RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/MOL/26
21 October 1999
(99-4568)
Working Party on the
Accession of MoldovaOriginal:  English
ACCESSION OF THE REPUBLIC OF MOLDOVA
Information concerning the Agricultural Privatization of Moldova
The Ministry of Economy and Reform of the Republic of Moldova has submitted the
following information concerning agricultural privatization.
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Information on the Agricultural Sector and Debt Cancellation according to
Law No. 392 on Restructuring Agricultural Ente rprises in the Process of Privatization.
The agriculture in the Republic of Moldova is the major sector of the economy. It
encompasses 25 per cent of GDP and 42,8 per cent of total employment. Almost all branches of the
economy depend on agriculture. Nevertheless, the agricultural sector has become in the recent years
more and more inefficient and unable to cover its cost of production. This is due to low productivity
of the labour force, land and fix capital. All attempts of the Government to revitalize the agriculture
sector did not reach their prospected objective. We can mention here state credits and guaranties, milk
and wheat programmes and non-cash support (mainly tax exemptions) that never represented real
producer subsidies.
To overcome this situation the privatization and restructuring of the former state agricultural
enterprises was required. The privatization process started in 1996 and continued in 1998 with the
largest project - National Programme“P ământ” (Land).
However, a major impediment to privatizing agricultural enterprises was the total amount of
debt of 2.8 billion Moldovan Leu (MDL) that has been accumulated by the agricultural sector. In
order to overcome this impediment the Parliament of the Republic of Moldova has recently (May
1999) adopted the Law No.  392-XIV “On restructuring of agricultural enterprises in process of
privatization” (hereinafter the Law).
On the base of this Law, a Republican Commission has been established. This Commission is
entitled to examine every balance sheet of all ente rprises that concluded contracts with the National
Programme “Pamant” (Land) and decided to go through restructuring procedure on the base of the
Law and to take decisions as regards cancellation of outstanding debt.
The following table contains information on historical debt of 852 agricultural enterprises that
have concluded contracts with the National Programme“P ământ” (Land) by the time of adoption of
the Law although the total existing at that time number of agricultural enterprises was around 1,300.WT/ACC/MOL/26
Page 2
Debts of agricultural entities (MDL million)
Total Debt
OutstandingOf which – debt contracted in:
Nr. Creditors
As of
(01.10.1998)1998 1997 1996
1. “Moldoenergo” – electricity
company84.6 45.0 26.0 13.5
2. “Moldresurse” enterprise 52.7 26.5 19.8 6.3
3. “Arca-Moldova” enterprise 2.6 1.5 0.6 0.4
4. “Tirex petrol” Joint-St. Comp. 21.6 8.4 6.3 4.7
5. Production Association
“Fertilitatea”29.7 15.5 6.9 5.8
6. Credits of the Ministry of Finance,
including State Guarantees76.0 73.0
7. Commercial banks 111.9 64.3 35.0 11.1
8. Agro-processing enterprises and
“other” input-supplying enterprises697.5 375.3 277.4 34.7
Total of above 1076.6 536.5 372.0 149.5
Total amount of debt included in Base
Total AMS calculations536.5 372.0 149.5
Source: Ministry of Agriculture and Processing Industry
The figures represent debts incurred during the three years 1996 – 1998 in relation with
different kinds of inputs used in farming activity: seeds and seedling material, fertilizers and
pesticides, oil products and electricity, spare parts, transportation and other services rendered by
suppliers listed in the table. Bank credits also financed purchases of the above inputs.
Credits from “Moldenergo” financed electricity purchase for agricultural purposes.
Credits from “Moldresurse” enterprise and from “Tirex-petrol” enterprise financed the
acquisition of oil products used in farming activity.
Production Association “Fertilitatea” supplied fertilizers and other chemicals and “Arca-
Moldova” enterprise provided farmers with  spare parts for agricultural equipment.
Before 1997 there were Government programmes to supply credits to farm producers directly
from the Government, through the Ministry of Finance. These credits were used to purchase
agricultural inputs. The Ministry of Finance also guaranteed credits provided by agricultural input
suppliers. When payment to the original creditors fe ll into arrears, the guarantee was invoked and the
Ministry of Finance became the direct creditor of the agricultural entities.
Many agricultural enterprises were not able to start farming activity every new season
because of the inability to secure necessary inputs (inadequate access to credits and other production
factors). Consequently agro-processing enterprises also frequently needed to provide inputs to
agricultural producers supplying the processing enterprises. Repayment was to be made at the end of
the harvest through delivery of the harvested products. When delivery of harvested products did nottake place a debt occurred equal to the value of the input originally supplied.
Other input supplying enterprises are those not individually mentioned in the table. They
include smaller suppliers of oil products, spare parts, seeds and fertilizers.WT/ACC/MOL/26
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Agricultural producers used one or more of the above methods of financing inputs often
combining various sources of credit in the manner most advantageous to them.
The calculation excludes all penalties, liabilities to the Consolidated Budget and Social Fund,
salary arrears and debts accumulated before 1996. The total value of debt used for the AMS
calculation is MDL 1.054 billion, out of MDL 2.8 billion, representing only those debts that occurredin relation with input subsidies used for growing primary agricultural products and which were not
paid back by former state agricultural enterprises.
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