MARK HORTON: MAJOR PROBLEM OF MOLDOVA'S ENERGY SECTOR IS IMPROVEMENT OF ITS ADMINISTRATION

Interview with Mark Horton, Resident Representative of the
International Monetary Fund in Moldova

Chisinau-12.10.1998/(BASA-press)

Question: After the IMF mission's visit to Chisinau in mid-September
it was said that the next two weeks will be decisive for Moldova as
the International Monetary Fund is to decide over resuming or not
its financial 190-million-dollar credit for Moldova. How did things
change over this period?

Answer: The budget and the energy sector are the two "most
concerning" problems. A trend can be observed in these sectors:
"the lack of discipline and purpose." No concrete changes were
carried out in the administration of the energy sector over the
last six years. And this thing works against the Moldovan economy
and against the long-term country's viability.

The major problem is how to improve the management of the energy
sector is order to cut down the constant gather of debts. In fact,
the state should assume a very important role in administration of
this sector and not admit that it is dominated by personal or
private interests.

When I speak about the management of the energy sector I do not
mean neither the public nor the private property. It is way about
the strategy and the policy promoted in this sector in order to
insure the country's energy security, put an end to both energy
losses and thefts, find the cheapest method to insure the country
with fuel. It arises the impression that these issues failed to be
discussed or taken into consideration.

Q.: Do you think that the privatization of the energy sector could
solve current problems or will lead to their aggravation?

A.: First of all, we should point out some progress made in
preparation of the energy sector for privatization. The
privatization of some energy companies could help to settle some
problems. But we should answer ourselves: could the privatization
be carried out in the current financial medium and under the light
of Moldova's experience in privatization of other large
enterprises? But even after the privatization of these companies,
some strategical problems will continue to remain up to the state,
as the fuel reserves, other.

The privatization cannot be carried out over the night, but, we are
concerned that no progress is registered. There is only the lack of
clear issues and the lack of discipline. The settlement of this
problem is up only to the Moldovan cabinet.

A concrete program on how to redress the situation is requested,
first of all in order to avoid that the state takes over debts of
economic agents and state-run energy enterprises, as it happened in
1996 when Moldova issued 140-million-dollar state bonds in order to
re-schedule its debts towards Russian Gazprom for seven years.
In 1998 the cabinet intends to apply the same scenario to
re-schedule Moldova's 90-million-dollar debts.

This is, in fact, a duplicity position, when on one hand there are
requested foreign credits but on the other hand the cabinet assumes
debts which do not belong to it.

Q.: After the IMF and World Bank annual meetings in Washington,
Chisinau officials said that foreign credits could be bigger that
it was expected. What can you say about this?

A.: Only when the Moldovan cabinet discusses in a concrete way
these two issues - the cut down in budgetary expenses and the
reorganization of the energy sector - the IMF will be ready to
grant a bigger financial assistance. But unfortunately, the
Moldova's economic situation is rather critical. It is not the
moment to follow some faction or ideological interests. The
national interests must be on the first place.

I think that there is only a partially will of the Moldovan cabinet
to solve these problems. The cost of the delay will be big. If the
lobbying for business or personal interests continues, then we
will have to be only pessimists.