Tigran Sargsyan: Armenian government will ensure transparency of its
anti-crisis actions

YEREVA N, JANUARY 9, NOYAN TAPAN. "The Armenian government intends to
confront the expected economic crisis in two major ways: by giving
impetus to construction of infrastructures and assisting the
enterprises in difficult conditions," the RA Prime Minister Tigran
Sargsyan said during a talk with NT correspondent.

In his words, Armenia has good opportunities to launch new
infrastructure-related programs. The government envisages spending 300
million dollars in the energy sector, another 300 million dollars in
the irrigation and water supply sectors, and 250 million dollars on
restoration of the earthquake zone within the next 1-2 years. T.
Sargsyan said that the World Bank and the Asian Development Bank have
shown interest in allocation of respective funds to Armenia.
Negotiations are underway for receiving funds from Russia and other
partners.

Armenia has asked the World Bank to provide, in addition to 420 million
dollars – a sum already approved for the country – for the next 3
years, another 250 million dollars for crediting small and medium
enterprises and construction of infrastructures. The prime minister
noted that Armenia’s Action Plan was approved by the International
Monetary Fund (IMF), and the agreement envisages the possibility of
providing a credit line urgently to Armenia by the IMF.

As regards the assistance of enterprises, Tigran Sargsyan said that
with this aim a wide range of instruments will be used, including
credit guarantees, loans (especially to small and medium enterprises),
the government’s participation in the capital of companies, and
government subsidies. The government is sure that it will have enough
resources for all this, even if the revenues of the 2009 budget are not
sufficient. For this purpose the government may spend its reserve
resources in the Central Bank of Armenia (more than 300 million
dollars). Besides, thanks to the strict budgetary policy conducted in
the previous years, Armenia has a low level of foreign debt (17% of its
GDP) and quite high credit rating which is favorable for receiving
loans. Finally, an extremely low level of budgetary deficit (0.95% of
GDP) is planned for 2009. This will allow the government to increase
several fold the deficit of the budget in case of necessity and to
obtain additional funds in this way. The government has already
provided 52 million dollars for crediting small and medium enterprises.

Tigran Sargsyan underlined that the Armenian government will have to
fulfill an unprecedented function soon: to assess the state of
enterprises and the business plans submitted by them in order to make
decisions on provision of financial assistance to them. With this aim
an operative headquarters was established. It is headed by the prime
minister and composed of state officials and independent experts. The
prime minister stated that the government intends to ensure
transparency of the headquarters’ activity so that the public will be
informed and can control the decision making on the government’s
contribution, as well as the allocation and spending of financial
resources.

The government is also going to ease the tax burden of enterprises in
2009. According to Tigran Sargsyan, this will be done not through
reduction of tax rates (although tax reduction is also possible in some
cases), but first of all by simplifying the order of paying taxes,
thanks to which entrepreneurs will spend less time on their contacts
with tax bodies.

According to estimates of the World Bank, in 2008 businessmen spent
1,120 hours on tax payment annually in Armenia, which is one of the
worst ten indices in the world. Azerbaijan where businessmen spend 952
hours on tax payment annually is also among the worst ten. However, the
prime minister did not indicate the amount of time, by which they
envisage reducing the time spent by businessmen on contacts with tax
bodies in Armenia.