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The results of the implementation of the Projects for the development of agriculture, examined within the profile Parliamentary Committee

  • 11.05.2022
  • 780

Increasing the well-being of the rural population of the Republic of Moldova and reducing poverty by strengthening resilience to climate change in agriculture and improving economic opportunities for the rural poor is the goal of the International Fund for Agricultural Development (IFAD) Projects.

On May 11, the Court of Accounts of the Republic of Moldova presented to the Public Finance Control Committee (PFCC) the Performance Audit Report on the projects financed from external funds managed through the IFAD Consolidated Implementation Unit.

The CoARM’s auditors reported to the PFCC’s members on the findings, which attest to deficiencies in the projects financed from external funds managed through the Consolidated Project Implementation Unit of the International Fund for Agricultural Development.

The Republic of Moldova, since 2000, has benefited from preferential loans and grants from IFAD sources; to date, $ 130 million were allocated under eight Programs, which have run consecutively since 2000.

During the audit, two projects financed from IFAD sources were evaluated: IFAD VI “Rural Financial Services Project and Agricultural Development” (2014-2021, completed) and IFAD VII “Rural Resilience Project” (2017-2021 (10 months), running until 2023.

Within the respective Projects, were achieved results, which contributed to the development of the field of agriculture. Thus, were created 5 rural agricultural markets, 3 irrigation systems, 11 field schools, 5 nurseries, forest curtains on an area of ​​341.3 acres, 5 bridges and 21 local roads with a length of 30.2 km, were re-credited loans, including subsidiaries, etc.

However, the audit highlighted some non-compliances and shortcomings:

  • performance indicators that have already exceeded the initially approved indices have not been subject to review, although the mid-term evaluation of the performance indicators has taken place, and annual monitoring evaluations have been carried out by the donor; this makes it impossible to assess the effectiveness of the use of financial resources;
  • the Soil Testing Laboratory was not set up, which mainly affected agricultural producers who practice intensive agriculture and who export agricultural production to EU countries;
  • To date, the Agricultural Credit Guarantee Fund has not been set up, which has limited access to credit resources for the most disadvantaged farmers, especially those from rural areas, who do not have sufficient assets to secure the collateral needed to access credit;
  • $ 22.5 thousand were fixed for an indefinite period and with an increased risk of non-recovery for the development of an integrated management software for the management of projects managed by the IFAD Consolidated Project Implementation Unit.

A water supply network for irrigation with a length of 2 km, from Hîrtop village, Cimişlia district, for the creation of which in the years 2014-2015 were allocated 163.9 thousand USD (equivalent to 2.9 million lei), is not put into operation so far. The situation is caused both by the technical circumstances, generated by the modification of the initial project and the delay of the execution of the works, and by the unsatisfactory quality of the works performed by the contractor, being found defects that were not removed during the 6-month warranty period prevent the implementation of the objective.

The audit found that decision-makers did not take the necessary steps to ensure the sustainability and durability of objects built from IFAD sources. Thus, Dîngeni City Hall, Ocnița district, did not count the road sector with a length of 0.57 km worth 2.6 million lei, and the town hall of Hincesti did not account for the 2.75 km long road segment, worth 4.3 million lei. Consequently, the situations found lead to a decrease in the value of the patrimony managed by the respective mayoralties, as well as to the non-registration of the patrimonial rights over the newly created local public road sectors.

The auditors noted that although some town halls have accounted for the investment objectives received from IFAD, on-site visits reported that some of them were unsatisfactory and that town halls were not responding appropriately to ensure their sustainability.

For example:

  • The town hall of Găvănoasa commune, Cahul district did not ensure the proper maintenance of 7.5 acres of forest curtains, for the planting of which, in 2020, 316.9 thousand lei were used. The on-site visit showed that the success of the catch is very poor and urgent measures will be taken to prepare the land and the execution of the works to fill the gaps.
  • The town hall of Stolniceni village, Hincesti district, did not ensure the maintenance in good condition of the bridge with the access road to the production areas (put into operation in 2020), for the construction of which 1.5 million lei were allocated
  • The town hall of Mereșeuca village, Ocnița district did not ensure the proper maintenance of the road segment in the white version with a length of 0.6 km, for the construction of which 0.5 million lei were capitalized, the road pavement on some sectors being damaged and on others completely missing.

Another relevant aspect refers to the way of transmitting the objectives created within the IFAD Projects to the town halls, which is an ambiguous, unregulated one. Thus, after receiving from IFAD the small-scale irrigation system, the mayor's office of Saharna Nouă commune from Rezina district, not respecting the restrictions of art. 10 paragraph (4) of the Law on the administration and denationalization of public property, which expressly provides that public domain goods may not be transferred on loan to individuals or legal entities with private capital, sent by loan agreement to an economic agent in the field of agriculture, the irrigation system built from the means of the IFAD Program. The loan agreement does not provide responsibilities for either the borrower or the lessor, it does not contain provisions on the technical supervision of irrigation systems transmitted for free use, as well as the monitoring of the way of their use, the conditions of restitution of the good, not being drawn up the act of receipt-delivery on loan of the respective good.

Finally, the Court of Accounts concluded that, although progress had been reported in the implementation of the IFAD Projects, it had been noted that some indicators had not been met and others had been exceeded beyond their target due to their failure to review and adjust in a timely manner.

The Court of Accounts noted that in order to fully achieve the objectives of the IFAD Projects and maintain their effects, actions are needed to strengthen the control and supervision system in order to ensure the sustainability of investments, as well as ensuring the observance of the principles of good financial management in the implementation of the actions of the Project.

The president of the Public Finance Control Committee, Tatiana Cunețchi, stressed the importance of the efficient use of money, provided by external donors, and the necessary measures and actions to implement the recommendations of the Court of Accounts, suggesting the mobilization of all entities involved in these projects. In particular, the President of the Committee referred to the need for proper accounting of road and bridge sections, irrigation and water supply systems, built or rehabilitated from external funds.

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