ACCORDING TO CBA CHAIRMAN, LEVEL OF SHADOW ECONOMY IS HIGH IN SOUTH
CAUCASIAN COUNTRIES

YEREVAN, APRIL 28, NOYAN TAPAN. “Today we live similarly badly, but
differently well.” Chairman of the Central Bank of Armenia (CBA)
Tigran Sargsian stated this at the opening of the international forum
Caucasus 2005, when analyzing the development dynamics of the South
Caucasian economies. According to him, the situation assessment by
using the main criteria of the Maastricht Agreement shows that the
level of shadow economy is high in the three South Caucasian
countries, which are also facing the problem of poverty and unsettled
conflicts. The first criterion is inflation level. In this respect
Armenia is in the most favorable state, which, according to
international organizations, is conditioned by the efficient monetary
and credit policy. Currency rates prevail in the monetary and credit
policies of Georgia and Azerbaijan, which may lead to macroeconomic
problems in both countries in the next few years. T. Sargsian noted
that in 2006 Armenia adopted the inflation targeting policy, while it
will take Azerbaijan and Georgia 3 years to shift to this policy.

Besides, the highest level of economy’s dollarization is in
Azerbaijan. In the opinion of CBA Chairman, in terms of the ratio of
state debt to GDP, all the three countries are in a favoravle
state. At the same time, it was noted that only in Armenia, the
government places 15-year state bonds at an annual interest rate below
10%. In terms of salaries, Armenia is in first place in the region
(145 USD), followed by Georgia and Azerbaijan. The higest index of
poverty is in Georgia – 52%, with this index making 34% and 29% in
Armenia and Azerbaijan respectively. By the economic growth index,
Azerbaijan is the leading state among CIS member states, however, oil
products account for about 41% of Azerbaijan’s GDP. In Georgia, GDP
growth made 9.3% in 2005, but the inflation level was quite high –
over 6%. In Armenia, economic growth made 13.9% over the same period
with a 0% inflation. T. Sargsian said that in connection with a growth
in their expenditures, all the three countries are trying to icrease
tax collection. Azerbaijan’s state budget expenditures have
especially grown, particularly defence expenditures. In 2006 alone,
the country’s defence expenditures will amount to 650 mln USD, which
is 4 times as much as Armenia’s defence expenditires.