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The Court of Accounts audited the performance of agricultural development projects

  • 09.12.2021
  • 2113

Agriculture is a strategic sector for the Republic of Moldova, which requires continuous development, and increasing productivity requires investment.

In this regard, the Court of Accounts of the Republic of Moldova (CoARM), on December 9, examined during the online meeting, the Audit Report of the performance achieved in the projects financed from external funds managed through the Consolidated Unit for the Implementation of International Fund Projects for Agricultural Development (IFAD).

The Republic of Moldova, since 2000, has benefited from preferential loans and grants from IFAD sources, so far $ 130.0 million USD have been allocated for eight Programs, which have run consecutively since 2000.

During the audit, were evaluated two projects financed from IFAD sources: 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).

The evaluation of the results achieved in the respective Projects shows that they are palpable and have 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 ha, 5 bridges and 21 local roads with a length of 30.2 km, were issued reaccredited 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;
  • until now, 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 USD were fixed for an indefinite period and with an increased risk of non-recovery for the development of an integrated management software in order to manage the projects managed by the Consolidated IFAD Project Implementation Unit.

A 2 km long water supply network for irrigation, from the village of Hîrtop, Cimişlia district, for the creation of which during 2014-2015 were allocated 163.9 thousand USD (equivalent to 2.9 million lei), and is not running 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 prevents the target from being put into operation.

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, from Ocnița district, did not count the road sector with a length of 0.57 km worth 2.6 million lei, and the Hincesti town hall 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 audit notes that although some town halls have taken into account the investment objectives received from IFAD, the on-site visits reported that some of them are unsatisfactory and the town halls do not take appropriate measures to ensure their sustainability and 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 monitoring their use, the conditions of return of the property, 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 mechanism for submitting investment objectives to agricultural LPAs for use by agricultural producer groups does not in all cases ensure the sustainability and sustainability of the investments made, some of which are already unsatisfactory.

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

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