FORMER ROA PM BAGRATYAN – ARMENIAN ECONOMY TO FALL 6.5-12%
Sona Avagyan

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2009/05/26 | 15:35

Economy

Former RoA Prime Minister Hrant Bagratyan stated that Armenia’s economy
would witness a drop of at least 6.5 – 12%. He made the prediction
at a press conference held earlier today.

"The crisis has entered the 3rd stage which will bring about serious
budgetary and banking problems. The crisis exposed that incorrect type
of development that Armenia has seen in the past ten years. There is
no manufacturing and risks aren’t diversified in the economy. While
the country doesn’t have a heavy debt burden, nevertheless, I think
that here the crisis will enter a 4th stage," said Mr. Bagratyan,
adding that the government is assisting those sectors that brought
on the problem and not those sectors where a problem doesn’t exist.

The former prime minister criticized the anti-crisis measures enacted
by the government and pointed to the assistance given the mining
sector as an example.

He said that he wasn’t sure where the government’s $10 million wound
up in the mining sector. "If they gave it to the Kajaran mining
concern, you know that Kajaran has serious issues because it was a
‘false sale’. We have serious suspicions that Robert Kocharyan, the
former Armenian president is somehow involved in Kajaran. Kajaran
produces 80% of Armenia’s copper and molybdenum. It was sold in
2004 and was the first time our national resources were sold for
nothing in return. It operated for 2-3 years and made some $130
million. Now it has difficulties selling its product. Why are we
assisting it? Are we merely assisting an individual? Who is the real
owner of Kajaran?" noted Mr. Bagratyan.

Mr. Bagratyan is also convinced that Armenia’s currency isn’t on a
floating rate. "According to our information the RoA Central Bank is
still intervening in the exchange market but on a smaller scale. I
predict that come June-July, the dollar will show signs of rising
and the dram will witness a serious drop."

Asked about statements made by the World Bank and IMF that Armenia is
executing a floating rate policy, Mr. Bagratyan responded that the
IMF "doesn’t work on our behalf"; they come here and at most spend
1-2 months.

Regarding the government’s social policies, Mr. Bagratyan stated that
he advised the Armenian government don’t to enter the crisis with a
flat tax system but rather a progressive one. The government didn’t
agree to his plan.

"Today, an individual making $10,000 is paying 20% tax and so is a
person making $200. We were the ones who came up with the flat tax
but if we are elected to office we’ll enact a progressive tax. The
poor won’t be paying 20% but 15%," Mr. Bagratyan said.