PREMIER SAYS ARMENIA ABLE TO REPAY FOREIGN DEBT

Golos Armenii
7 Oct 04

Armenian Prime Minister Andranik Markaryan’s interview with Moscow’s
Noyev Kovcheg (Noah’s Ark) newspaper.

(Noah’s Ark correspondent) Dear Mr Prime Minister, you have been
occupying the post of prime minister for more than four years.

(Passage omitted: Markaryan says his position on Karabakh has not
changed; Markaryan on development of Megri Region, history of the
Armenian Apostolic Church)

During your tenure, Armenia’s state debt has reduced in relation to
the GDP. Will this tendency be maintained?

(Markaryan) The foreign debt totalled 39.3 per cent of the GDP by the
end of 2003. For comparison, in 2000 this figure was 45 per cent. If
the policy conducted today in the sphere of foreign debt settlement,
as well as today’s rates of GDP growth, export of goods and services
are maintained, Armenia’s state budget revenue will be enough to repay
its foreign debt. If this tendency is kept till 2007, the foreign debt
will amount to 30.7 per cent of the GDP.

(Passage omitted: Gini coefficient in Armenia)

(Correspondent) According to many experts, unfortunately, Armenia
remains to be a country with a high level of corruption and “shadow”
economy. According to the results of the previous year, Armenia
occupied one of the last places among the CIS countries in terms of
the share of taxes in the composition of the GDP. What specific
measures are being taken by the government to improve the situation?

(Markaryan) Today fighting corruption is the most important problem in
the world and in the countries with transition economies, in
particular.

(Passage omitted: according to Transparency International in 2003
Armenia occupied 78 place among 133 countries for the level of
corruption)

Understanding the danger of this phenomenon, the government in 2003
endorsed the Programme of the Anti-Corruption Strategy of the Republic
of Armenia and measures to fulfil it. As a result of the conducted
reforms, significant positive changes have taken place in the tax and
bank spheres, as well as in the sphere of state management. Certainly,
the process has not finished yet.

(Passage omitted: before the programme was endorsed more than 20
anti-corruption laws in different spheres had been adopted)

As for the low level of tax revenue in the GDP, this is conditioned by
the large number of fields that are provided with tax
incentives. Although in 2003 taxes and duties accounted for 14.5 per
cent of the revenue growth, compared to 2002 their share in the GDP
reduced by 0.6 per cent, which is mainly explained by the fact that
the number of fields provided with tax incentives in the GDP structure
increased sharply. This was in the first place conditioned by the
implementation of large credit and grant programmes.

I think it is necessary to note that the government is carrying out
consistent work to improve this figure, particularly by eliminating
subjective factors. Thus, the programme envisages increasing tax
revenue mainly by reducing the shadow economy without raising the rate
of the main taxes. Legislation also plays a significant role in
improving the tax policy. To that end, the government will soon draft
the Tax Code of the Republic of Armenia and submit it to the National
Assembly for endorsement. As a result of these measures, it is planned
to increase the share of tax revenue in the GDP by an average of
0.3-0.4 per cent annually.

(Passage omitted: minor details)