PRESIDENT SARGSYAN DISCUSSED ECONOMIC CRISIS WITH POLITICAL PARTIES

RIA OREANDA
March 25, 2009 Wednesday
Russia

Yerevan. OREANDA-NEWS . On March 20, 2009 President Serzh Sargsyan
invited the Heads of the Armenian political parties to the second
thematic debate on the Global financial-economic crisis and Armenia,
reported the Official website .

In his opening remarks the President of Armenia said, This is our
second meeting in this format. As you remember, the main topic of
the first meeting was the NK peace process. All political forces of
Armenia, which had something to say, got the opportunity to do so
and all those who had questions, asked them. We, in our turn tried
to answer those questions, and tried to make visible the path we had
taken for our progression. In my opinion, it was a successful endeavor.

Today, the global economic and financial crisis is in the center
of the worlds attention since all countries are experiencing its
repercussions to this or that extent. Armenia, or our economy, is
not an isolated island and we too suffer the consequences of the
crisis. The political parties voice numerous opinions regarding the
issue, possible approaches are being introduced publicly, and this
is a good opportunity to bring them together, to discuss them, and
to exchange views.

It was necessary to organize this meeting, and I believe each of you
have something to say. Irrespective of our will, we are entering a
stage of global and regional changes, when everybodys approach and
opinion should be reckoned with and if possible developed into a
common approach and a common view.

The global crisis has forced the developed countries to
introduce changes which in the past would be deemed simply
unacceptable. Unfortunately, a universal recipe has not been invented
yet. Evidently, in this non-standard situation, the Government of
Armenia was compelled to undertake non-standard measures.

The Prime Minister and the Cabinet constantly inform the public on
these measures. Later, we will listen to the Prime Minister, but
now I would like to talk briefly about the role of political parties
and the public at large. If necessary, I can once again repeat what
should be understood without explanation: the crisis is our common
problem not only the Governments. We, the people of Armenia, are not
to blame for the crisis; this is not an Armenian issue.

At the same time, I believe that the Government and the authorities
have no right to hide behind the crisis and blame their own mistakes,
their own blunders on the crisis alone. The fact is that if we do
not resist the crisis together, all of us will suffer, the entire
society. To leave the Government face to face with this peril is
at least not wise. I would like to repeat: there are no universal
solutions, may be this is one of those rare occasions when it is
necessary to invent a bicycle.

Our people have a tremendous ability to find unorthodox solutions
in unorthodox situations. It has been proved more than once in the
course of our history. Now is the time to fully realize the creative
potential of our people. In reality, in many cases hardship and success
are intertwined and it is obvious that to achieve great success it is
necessary to overcome hardships, and there are many cases when under
such circumstances success is much bigger than expected. Just one
example: our Artsakh liberation war, our entire struggle for freedom.

Currently, the Armenian Government is engaged in active discussions
with a large number of experts, it also continuously cooperates
with the leading specialists of the world financial institutions,
and meticulously analyzes the measures undertaken by other countries,
as well as the proposals of our own independent experts made publicly
and directly. This is, undoubtedly, the right path. However, I believe
that at this stage this kind of consultations with the political
parties is necessary. Let me explain why.

The way the crisis will evolve in our country greatly depends also
on the public perception of the crisis and the public attitude. The
behavior of each of our citizens and the behavior of our society as
a whole will determine the success of the measures to be taken to
mitigate the negative developments. I am confident that the problem
belongs mostly to the realm of perception, public perception.

You may spend tens of billions of dollars and still to no avail
if the society is overwhelmed with panic and uncertainty toward the
future. I believe that everyone who is concerned with the future of our
country at this juncture is willing to become a promoter of responsible
actions and rational behavior. I trust that our political parties in
particular possess a great potential and possibilities to act in this
way. Thats the reason I attach importance to this meeting. Certainly,
I dont mean the people and the parties who are led by the principle
the worse the better.

Everyone is talking about the global crisis, offering advice, and
proposing arrangements starting from planning personal and family
budget and up to the drawing the state budget. However, there is
a misunderstanding I would like to talk about. The misunderstanding
lies in the misperception that this crisis is exclusively of financial
and economic nature, with the subsequent social repercussions. The
global crisis is a grave challenge for the political realm, to the
system of values and morals. Individuals behavior in time of crisis
reveals his or her merits, morality, and the degree of readiness to
accept political responsibility. The easiest, of course, the safest
thing to do is just to offer criticism.

Thanks God, our society has been able to act wisely in this crisis,
without panicking unduly which would have further complicated the
things. Farmers are trying to get seeds with whatever resources they
have, to sow and harvest. Businessmen have been actively seeking new
ideas and initiatives and this is, of course, praiseworthy. Political
establishment loves to give advice you do this and you do that,
and so on. Are we – political parties ready to act in step with the
reality? Are we ready to be modest, wise and most importantly not to
succumb to panic and not to create panic?

Specialists suggest that in time of crisis it is more beneficial to
work for smaller wages and lower profits rather than not to work in
the anticipation of high wages and larger profit, i.e. not to work
at all. I am asking you: Are we the Armenian political parties ready
to work in politics without anticipating political dividends? These
are times when reaping political gains, taking provocative and
scheming actions means to add to the crisis rather than to counter
its consequences. Can we find solutions for the problems unknown
before? Today, we will at least try. I am confident that our Government
is willing to listen to the proposals which offer reasonable solutions,
and it goes not only for the todays discussion. We will ask the
Prime Minister to comment on the observations of all the Heads of
political parties. We will also try to outline a permanent format
for the exchange of new ideas.

Afterwards, Prime Minister Tigran Sarkissian made a brief statement. He
said in particular: As the President has already said, every country
in the world is affected by this global crisis. Each country has its
own methods of mitigating the consequences of the crisis. Now about
our approaches on countering the crisis through all the merits and
demerits of our economy: On November 14, 2008 we presented to the
National Assembly our anti-crisis program the logic of which is
based on three pillars. Which are they? First, the implementation
of the infrastructure projects. Second, earmark assistance to the
enterprises, which are going through temporary difficulties. And the
third, assistance to small and medium enterprises.

In critical situation, the uninterrupted work of the infrastructure
becomes one of the most important tasks for the government. Our
anti-crisis program envisages the following measures directed at the
uninterrupted work of the vital infrastructure and implementation of
new projects: First, implementation of the road construction projects
construction of 800-1000km of roads in 2009-2012, which will require
nearly 110 billion AMD.

Housing construction in the earthquake zone will require close to
75 billion AMD, including the construction of the Masters Town. The
establishment of the All-Armenian Bank and Mortgage Foundation
9 billion AMD. Construction of a new nuclear power station and a
new railroad also requires large-scale investments. On the second
direction: To make the economy more resilient, a pinpointed assistance
will be provided to individual enterprises to create new jobs,
encourage local production to substitute imports, increase production,
to increase the use of local materials, and foster the implementation
of innovative technologies.

Unorthodox tools will be used to achieve this objective such as
state guarantees, subsidies, including in the area of agriculture,
direct loans, and participation in the entrepreneurial capital. The
operative center has already approved 18 programs, requiring almost
25 billion AMD.

The third direction: Small and medium enterprises are the backbone of
a stable economy, and their role becomes even more prominent in times
of crises. Toward this end the state is undertaking the following
steps: expansion of loan programs for small and medium enterprises,
and 15 billion AMD have already been allocated from the state budget
for this purpose. Assistance provided to small and medium enterprises
by the World Bank, European Bank for Development and the Asian Bank
will also increase sharply.

Establishment of specialized exporting enterprises aimed also at
the better utilization of export potential for our agricultural
produce. Decrease of tax burden for small and medium enterprises and,
in particular, increase of the ceiling for the added value tax from
the current 3 million Armenian drams to 58 million drams. Expense
justification through the receipts and bills, and approval of
documents in the amount of 36 million drams annually instead of 1
million drams. Transfer of hotel and restaurant businesses into the
area of fixed taxation and deferment of the taxation for added value
up to three years for equipment import.

A considerable simplification of tax administration, particularly
for the enterprises with the turnover up to 100 million AMD, and
the elimination of a mandatory accounting regulation. Introduction
of simplified tax reports, termination of the commissions formerly
accepting tax reports, elimination of the regulation on mandatory
filing a monthly report on added value tax if the turnover is less
than 100 million ADM instead of former ceiling of 60 million drams,
establishment of the accounting assistance centers, introduction
of standard services, participation in the GSP+ system which will
considerably reduce taxation of the products exported from Armenia
to the EU.

The strength of these three pillars will be conditioned by the
effectiveness of our social policies. We have introduced the regime
of tight budgetary cutbacks to protect social obligations of the
state and to fulfill them in time and in full measure. Pensions,
social benefits, and teachers salaries have already been increased,
which in our opinion will help alleviate the consequences of the
crisis for the most vulnerable segment of the society.

We have also planned a number of measures which will restrain
unjustified price hikes and provide for an increased flow to the
state budget from the major businesses. Among these measures are:
a mandatory external auditing for major companies, rigid penalties
for major business which fail to provide receipts, increase of fixed
pay for casinos and prize games, increase in base taxation for the
gas stations.

All the mentioned above measures have been developed after
consultations with businesses. We will be transparent and we will
introduce mechanisms to ensure public monitoring of the implementation
of the anti-crisis program. Since there is no consensus regarding
the best way to overcome the global crisis, and there are many
uncertainties and the situation is changing rapidly, we are pretty
sure that this program will be in a constant need of improvement. We
are open to new ideas and would appreciate a constructive criticism.

After the Prime Ministers statement, the consultations were continued
behind closed doors and lasted for over five hours.