Sheriff offers interest-free loan to cash-strapped Transnistrian government

Sheriff offers interest-free loan to cash-strapped Transnistrian government
By bne IntelliNews April 6, 2016

The parliament of the separatist Moldovan republic of Transnistria said on April 5 that it had received a proposal from diversified group Sheriff for a $26.55mn interest free loan to allow it to pay arrears on the public payroll.

While the loan is interest-free for the lender, it might generate political dividends for the parliamentary majority that hopes to win the presidential elections on December 11. Sheriff is reportedly behind the political party Obnovlenie (Renewal), which defeated supporters of President Yevgeny Shevchuk in the parliamentary elections last autumn.

The loan has not yet been formally accepted by the government, but given Obnovlenie’s links to the parliamentary majority acceptance is likely. However, lawmakers have not yet endorsed the budget for this year and certain amendments would have to be introduced in order to accommodate the Sheriff loan.

Parliament vice-speaker Alexander Shcherba said the proposal was a positive example of a public-private partnership.

Obnovlenie controls at least 31 of the 43 seats in the parliament (political affiliation is not formally expressed by candidates). The president’s candidates, running as independents in the parliamentary elections, paid the cost of Transnistria’s recent economic hardship in the polls and lost their majority. In the meantime, the economic situation has not improved.

Sheriff dominates the country’s economy. The group’s companies include the second largest European textile producer Tirotex, major spirits producer Kvint, petrol stations, hypermarkets, a TV channel, bakeries and the Sheriff Tiraspol football club.

Naturally it lobbies the government for more flexible business regulations and lower taxation. However, in 2012 the group lost the privileges it had enjoyed during the regime of Shevchuk’s predecessor, Igor Smirnov.

In separate news from Tiraspol, Transistria’s foreign exchange market is blocked. On April 5, no requests for foreign currency were met because of scarce supply. The central bank operates a fixed exchange rate policy, but pressure for depreciation has increased recently as exports have diminished. The new contract for the delivery of electricity to Moldova, which was critical for the region’s economy, was signed at a lower price, so forex inflows are lower.

Local bank Agroprombank previously proposed to extend a $10mn loan to the central bank, but the latter refused, saying this would be a short-term fix that would generates liabilities.


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