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Country Commercial Guides
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Chapter II: Economic Trends and Outlook
A. Major Trends and Outlook
1. General
Since independence, and notwithstanding the difficulties imposed by its small economy, a war in Transnistria and the collapse of the soviet trading system, Moldova has followed a strong reformist strategy. However, in the 1990s Moldova has experienced perhaps the sharpest GDP contraction in the Commonwealth Of Independent States (CIS), with the result that its economy by the end of 1998 was around one third of its 1989 size. This collapse can be attributed to various economic misfortunes: the GDP decline of 29 percent in 1992 reflected the war with Transnistria, and the decline of 30.9 percent in 1994 reflected a severe drought which all but wiped out the important grape crop.
In addition, the 8.6 percent decline experienced in 1998, a year in which the government expected a 5 percent growth, was a consequence mainly of the crisis in Russia, which normally receives some 55 percent of Moldova's exports. Continuing economic problems in neighboring Ukraine and Romania, which together usually receive another 12-15 percent of exports, further undermined the performance of Moldova's export sector. Meanwhile, strong speculation against the national currency, the Moldovan Leu (ML), led to a more than 100 percent depreciation by mid 1999. An attempt to maintain the leu's value significantly reduced Moldova's hard currency reserves over 1998 - from $347.6 million before the Russian financial crisis in august 1998 to under $147.6 million by the end of 1998. Despite the difficult environment, the Moldovan government attempted to stabilize the situation but was unable to do so without sustained IMF support.
There are some positive signs for 1999, even though growth is not expected to resume. Under a number of conditions like further economic reforms and privatization, Moldova received assistance from the IMF and World Bank in early 1999, which helped stabilize the currency and the domestic economy.
2. GDP Growth
Following the 1.6 percent growth in GDP recorded over 1997, Moldova expected a growth of 5 percent over 1998, with exports to Russia and other key markets providing the engine for this growth. Disappointingly, by the end of 1998 Moldova's economy had contracted by 8.6 percent. The main cause was the economic crisis in Russia and Ukraine, as well as the worsening economic situation in neighboring Romania. Together, these three countries usually receive 70.4 percent of Moldova's exports. This GDP decline reflected the poor performance in the agriculture sector (including the key wine sector) and a major contraction in industry, where output fell by 11 percent over 1998. On the supply side, industry and agriculture continued to be troubled by a shortage of inputs.
3. Inflation
The impact of the Russian crisis on the country's trade relations with Moldova led to intense pressure on the Moldovan currency over the last quarter of 1998 and the first two quarters of 1999. The previous rate of ML 4.7 to one us dollar had dropped to ML 10 in 1998 and to ML 11.45 in June 1999. This meant an effective doubling in the price of many imports, including dollar - denominated imports like oil. By the end of 1998, the average annual consumer price index (CPI) had reached 10 percent, with a 1998 cumulative inflation of 18.3 percent.
The government and the national bank of Moldova forecast the inflation rate as 13-15 percent in 1999. However, this scenario is optimistic, since the cumulative CPI for the first five months of 1999 is already 10 percent.
4. 1999 Budget
In December 1998, the government approved the budget for 1999, which envisaged revenues of ML 2.9 billion ($333 million), equivalent to 29.3 percent of GDP, and expenses of ML 3.1 billion. Due to the ongoing regional crisis, the IMF gave its consent for Moldova to raise its deficit "ceiling" from 2 percent to 3.5 percent of GDP. This deficit takes into account expected revenues from privatization, as well as IMF and other international financial institution funding that was expected in 1999. The government introduced a 5 percent tax on all imports, excluding energy supplies, and will apply these revenues toward the budget.
5. Credit Ratings
Western institutions believe that Moldova's reforms are an indicator of the country's further growth and as a result, the major ratings agencies did not decrease the country's rating after the crisis of fall 1998. Moody's agency gave Moldova a B2 rating in 1998, although the rating for long-term bank deposits has been decreased to Caa1.
B. Government Role In The Economy
1. General Goals
The government's vision is to move Moldova from its current poverty level by gradually transforming the country in the next century into an open market economy integrated into Europe, while maintaining its traditional markets in the NIS. The authorities have prepared a strategy called the "Strategic Orientations For The Socio-Economic Development Of The Republic Of Moldova Through The Year 2005," which sets out longer-term development objectives, and have adopted a work program of short- and medium-term policies to reach these objectives.
Moldova's development objectives are the following:
-- to stabilize the core institutions of the state which guarantee a democratic development of society, the rule of law and constitutional rights, and the freedoms and obligations of citizens;
-- to create adequate conditions for development of the market economy in order to ensure employment and revenue growth, and to be competitive on world markets;
-- to deepen agriculture and energy reform;
-- to create an environment which encourages private investment;
-- to bring Moldovan society in line with European standards and the norms of social equity and security;
-- and to prevent production and living standards from falling to a level which could generate social conflict and national strife.2. Budget Priorities
Creating the engine for sustainable growth is an imperative for Moldova and the key to longer term macroeconomic stability. The government's budget program features measures to accelerate privatization under the 1999-2000 privatization program. The government is pursuing demand-side adjustment in order to promote price stability and stop the increase of payment arrears. The 1999 budget targets fiscal tightening on the order of 6.5 percent of GDP, principally through a freeze in nominal expenditures and major cuts in defense spending, together with reductions in capital spending and in expenditure commitments in education and health. Fiscal adjustment will cause real pain as the public sector must be downsized and reorganized to free up the resources needed to pay public wages, pensions, social assistance and energy bills.
Arrears to the energy sector continue to increase, due in large part to non-payment by fiscally strapped institutions, especially at the local government level. The government has tried to ensure sufficient funding in the 1999 budget, but further arrears could result if budgetary revenues fall short. The authorities realize that any future debt restructuring package would have to be based on a credible, time-limited plan to reverse the buildup of external energy arrears.
The goal of reducing the budgetary arrears beginning in 1999 is likely to be realized only if public sector restructuring accelerates and the external environment improves.
The government is emphasizing debt management, aid coordination and foreign direct investment in order to mobilize its resources. It is also intensifying efforts to promote export growth and diversification by strengthening the trade regime, completing the process of WTO accession, negotiating a new free trade agreement with the European union, and maintaining strong incentives under the new, more flexible exchange rate policy.
3. Private Sector Development
The government's program stresses the need to promote private sector production of competitive goods and services. The Moldovan authorities understand that foreign investment is essential for efficiency and competitiveness.
The government is working with the donor community to develop a viable micro-credit system based on a participatory approach.
The authorities are working to create a positive environment for private investment. This involves legal and institutional reforms to level the playing field, promote competition, protect property rights, strengthen the court system and ensure transparent regulation. A modern infrastructure and active markets for urban land and real estate are important to attract private investment.
4. Public Sector Reform
Corruption: The importance of a strong anti-corruption strategy has been the subject of recent discussions in Moldova. As in many NIS countries struggling to introduce market forces and establish the rule of law, corruption takes many forms in Moldova. These include smuggling, tax evasion, abuse of office by poorly paid civil servants, and informal fee-for -service schemes in the social sectors. The government has launched numerous initiatives to combat corruption. While in the past these efforts have dealt mainly with the symptoms of corruption, there is clearly now an appreciation of the need for a more systemic approach involving institutional reforms, civil service reform, legal and judicial reform, and programs to strengthen public oversight and civil society. At the present moment the government faces the difficult problem of creating an efficient and corruption-resistant public administration within tight budget constraints.
Planned reforms: Moldova plans to reform the public pension system, which links contributions directly to benefits and gradually raises the retirement age. A legal framework for private pension funds is also being developed. In education, the government intends to complement the introduction of a modern, unified curriculum with a program to reform the structure and management of public education. The authorities are initiating a restructuring of the public health care system, which will involve consolidating existing facilities, introducing an official fee-for-service scheme, and partially privatizing health services. Last, the Moldovan government acknowledges that the social assistance system is in need of fundamental reform. Legislation to underpin this reform is being prepared.
Long-term goals: in the long term, Moldova plans to modernize the state and restore public confidence in state institutions. Decentralization of authority to a reorganized and strengthened system of local government is indispensable for social sector reform, since local authorities deliver most social services.
C. Privatization
1. General
Other priorities for Moldova in 1999 include restructuring and privatization of the state industrial and agricultural property. Moldova's privatization program dates back to 1991, when it adopted a property law, a privatization law and a law of agrarian reform. In 1992, it adopted an action plan for the stabilization and recovery of the economy as well as privatization, leading to an IMF-supported stabilization program in September 1993.
An effective mass privatization program was launched in 1994 by the ministry of privatization and the state property administration, and was completed in November 1996. Over 90 percent of the eligible population participated, using government-issued bonds. Some 1,142 large and medium-size, and 1,093 small enterprises were transferred to the private sector. Cash privatizations have had less success: the completed international tenders of the Moldovan telecommunications company Moldtelecom in 1998, and the tobacco concern Tutun in 1996, were canceled at the last minute. Over 1997-98, 223 enterprises were sold at open and Dutch auctions, generating revenues of ML 51.2 million ($4.45 million).
The government's program also aims to restore financial viability to the energy sector and ensure a reliable and competitive energy supply to all paying customers. The government is planning to privatize electricity distribution and generation companies within a year and it has initiated work on a plan to restructure district heating companies, including through bankruptcy proceedings if necessary.
Results: privatization revenues have been relatively low due to unrealistic price expectations and the unwillingness of the government to lose management control. In addition, since august 1998, the Russian crisis has had a strong impact on Moldova. However, the government has recently showed flexibility in establishing prices on the condition that serious investment commitments are to be made in the acquired company, and all its debts are to be assumed. As a result, 15 companies have been sold to foreign and local strategic investors, generating revenues of ML 50 million ($4.37 million) and direct investment of ML 87 million ($7.6 million), dm 82 million, and $57.5 million. Leading western companies were involved in six out of the 15 successful privatization programs.
The size of the private sector has grown considerably over the past few years. As of early 1999, an estimated 60 percent of the economy was in the private sector. Industries are more than 60 percent private, with agriculture at 86 percent, retail sale and services 70 percent, and construction and transport almost 44 percent.
2. Land Privatization
Given the importance of the agricultural sector for Moldova, land privatization is a key issue for the government, but progress has been slow. The authorities are privatizing land through an equitable and transparent system of direct cash grants to private farmers. More than one million private farmers will receive legally recognized land titles and property shares. The legal basis for land trade has been established and taxes on land transactions have been lowered.
Results: By early 1998, only 10 percent of the country's total land (13 percent of total agricultural land) had been privatized. As of mid-1999, this process has been completed for almost 100 large agricultural farms. Excluding land held by individuals that continues to be part of collective farms, private farming is estimated to cover only 3.7 percent of agricultural land.
In 1998-1999, the privatization program was extended to cover 890 collective farms, out of approximately 1000 in the country. Land has been tradable on a restricted basis since late 1997 and can now be used as collateral, although in reality problems in determining land value have limited its use in commercial transactions. For this reason, evolution of a functioning land market has been slow, which has in turn held back much-needed reforms in the agricultural sector. Reversing this trend remains one of the government's most pressing priorities.
There are still some restrictions on transactions for agricultural land; for instance, foreigners are not allowed to purchase it.
D. Balance Of Payments Situation
1. Trade Balance
In 1998, the collapse in the value of the currency impacted strongly on Moldova's external trade. The 1998 trade deficit increased to $389.1 million from $297.3 million in 1997, reflecting lower exports to key markets and higher import costs due to currency devaluation. The balance of payments deficit for 1998 reached $165.6 million, caused both by the higher trade deficit and lower that expected inflows of investment. The government deficit for 1998 was ML 305.3 million, representing 3.5 percent of GDP.
2. External debt
One of the country's biggest challenges will be tackling its increasing external debt, which by the end of 1998 had reached over $1.2 billion. Moldova had been due to repay an estimated $215 million over 1998, but was unable to do so. During 1999, a further $235 million, equivalent to more than 80 percent of Moldova's GDP, becomes payable. The country has made some dramatic efforts to stabilize the situation, including handing 50 percent ownership of its gas lines to Russia's Gazprom, one of its biggest creditors. Moldova also redeemed bonds worth $140 million in order to pay off part of its Gazprom debt. However, Moldova continues to owe that organization approximately $320 million, not including the $400 million that is owed by Transnistria.
E. Principal Growth Sectors
1. Agriculture
Agriculture represents the basis of the Moldovan economy, comprising up to 40 percent of GDP and providing employment for about 42 percent of the population. Agricultural production accounts for 75 percent of the country's total exports. This specialization in agricultural production is due to its favorable climatic conditions and higher than average soil fertility. 75 percent of the total territory is agricultural land and over a half of the population lives in rural areas. Various products such as cereals, sunflowers, sugar beets, potatoes, vegetables, tobacco, fruits and grapes grow in Moldova. In 1998, plantings of lower-cost crops like wheat, corn and sunflower increased and amount to 2.485 thousand tons of wheat and corn and 199 thousand tons of sunflowers. On the other hand, plantings of capital-intensive crops like tobacco and vegetables have declined and amount to 24 and 501 thousand tons respectively. The number of livestock considerably decreased as a result of both high prices and the general economic crisis, which led to considerable profit losses.
Moldova benefits from Chernozem, a fertile black earth that covers 75 percent of its soil area. However, the sector has been adversely affected in recent years by droughts, frosts, and floods. Adverse weather conditions have been compounded by a shortage of inputs and raw materials. This led to more intensive farming techniques, in turn lowering the productivity of soil by some 35 percent. Thus, the sector continues to receive substantial government subsidies and tax incentives.
The total farmed area in Moldova is 2.6 million hectares: 21 percent is farmed by individuals, 61 percent by cooperative farms, and 18 percent by the state. Over the next few years, the amount in the first two categories is to increase as a result of the national farm restructuring program. Some 273 thousand farmers currently operate throughout the country.
2. Manufacturing
According to statistics from the economics and reforms ministry, Moldova's industrial production decreased by 11 percent in 1998 compared to 1997. More than 60 percent of enterprises reduced their production in 1998. The most significant decline was recorded in the furniture, meat, wine, bakery, cannery, and sugar production industries. Moldovan industrial development was directly affected by the financial crisis in the CIS countries and in particular, in Russia. The low incomes of the Moldovan population and introduction of the value-added tax on imported raw materials also affected domestic industries. Currently, the ministry is working on developing measures to support the sectors, speed up the reorganization process, and stimulate the financial growth of enterprises.
The following is a breakdown of the manufacturing sectors in Moldova in 1998: food processing - 57 percent, energy generation and distribution - 18 percent, light industry - 5.4 percent, engineering and metal processing - 5 percent, construction materials production - 4 percent, and forestry, wood processing, pulp and paper production - 3 percent.
Food Processing: Moldova used to be one of the main suppliers of fresh and processed fruits and vegetables to the Soviet Union. Since Moldova's transition to a market economy, this sector, like almost all of the Moldovan economy, met with difficulties. However, the apple juice production sector is expanding despite the fact that many factories have outdated equipment. A number of companies have made substantial profits almost exclusively in apple juice processing. In 1998, Moldova produced 84.5 thousand tons of juices.
Wine: Wine represents a major product of Moldova's economy, with exports in a good year accounting for up to 50 percent of the total export income. The wine industry has also been a major area of foreign investment. However, it still needs substantial amounts of money to recover from the anti-alcohol campaigns conducted between 1985 and 1991 and from the general under-investment that has characterized the industry since then. There are 150 wineries producing 3-4 million hectoliters a year from 170 thousand hectares of vineyards, an area broadly the same size as Bordeaux in France, but capable of producing a full range of red, white, and sparkling wines. After a good year in 1996, unseasonable weather substantially decreased the grape harvest in 1997: only 180 thousand tons of grapes were harvested, which is around half the 1996 grape harvest. The 1998 harvest was 339 thousand tons. In 1998, Russia accounted for 85.6 percent of wine export sales. Moldova's wine growers continue to view this as their most important market, despite the current crisis. However, Moldova exports wine into many western and Asian markets such as the united states, Canada, western European countries and china. In 1998, wine exports amounted to 13.9 million decaliters, worth $190 million.
Sugar Beets: Sugar beets are another important crop. The country has the production capacity, although with outdated technology, to process over 3 million tons of beets annually. There are 10 privatized sugar beet enterprises in the north of the country, grouped together in the association of sugar refineries. About 1.8 million tons of beets are processed into 230 thousand tons of white sugar each year.
Milk: In 1998, milk production in the country increased by 25 percent, totaling 131.5 million lei ($15 million). In particular, production of raw milk increased by 42 percent and production of milk powder, butter, and cheese doubled compared with 1997. Eighteen new diary items were marketed during 1998. Out of 10 dairies in Moldova, Incomlac, located in Balti, and Alba, located in Hincesti, are the biggest. Starting in 1997, Alba strengthened its position with a significant American investment.
Light Industry: Much of the light industry is equipped with modern machines and some plants have formed joint ventures with foreign companies, mostly from Western Europe. More investment is needed to widen the raw materials base and to find new foreign markets. The industry produces cotton cloth, industrial carpets, natural and artificial silk and natural and artificial leather goods. Textile and knitwear companies are among 39 listed by the government as prime companies likely to attract western investors.
Tobacco Industry: The tobacco industry remains one of the most important in Moldova. During soviet times, the republic produced 40 percent of the USSR's annual crop - at its height, 135 thousand tons, equivalent to 10 billion cigarettes a year. The industry consists of eight dehydration plants and the Chisinau tobacco factory, which can produce 9.1 billion cigarettes a year. In 1998, cigarette production was 7.5 billion, 2 billion less than in 1997. In 1998, Moldova announced plans to privatize Tutun, the country's largest tobacco concern, by breaking it up into 10 joint stock companies, with 20 percent of the shares to be distributed to employees and the remainder transferred to the state, and 80 percent being sold to investors. An Austrian company has been appointed to help oversee the privatization process, which is expected to start in late 1999 with the sale of the tobacco dehydration companies.
Construction Materials: The government has been moving ahead with privatization in this sector, which contributed around 5 percent of the gross national output in 1998. In 1998, the sector comprised about 50 companies that are working on local raw materials. Annual production capacities in Moldova are the following:
Cement - 2.5 million tons; concrete blocks and items - 2.2 million cubic meters; asbestos - cement pipes and coupling parts - 3 thousand kilometers; gypsum - 110 thousand tons; bricks - 254 million pieces; stone blocks for construction - 460 million pieces; linoleum - 4 million square meters. This branch of industry is expanding in two directions: through increased export of construction materials (cement, gypsum, ceramics) and through investment in civil engineering.
Metal Processing: The metal processing sector is represented by the only Moldovan metallurgic plant located in Ribnitsa, a city in the Transnistria region. It annually produces 700,000 tons of metal items on the 39 production lines. About 95 percent of its production is exported and only 5 percent is used domestically.
3. Services
Insurance Services: Insurance services are becoming more and more important in Moldova's market economy, although statistics show that less than 1 percent of net revenues are spent for insurance in Moldova. At present, there are 40 companies which provide the service, of which 16 are joint stock companies, 6 are joint ventures, and 24 are limited liability companies. In 1998, the sector dynamically increased activity by 40 percent and by the end of 1998 insurance reserves amounted to ML 140 million. There are 2800 persons working in the sector. There is a demand for life, accident and health insurance services, non-life insurance services, and reinsurance and retrocession services.
Legal Services: As Moldova passes new laws and regulations, Moldovans are in increasing need of legal advice, and in many cases are unable to find expert assistance in these areas. As a result, legal services are unquestionably a growth industry in Moldova. A license issued by the ministry of justice is required to provide legal services. A licensed lawyer can provide all legal services, except representation in criminal proceedings, which is permitted only to sworn solicitors. There are two u.s. law firms active in Moldova: KPMG Legal And Taxation Services, which provides legal and taxation consulting, and The Law Office of Romney Wright, P.C., which provides assistance with visa document preparation. The American bar association is also active in Moldova as the U.S. Agency For International Development (USAID) contractor for Moldova's legal reform project.
Communications Services: Due to Moldova's poor telecommunications infrastructure, more and more private companies are investing in these areas: mobile telephone services in the GSM-900 standard; business network services; packet-switched data transmission services; telegraph and telex services; facsimile services; private leased circuit services; electronic mail; voice mail; and code and protocol conversion.
F. Infrastructure
1. Telecommunications
Moldova has an under-developed telephone system with only 15 percent of households connected to the national network. There is an acute shortage of pay phones, and many rural areas are without service. Direct telecommunication lines link Moldova to all CIS countries, Romania, Bulgaria and Greece. Lines to the rest of the world are supported via satellites through two transit telephone exchange units located in Montreal, Canada and Copenhagen, Denmark.
Moldtelecom, the national telecommunications company, is currently upgrading its system. It has signed agreements with a number of western companies including Denmark's Great Northern Telegraph (GNT), which is investing $10 million of the $17 million cost of installing an international digital switch system and installing fiber-optic technology between Cahul and Briceni. GNT will recoup its investment during the operation of the system over a period of 13 years. The Cahul-Briceni link, which runs through 23 districts and took more than two years to build, connects Moldova's telecommunications system to those of neighboring countries. Moldtelecom plans to upgrade new lines including those from Balti to Ungheni and Nisporeni, but continues to face a shortage of capital. The government intends to sell a controlling interest of 51 percent of Moldtelecom, subject to a condition that a potential investor expands the telephone network by 10 percent over the next five years.
One of Moldova's largest investments was made in telecommunications. On October 1, 1998, Voxtel, a consortium comprising one French, one Romanian and two Moldovan companies, began to provide mobile telecommunication service in the GSM-900 standard. The company plans to invest $65 million in its network up to the year 2007, of which $25 million will be provided by the shareholders, $10 million by the International Financial Corporation (IFC) of the World Bank, and the remaining $30 million by a consortium of western banks. By that time, Voxtel expects to have 150 thousand clients.
2. Transportation
Roads: Moldova depends on its road transport network to ensure both internal movement of products and the export of agricultural goods. Many roads are being upgraded, including 238 kilometers of main highway, under a $28.6 million loan from the ABOARD. Automobile, bus and truck transport accounts for most of the local transportation, which is 96 percent of cargo movement, and more than 85 percent of passenger travel.
Trains: The Moldovan railway accounts for 95 percent of external cargo and extends to 1,318 kilometers.
Air: Air transportation is provided by three main airlines: Air Moldova International and Moldavian Airlines, commercial air carriers, and Air Moldova, a state company. Airlines flying to Moldova include Tarom (Romania), Transaero (Russia), and Tyrolean Airlines (Austria). There are connections with 25 foreign cities and with more than 25 foreign airlines. Chisinau Airport was built in 1974 and currently receives 16-18 planes a day. In 1998, a Turkish company won an international tender announced for airport reconstruction, funded by an EBRD loan and the Moldovan government, worth $12 million. Reconstruction work is expected to be complete in early 2000, after which the airport capacity is expected to be 400 persons per hour. By 2010, the airport will be able to handle 605 thousand passengers yearly, versus only 160 thousand passengers in 1998.
Water: River transport is used for merchant shipping on the Nistru river, as well as for the transportation of tourists and local cargo.
In early 1995, the Moldovan government established Terminal S.A., a joint Moldovan-Greek venture to build and maintain an oil terminal in Giurgiulesti on the Danube River in Moldova. The company signed a concession treaty with the Moldovan government, which was later approved by the parliament. In December 1995, the EBRD, the government of Moldova, Terminal S.A., and the Technovax Company signed a multilateral memorandum, in which the parties stated their willingness to construct and maintain the terminal. The EBRD's role was then confined to financing and supervision. Tirex-petrol, a major Moldovan supplier and wholesaler of oil, owns 41 percent of the terminal's shares. (Note: Tirex-petrol is now controlled by the Moldovan government, which holds an 83 percent stake in the company.) Technovax, a company formed by two Greek construction companies solely for the Giurgiulesti project, holds 39 percent of the terminal's shares. The EBRD holds a 20 percent share in the terminal company. The concession treaty will run until 2022, after which the terminal will be given to the state unless the parties agree to proceed in a different manner. The Giurgiulesti facility will increase Moldova's ability to import oil products and thus reduce their cost.
G. The Y2K Problem: Moldova's Efforts
1. Level Of Public Awareness
Most top Moldovan officials are familiar with the Y2K problem. In October 1998, the Moldovan government issued a special decree on the solution of the Y2K problem. A special inter-departmental committee for the problem in Moldova was created by this decree. This committee will present their national Y2K action plan to the government for approval in mid-July 1999. Once the plan is ready, the committee will seek a second grant of $500 thousand from the bank for implementation.
Moldova is a developing country with very few significant computer based systems and the Y2K problem is not a concern of a large part of the society. The country is in a severe economic crisis and the citizens are accustomed to poor communications and transportation and shortage of utilities.
2. Moldova's Preparedness
The shortage of financial resources is the primary obstacle for Y2K preparedness in Moldova. The national committee considers the energy, rail, pension and health sectors as critical, primarily because there is limited funding to solve the Y2K problem. The telecommunications sector is critical but will not have to rely on the government for funding. The financial sector is also highly vulnerable; however, the National Bank of Moldova was one of the first in the country to be aware of the Y2K problem. It may be the only organization in Moldova that can allocate enough resources for the Y2K problem solution.
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[end of document] Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title 17, United States Code.
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