TIGRAN SARGSYAN: GLOBAL CRISIS EXPOSED ARMENIA’S WEAK POINTS

news.am
Oct 30 2009
Armenia

The global economic crisis has, in a sense, played a positive role in
exposing the weak points of the Armenian economy, RA Prime Minister
Tigran Sargsyan stated in Parliament, presenting the 2010 draft budget.

"First, the crisis revealed a low level of economic diversification
in Armenia, deficit of long-term funds and of relevant institutions.

Secondly, oligarchic monopolies and a low competition level in the
Armenian economy, which reduces the price flexibility level. Thirdly,
poor motivating factors in government agencies. Fourthly, pressing
grave problems in the education and health systems. The Government’s
2010 strategy is aimed at resolving these problems," the Premier said.

Presenting the key performance indicators set by the 2010 draft budget,
the Premier tried to answer the question as to why the Government
fails to make realistic economic forecasts for 2009-2010.

"The answer is a simple one: the global economic crisis breaks all the
laws and does not allow accurate forecasts to be made." He reported
that next year Armenia is to receive funds from the Millennium
Challenge Corporation, which will allow the country to keep to the
2010 expenditure budget. According to him, the expected economic
growth is 1.2%. "We also plan to maintain social expenditures at the
2009 level, and I am sure we will accomplish the task," he said. The
Premier pointed out that the GDP may be a little lower next year as
compared with this year.

The Premier also addressed the issue Armenia’s national debt. The
public is concerned over whether the country will be able to pay off
the debt after receiving loans. "I would like to note that Armenia’s
budget deficit is mainly financed by international donor organizations,
which prevents market risks. Moreover, the credits issued to Armenia
by the World Bank, Asian Bank and International Monetary Fund (IMF)
will be restructured, which will relieve the debt burden on the
budget. Armenia is not running great risk – if the world economic
recovery is delayed, Armenia will postpone the payment of its debts
as well."

The 2010 budgeted expenditures are 533bn AMD instead of the previously
forecast 500bn. The target will be exceeded provided a favorable
economic situation develops. Otherwise, the expenditure budget will be
executed due to the reserve funds. Next year, the financing of local
government will total 32.5bn AMD – an increase of 17% as compared with
this year. A total of 31bn AMD are intended for the Nagorno-Karabakh
Republic (NKR). According to the Premier, the funds will help the
NKR ensure its security. Next year the RA Government will continue
assisting small & medium-size (SME) and backbone enterprises, create
favorable conditions for export and continue customs and tax reforms.

"The Government has focused its attention on reforms in the
pension and insurance systems, which will enhance Armenia’s economic
diversification," the Premier said. The Government also plans reforms
in the state government, health and education systems.

From: Emil Lazarian | Ararat NewsPress