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U.S. DEPARTMENT OF STATE
MOLDOVA: 1994 COUNTRY REPORT ON ECONOMIC POLICY AND TRADE PRACTICES
BUREAU OF ECONOMIC AND BUSINESS AFFAIRS





                             MOLDOVA

                     Key Economic Indicators
      (Millions of U.S. dollars unless otherwise indicated)


                                    1992       1993      1994 1/

Income, Production and Employment:

Real GDP (1991 prices)             3,940      6,000       N/A
Real GDP Growth (pct.)               -27        -14        -3
GDP (at current prices)           53,750    583,610     2,138
Gross Output by Sector:
  Agriculture                     25,900    269,530       N/A
  Energy/Water                       N/A        N/A       N/A
  Manufacturing                   57,570    772,630       N/A
  Construction                     6,950     63,170       N/A
  Rents                              N/A        N/A       N/A
  Financial Services                 N/A        N/A       N/A
  Other Services                     144      1,540       N/A
  Government/Health/Education        N/A        N/A       N/A
Net Exports of Goods & Services      N/A        N/A       N/A
Real Per Capita GDP                  N/A        N/A       N/A
Labor Force (000s)                 2,460      2,448     2,479
Unemployment Rate (pct.)            16.7       15.5        30

Money and Prices:

Money Supply                      87,155    376,303   160,650
Base Interest Rate                   N/A         12        25 2/
Personal Saving Rate                 N/A        N/A       N/A
Retail Inflation (pct.)            1,500      2,000       100
Wholesale Inflation                  N/A        N/A       N/A
Consumer Price Index                 N/A        N/A       256 3/
Exchange Rate (USD/MDL)              401        364    403.96 4/

Balance of Payments and Trade:

Total Exports (FOB)                18.06        360       600
  Exports to U.S. 5/                   0          0       2.4
Total Imports (CIF)                25.81        513       759
  Imports from U.S. 5/                 2         31      26.4
Aid from U.S.                        N/A        N/A       N/A
Aid from Other Countries             N/A        N/A       N/A
External Public Debt                 N/A         38        29
Debt Service                         N/A        N/A       N/A
Gold and Foreign Exch. Reserves      N/A         76        68
Trade Balance                        -37       -162      -255
  Trade Balance with U.S. 5/          -2        -31       -24


N/A--Not available.

1/ 1994 Figures are estimated based on available eight-month
data.
2/ 1994 Interest rate is estimated based on five-month data.
3/ Consumer price index is reported in Mondovan lei (MDL).
4/ 1994 Exchange rate is estimated based on available
eleven-month data.
5/ 1994 figures are estimates based on January-October data.



1.  General Policy Framework

    Moldova is a small landlocked country located in the
extreme southwest region of the former Soviet Union (FSU).  The
economic life of Moldova was highly integrated with that of the
FSU, and disintegration of the FSU seriously affected Moldova's
economy.  The agriculture and industrial sectors each account
for about 42 percent of total economic output.  Moldovan
industry previously was organized to supply markets in the FSU,
with production concentrated in consumer goods and
defense-related products.

    In accordance with a presidential decree dated January 17,
1994, the National Bank of Moldova (NBM) was charged with
regulating the money supply.  The National Bank of Moldova
allocates about 80 percent its available credit through credit
auctions.  The volume of credit offered is determined by a
monetary-credit program.  Introduction of credit auctions has
helped reduce inflation and the cost of financing.

    The National Bank of Moldova has implemented faithfully the
program agreed to by the government and the International
Monetary Fund (IMF) to restrict growth of the money supply.  As
a consequence, the stability of the lei has improved
significantly in the first half of 1994.


2.  Exchange Rate Policy

    Moldova no longer has a policy of multiple exchange rates. 
Since the introduction of the national currency the National
Bank of Moldova has moved to liberalize its currency market. 
An interbank foreign stock exchange was established in August
1993.  Auctions are held three times a week for U.S. dollars,
Russian rubles, Romanian lei, and German marks.


3.  Structural Policies

    Moldova officially liberalized prices of most consumer
goods in January 1992, though some products continue to remain
subject to controls.  Imported goods were exempted from
regulation at the wholesale level, but can be subject to
controls at the retail level.

    Tax rates in Moldova are as follows:  income tax for
enterprises - 30 percent; value-added tax - 20 percent; import
tax, excise tax on wine and tobacco production, natural gas,
and luxury items - from 10 to 80 percent; agricultural
enterprises.  Farmers pay a land tax calculated on the basis of
the total land area and its quality.

    The government has developed much of the legal framework
needed to support a market economy.  The Moldovan parliament
has adopted laws covering private ownership of property, 
foreign investments, bankruptcy, leasing, privatization of
state enterprises, as well as formation of joint-stock
companies.


4.  Debt Management Policies

    Moldova is a member of several international financial
organizations, including the IMF, the International Bank for
Reconstruction and Development (IBRD), and the European Bank
for Reconstruction and Development (EBRD).


5.  Significant Barriers to U.S. Exports

    Moldova has taken steps to simplify policies surrounding
its trade regime.  With the exception of unprocessed leather,
energy products, cereals and cereal products, all export quotas
were removed in June 1994.  Export licensing was eliminated,
except for national security, medical and cultural products. 
Moldova has observer status in the General Agreement on Tariffs
and Trade (GATT).

    In July 1994, the Moldovan government began requiring
certification of imports by the Moldovan Department for
Standards, Metrology and Technical Oversight or by the Geneva
SGS International Association.  The stated purpose of the
certificate is to ensure the high quality of imported goods. 
Goods and services determined by the government to be harmful
for customers may not be advertised.  These include tobacco and
tobacco products; hard alcohol; narcotic drugs; preservatives
and food additives; and non-traditional curative methods that
are not approved by the Moldovan Ministry of Health.  The
Department of Standards, Metrology and Technical Oversight is
in charge of establishing and accrediting bodies that certify
imported products.

    Barriers to foreign trade and investments in Moldova
include an underdeveloped banking, insurance, legal, and travel
services.

    Other investment barriers are as follows:

-- Prohibition of land ownership:  Existing law prohibits the
sale of land to foreigners.  However, the government is
examining land legislation with the view of permitting such
sales.

-- Targeting of favored industries for development:  In an
October 1993 decree the government stated it would give
preference to investment in the following industries:  radio
and electronics; chemical and pharmaceutical industry; food
processing industry; telecommunications; railway equipment;
packing industry; biotechnology; detergent and soap
manufacturing industry; and goods for children.

-- Limitations on foreign equity participation:  Although the
government has taken steps to liberalize the economy, only
Moldovan citizens can participate in privatization of
enterprises sold for patrimonial bonds at the auctions. 
However, Moldovan citizens can sell their shares to foreign 
businessmen.  The government plans to give greater
opportunities for foreign investment.  Once ratified, the
U.S.-Moldova bilateral investment treaty will provide
substantial assurances to U.S. investments.


6.  Protection of U.S. Intellectual Property

    Laws protecting intellectual property (IP) and their
enforcement are poor, resulting in widespread piracy.  There is
serious infringement of software, cable television, audio and
video cassettes, and books.  The Department on Intellectual and
Industrial Property Protection has drafted IP legislation which
the parliament plans to review soon.


7.  Worker Rights

    The 1990 Soviet law on trade unions, which was endorsed by
Moldova's then Supreme Soviet and is still in effect, provides
for independent trade unions.  Moldovan laws passed in 1989 and
1991, gave citizens the right to form social organizations, and
provided a legal basis for the formation of independent
unions.  The new constitution, adopted in 1994, declares that
any employee may form or join a union.  However, there have
been no apparent attempts to establish alternate trade union
structures independent of the existing organizations that were
part of the Soviet trade union system.  Non-government workers
(except those in essential services) have the right to strike,
but there were no strikes in 1994.  Moldovan law, which is
still based on former Soviet legislation, provides for
collective bargaining.  Wages are set through a tripartite
negotiation process involving government management and unions.

    Forced labor is prohibited by Article 44 of the new
constitution.  No cases of forced labor have been reported.

    The minimum age for employment under unrestricted
conditions is 18.  Employment of those aged 16-18 is permitted
under special conditions, including shorter work days, no night
shifts, etc.  Moldovan industry does not employ child labor,
although children living on farms do sometimes assist in
agricultural production.

    The average wage is 100 lei (about $25 in December 1994)
per month.  The new constitution sets the maximum workweek at
40 hours, and the labor code provides for at least one day off
a week.  The state is required to set and check safety
standards in the workplace.  Workers have the right to refuse
to work but may continue to draw salaries if working conditions
represent a serious threat to their health.  The declining
economic situation, however, has led to a decline in safety
standards.

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