlier this month to remove a migration fee for Moldovans and a number of other foreign citizens, starting from 01 January 2008. Yevgeny Shevchuk explained the reasons for this.

" - The first reason is lines at border crossings," he said. "People visiting or going through our republic have to spend much time on the border, to pay fees and so on. Parliament believes it doesn’t encourage people to visit Pridnestrovie. We want more people to come to our republic to learn about our success and difficulties, to get positive impressions. It is not only an issue on collection of the migration fee but an excessive control at the border checkpoints. Both executive government and Parliament are working on the issue."

Removing the migration fee is just one of the steps that Parliament is taking towards a more open border policy. Other reform measures are under review, which will result in a new approach to free movement and openness on the 816 km of borders that Pridnestrovie has with Moldova, to the west, and with Ukraine, to the east.

" - The Migration bill and the Border bill are under consideration in Parliament. I hope Parliament will make appropriate decisions. And the border procedures will be regulated by law. The migration service activities are currently regulated by subordinate legislation. In our opinion, according to our Constitution this service must act under the law prescribing the procedures for collecting fees, the amount of fees and so on," added Shevchuk. Irregular payments and thinly disguised corruption has been a recurring problem at some border crossings, and Parliament is aware of complaints from foreign tourists who have been victims of shakedowns.

Yevgeny Shevchuk also lashed out at the Ministry of Internal Affairs for shedding "crocodile tears" over the anticipated budget shortfall stemming from the coming lack of migration fee income.

" - As for the problems that could arise after cancellation of the migration fee according to the Ministry for internal affairs, I want to say that before imposition of the migration fee the Ministry of Internal Affairs was successfully functioning," he pointedly noted. He promised to rein in the Ministry and make its spending subject to Parliamentary oversight: "When the Ministry of Internal Affairs decides on spending alone, I think, it is not good and is not in full compliance with our legislation. Starting from 2008 the planned spending will be discussed in details in all government agencies, it is planned to cut spending on the system of public administration. The state lacks money, so such a move is necessary and Parliament is ready to fulfill it."

Hard times ahead

With a cronic budget shortfall and no financial aid from Russia, Pridnestrovie's Parliament has extensively debated tax and budget policy and the best approach to tax laws: Whether to reform the current tax system or transition to another tax system entirely. A Parliamentary committee was tasked to estimate the effects of the transition to another tax system, but no decision has yet been made, said Shevchuk.

" - It should be steadily changed only after thorough examination and analysis of the effects and opportunities for implementation in the Pridnestrovian Moldavian Republic. In my opinion, sharp changes in taxation are counter-productive. Parliament believes that all proposed changes must be scrutinized thoroughly to avoid further worsening of the economic situation."

Pridnestrovie has a flat tax on income and no sales tax, making its overall tax burden one of the lightest in Europe. Several MPs from the Renewal party have ties to local businesses, and the party is seen as a pro-market, right-of-center party whose political position is pro-business and based on growth in the economy.

" - I’d like to say that changes in the tax system won’t lead to the increase in the budget revenue; they are of the strategic importance as integration into large economic associations based in the West and the East – the CIS states and the European Union," said Yevgeny Shevchuk.

He warned that there are hard times ahead as long as the country remains unrecognized internationally.

" - I’d like to dwell on some negative moments of the coming year. Of course, there will be a shortage of funds even after imposition of higher taxes. In this situation the decision was taken to keep the 2007 level of salaries for the budget-sector. The salaries won’t be increased in line with higher inflation expected in 2008. We understand that it’s rather difficult for our citizens."

Later this month, Parliament is set to discuss ways of subsidizing pensions with more cash. Simply put, this is necessary, says Shevchuk, because the retired population of Pridnestrovie has the problem that "their low pensions do not meet their needs."