BAGRAT ASATRYAN: ARMENIA HAS NO ANTI-CRISIS PROGRAM

News.am
22:49 / 08/13/2009

Question: Mr. Asatryan, an economic decline of 16.3% has been
registered in Armenia. What level can it reach by the end of the year?

Answer: I think, and hope, Armenia has reached bottom and I forecast
better indicators for the end of the year. An economic decline of
12-13 per cent is expected toward the end of this year. But, I would
like to note we should not be enthusiastic. A lower decline can be
expected only due to the fact that the end of last year, particularly
the last quarter, proved to be too bad for our economy. I would like
to remind you that a 20% economic decline was registered in Armenia in
the last quarter of 2008 as compared with the last quarter the previous
year. That is, if this year’s decline is, say, 18%, it means a positive
result for us. I say this because everybody is waiting for the results
of the Government-launched anti-crisis program: positive or negative.

Question: Armenia borrowed credits from other states and international
financial agencies. Have not we reached a dangerous point?

Answer: This question should be viewed from at least two aspects. If we
compare the country’s foreign debt with its current GDP, the foreign
debt does not reach the dangerous point even if the current rates
of increase are maintained. However, we should revise this generally
accepted approach to the foreign debt in the context of actual tasks
for our country. From this point of view, our foreign debt should
be compared with the current exports: how many years’ exports are
necessary for Armenia to pay off its foreign debt. From this aspect,
the situation is, of course, much more difficult.

Question: What is you opinion of credit efficiency?

Answer: I will say what everyone does: unsatisfactory. While increasing
our foreign debt, we are speaking of anti-crisis funds. Did not foreign
funds reverse the economic situation in Armenia? No, they did not! And
the current economic indicators are evidence thereof. What are the
sectors the funds are invested in? Do the investments guarantee
economic reproduction, an economic level that would later enable
Armenia to fulfill its commitments without problems? The answer
is negative as well. The construction sector has to date been the
primary sector the Government-borrowed funds have been invested
in. But it will produce a short-term effect. It is natural demand
that is topical: is it right to invest Government-guaranteed funds
in housing construction, a sector serving very narrow circles? It
turns out that a couple of oligarchs get Government-guaranteed funds
to construct flats distributed among the members of their narrow
circle. It is clear that positive results can promptly be achieved
in this case. But this is a short-term effect, and the funds cannot
be re-invested. Another matter, if the funds are invested in the
economy and industry. Enterprises would manufacture products that
would enable Armenia to recoup investments.

Question: What are the sectors funds should be invested in to ensure
high efficiency?

Answer: First, I would like to note we are dealing with
an unprecedented situation. Of primary importance is the
following principle: which are the sectors the Government should
support? They are obviously the sectors that are of importance for
the country’s economic future, the economic entities creating values –
import-replacing or exported ones. That is, the Government must first
of all support the production sector. The next sector is small and
medium-sized businesses, which fact is pointed out by everybody. The
country’s viability, and particularly the viability of the economy,
depends on the state and development level. It is not only unhealthy,
but also has an outcast status. We should realize the fact that the
crisis is not only a test for our potential, but also a prerequisite
for creating a dynamically developing system.

Question: How effective is the Armenian Government’s anti-crisis
policy?

Answer: It is positive results that show effectiveness, but they,
unfortunately, are lacking. Moreover, Armenia has no anti-crisis
program. Individuals, for example the Premier, have made statements,
but a program approved by our "gifted" National Assembly is still
being implemented in our country. The program provides for 9.2%
economic growth, with corresponding budget estimates. What anti-crisis
program can we speak of under the circumstances? I said on several
occasions that statements made by individual officials and even most
brilliant ideas expressed "in camera" do not mean a program. We need
a real program to get out of the situation. And it must be a program
in conformity with the country’s legislation. What is being done now
is nothing but uncoordinated efforts that have little effect.

Question: The Premier admitted the fact that the Armenian economy
is dependent on external influence. In this context, what does the
Russian economy suggest to you? What do you think, when will we
overcome the crisis?

Answer: It is no secret for anybody that the year 2009 has proved a
failure. Unfortunately, the authorities were among the last to come to
realize the fact. We do not have any guarantees against the economic
decline until 2020. I think we will close next year with negative
results. Positive trends in the American economy can be the best
result at the end of the year – if the Russian economy stabilizes
and ensures growth of at least 2%. Only in this case – provided the
authorities take necessary measures – can the economic decline in
Armenia be checked and economic growth expected in 2011. This is
not guaranteed because the situation remains serious in Russia as
well. They summed up the first half of the year, and the decline was
more serious than forecasted, 10.5%.

I would like to take the opportunity and say that we should estimate
the period required to overcome the consequences of the crisis. It
will take Armenia four to five years at best. Provided, of course,
the authorities undertake the elaboration and implementation of a
relevant program.