IT WILL TAKE ARMENIA TOO LONG TO GET OUT OF THE CRISIS IF ECONOMY STRUCTURE IS LEFT UNCHANGED

ArmInfo
2010-02-23 12:15:00

ArmInfo. "Crisis reveals the very hidden factors that undermine the
bases of healthy competition at a glacial pace and result in disastrous
consequences," said Araik Karyan, Head of RASCO Insurance Company, the
former head of the Insurance Inspectorate and USAID expert, during the
7th International Economic Forum BRIDGE 2010 in Armenia. He said that
in conditions of crisis no one can predict the trends of economic
development, but one thing is clear that maintaining the former
mechanisms and structure of economy may deteriorate the situation
in the country. The expert thinks that construction and services
sectors have become an important link in the structure of economy in
Armenia and their share in GDP is 62% whereas the share of industry,
agriculture and energy in total does not amount even to 30%.

A. Karyan believes that Armenia needs its own stabilization fund that
would be replenished at the expense of the sectors having surplus
profit. This will stimulate structural changes in economy with a focus
on the industrial sector. A. Karyan proposed exempting import of any
type of equipment in Armenia of VAT as well as prolonging the period
of payment of the tax on import of raw materials for processing by
6-8 months. As regards preferential terms of taxation on import of
equipment approved by the government, A. Karyan called it nothing
but charging of VAT in advance.

Among the major steps stimulating development of economy, the
expert stressed the necessity of partial governmentalization
(re-privatization) of enterprises implementing innovative business
projects, their further monetization through provision of budgetary
loans with prolonged debt service as well as through placing
government orders with enterprises implementing effective and
innovative projects. "The next tooling suggests administration of
guarantees to the business by certain insurance schemes, governmental
co-financing of activity of the subjects undergone relevant selection,
partial or full funding of commercial credits, development of a new
state property management concept, governmental financing of venture
projects, which allows attracting long money without mortgage security,
as well as administration of state guarantees in form of long-term
loans till 2020 for business stimulation and innovative development",
he emphasized.

Within the frames of export stimulation, A. Karyan offers providing
insurance guarantees for exporter enterprises. According to him,
this tooling is used very successfully in both the developed European
countries and in the countries with transient economy. Then, the
expert offers creating efficient mechanisms of regional development.

Here, Karyan recommends the government to pass from the policy of
smoothing of economic processes to the policy of polar development of
the country’s economy, where centralization of financial, technological
and managerial resources is necessary for innovative development of
the regions. Moreover, emphasis in the regional development strategy
should be laid on the competitive advantages of each region.

When speaking of assistance to the social sphere, the expert
highlighted the pension reforms, initiated by the government, in
particular, implementation of accumulative pension system in 2011. A.

Karyan offers changing the sources of financing of social tasks with
transfer from budgetary mechanisms to insurance ones.