ECONOMIC GROWTH OF NKR FORECAST TO MAKE OVER 13% THIS YEAR

Noyan Tapan
Dec 2, 2009

STEPANAKERT, DECEMBER 2, NOYAN TAPAN. The 2010 draft state budget of
the Nagorno Karabakh Republic (NKR) was discussed at the November
30 sitting of the NKR government. The President of the NKR Bako
Sahakian made a speech, in which he said that the impact of the
global financial and economic crisis was partly neutralized by the
economic policy conducted by the government this year. As a result,
economic growth will make over 13% in 2009, according to forecasts.

At the same time B. Sahakian noted that he is far from thinking
that the crisis was completely overcome, adding that they should
be prepared for possible unfavorable developments in 2010. In his
opinion, the main subject of the discussions of the 2010 draft state
budget should be adoption of a balanced and realistic budget under
conditions of the global crisis, after which the government must
ensure its implementation through an efficient budgetary policy.

Then the NKR president in particular said:

"The 2010 state budget should ensure the optimal realization of the
following two goals:

First, it is necessary to spend state financial resources efficiently
and economically, which is of great importance in conditions of limited
state revenues – on the one hand, and the necessity to implement the
envisaged projects fully and on time – on the other hand.

Secondly, the reduction in state expenditures should not become a
factor restricting the economic relations and growth in the country.

Quite the opposite, the state budget expenditures, which, on the other
hand, are the population’s incomes should expand the gross demand,
thus promoting economic growth in our republic.

I would like to make some observations about the submitted state
budget and its further implementation, and the government must take
these observations into account.

– It is necessary to protect the most vulnerable groups of the
population from the external unfavorable effects. The pensions and
benefits, the salaries of teachers, medical personnel and other
employees of the state sector must be maintained at the level of
early 2009 and paid without delay.

– I commission the government to keep the problems of the families of
the servicemen, who were killed in the Artsakh war or are missing,
and the problems of the disabled at the center of its attention and
to continue implementing consistently the programs on their social
protection, and starting from January 2001, also to provide a monthly
pecuniary aid of 15 thousand drams (for each victim) to families with
two or more victims of the war.

– The expenses on maintenance of the state bodies should be incurred
in a strictly saving mode. The purchase of property with budgetary
resources can be made only in exceptional cases and mostly for
professional equipment. Budgetary resources should be spent only
under conditions of strict financial discipline mandatory for everyone.

– The economic policy should be conducted in such a way that an
unusual rise in consumer prices would be ruled out.

– It is necessary to continue steps on ensuring an equal and favorable
field for business. The measures taken for this purpose should aim to
simplify and improve tax administration, form a favorable investment
climate and to expand the assistance to small and medium business.

I would like to take this occasion of the 2010 draft state budget’s
discussion and to speak about a number of important problems.

1. The process of forming this state budget is taking place in a period
when the behavior of any state body and any official and the degree
of their responsibility for their duties are of great importance in
terms of dealing with the problems of our country and economy.

2. I want to draw the attention of the heads of all concerned bodies,
first of all the Ministry of Education and Science and the Ministry
of Healthcare, to the quality of child care at pre-school institutions.

Everyday control should be established to ensure the conformity of
food, living and sanitary conditions to the norms.

3. There are a lot of problems related to the use and preservation of
lands and the control of this process. These problems are serious
obstacles to economic development, including the formation and
replenishment of the budget. The government and law enforcement
bodies must continue large-scale work for solving these problems,
in particular the problem of illegal land use, and they must carry
this work to its logical conclusion.

4. The necessity of optimizing state institutions has been repeatedly
underlined. However, today the number of state nonprofit organizations
financed from the state budget has reached 140 and continues to grow.

9 new state nonprofit organizations were registered in 2009. I
commission the government to examine the current situation and present
a proposal for serious reforms in this sphere".

In conclusion B. Sahakian expressed confidence that adoption of the
2010 draft state budget of the NKR will allow solving problems of the
country’s socioeconomic development and its normal vital activity. In
his words, the budget is socially oriented and will contribute to
the improvement of living conditions of the Karabakh people.