Author: Garo Vardanian

                                        Tuesday, 

Armenian Government Keen To Scrap Debt Ceiling


 . Tatevik Lazarian


Armenia - Finance Minister Vartan Aramian presents a government bill
in the National Assembly in Yerevan, 12Dec2017.

The Armenian government has moved to abolish a legal limit on the size
of the country's public debt which has tripled in the past decade.

An Armenian law stipulates that the total amount of the government's
outstanding debts cannot exceed a sum equivalent to 60 percent of
Gross Domestic Product. The debt-to-GDP ratio currently stands at 55.4
percent.

The National Assembly began debating on Tuesday a government bill that
would scrap that debt ceiling which Finance Minister Vartan Aramian
described as too restrictive and outdated.

As well as removing the borrowing cap, the bill would require the
government to come up with a plan of actions to ease the debt
burden. The government would also have to certify that fresh loans
secured by it foster economic growth.

Answering questions from opposition lawmakers concerned about the
initiative, Aramian claimed that it is not primarily aimed at allowing
the government to obtain more multimillion-dollar loans."The whole
purpose of this package is not to enable us to borrow new loans but to
set rules regarding what we should do, what fiscal-budgetary policies
we should pursue," he said.

"It's not about getting or not getting loans," he insisted moments
later. "It's about the nature of our fiscal-budgetary policy."

The minister declined to specify whether the government plans to
resort to further borrowing. But he did reaffirm its recent pledge to
cut the debt-to-GDP ratio by one percentage point in 2018.

According to official statistics, economic growth in the country
accelerated this year. The government expects it to remain relatively
robust in 2018.

Armenia's public debt, which also includes foreign loans extended to
its Central Bank, passed the $6 billion mark recently. It stood at
less than $2 billion before the 2008-2009 global financial crisis
plunged Armenia into a severe recession. The authorities in Yerevan
have since borrowed heavily from the World Bank, the International
Monetary Fund and other external sources to prevent massive spending
cuts and finance infrastructure projects.

Opposition politicians and other critics of the government
increasingly voice concern at the rising debt. They also accuse the
authorities of misusing external loans.

Government officials dismiss these claims. Aramian argued earlier that
low-interest loans provided by the IMF, the World Bank and other
international lenders account for the bulk of the national debt.

The minister acknowledged in February that budgetary expenditures on
debt servicing will continue to rise and will peak at $500 million in
2020. The Armenian state budget for 2017 is worth roughly $3 billion.


IMF Still Sees Lack Of Competition In Armenia


 . Sargis Harutyunyan


Armenia - Yulia Ustyugova, the IMF representative in Armenia, speaks
to RFE/RL in Yerevan, 12Dec2017.

Armenia's economy is continuing to suffer from a lack of competition,
a senior official from the International Monetary Fund said on
Tuesday.

"Our assessment is that competition in the domestic market is indeed
limited and there is a lot of room for improvement," Yulia Ustyugova,
the head of the IMF office in Yerevan, told RFE/RL's Armenian service
(Azatutyun.am) in an interview.

"We have been raising this question and having very candid discussions
with the authorities," she said. "According to our assessment, it does
impede growth."

Ustyugova said the government should ensure that companies dominating
various types of business do not abuse their positions. It is also
essential to improve the investment climate so that new firms can
enter those sectors, she added.

"We are convinced that the business environment in Armenia is
improving," Prime Minister Karen Karapetian declared a month ago. "But
we also acknowledge that we have weak spots which we must definitely
work on."

Speaking in the parliament last week, Karapetian insisted that his
government is liberalizing lucrative sectors of the Armenian economy
that have long been dominated by a handful of wealthy
entrepreneurs. But he said more time is needed to complete that
process.

Ustyugova pointed out that the government's five-year policy program
approved by the Armenian parliament in June contains major anti-trust
measures. "But the question is implementation," she stressed.

A World Bank survey released in 2013 said that "oligopolies" control
68 percent of economic activity in Armenia, making it the most
monopolized economy in the former Soviet Union. The lack of
competition has been particularly acute in lucrative imports of fuel
and basic foodstuffs such as wheat, sugar and cooking oil. Economists
have long said that de facto monopolies hamper the country's
sustainable economic development.

Echoing government forecasts, Ustyugova said the Armenian economy may
grow by more than 4 percent this year after practically stagnating in
2016. But she cautioned that that will not be enough to significantly
reduce very high unemployment which official statistics put at about
20 percent. The government should focus on more job creation,
including by "retraining those who need jobs," added the IMF official.

Visiting Yerevan in April, the head of an IMF mission, Hossein Samiei,
said the current Armenian government is committed to implementing
major reforms needed for speeding up economic growth and reducing
poverty. "I'm not saying everything is perfect," he told
reporters. "But hopefully things are moving in the right direction."

Karapetian has repeatedly pledged to create "equal conditions" for all
business since he was named prime minister in September 2016.


Deal With EU To Strengthen Armenia, Says French Envoy


 . Anush Mkrtchian


Armenia - French Ambassador Jonathan Lacote arrives for a news
conference in Yerevan, 12Dec2017.

Armenia's policy of seeking a "privileged" relationship with the
European Union while remaining part of a Russian-led bloc will
strengthen its positions in the region and make it more attractive to
investors, France's ambassador in Yerevan said on Tuesday.

Jonathan Lacote referred to the Comprehensive and Enhanced Partnership
Agreement (CEPA) between the EU and Armenia that was signed in
Brussels on November 24.

"The key thing about this agreement is that while being a member of
the Eurasian Economic Union (EEU) Armenia can also have privileged
relations with the EU," he told a news conference.

"I think that thanks to this agreement Armenia can become a very
important actor in the region," said Lacote. "This is what I realized
especially after meeting with French businesspeople in Armenia. Things
will get easier for them because Armenia will move closer to European
norms with [CEPA-related] reforms initiated by it."

French companies doing business in Armenia, the diplomat went on, are
first and foremost interested in tariff-free access to markets in
Russia and other ex-Soviet states making up the EEU. "And if Armenia
can offer a secure business environment it will certainly take on the
role of a bridge," he said. "In our view, membership in the two
systems strengthens Armenia."

The French investors include the liquor giant Pernod Ricard, which
bought Armenia's largest brandy company about two decades ago. More
than 80 percent of its Armenian subsidiary's output is exported to
Russia.

The CEPA does not provide for a free-trade regime between the EU and
Armenia in view of the latter's membership in the Russian-led trade
bloc. Instead, it says, the two sides will seek to ease non-tariff
barriers to mutual commerce such as technical regulations and
licensing and labelling requirements.

Citing "common values" shared by the two sides, the 350-page accord
commits the Armenian government to implementing political reforms and
"approximating" national economic laws and regulations to those of the
EU. Yerevan will regularly report to Brussels on "the progress made
with regard to approximation" specified by several annexes to the
agreement. This "regulatory harmonization" will cover business
regulation, agriculture, transport, environment, consumer protection
and even energy.

Lacote stressed the significance of Yerevan's reform commitments
undertaken as part of the CEPA.


Press Review



"Aravot" comments on President Serzh Sarkisian's weekend speech in
which he warned local government officials against embezzling public
funds. The paper says that Sarkisian referred to cases that amount to
grave crimes and must be investigated. "But it's not hard to imagine
that the practice is so widespread that if the law starts to be
enforced then half of the country will have to go jail and the other
half must become their prison guards," it says.

"Zhoghovurd" says that Sarkisian also promised in his speech,
delivered at a government conference in Dilijan, that Armenia's per
capita Gross Domestic Product will reach $10,000. The paper says that
Sarkisian is far more likely to raise Armenia's per capita public debt
to $10,000. That figure currently exceeds $2,000, it says.

Interviewed by "168 Zham," a Lithuanian political analyst, Laurinas
Kasciunas, welcomes the November 24 signing of the Comprehensive and
Enhanced Partnership Agreement (CEPA) between Armenia and the European
Union. He says that the deal will breathe a new life into Armenia-EU
ties that were thrust into uncertainty in 2013 following the collapse
of an Association Agreement negotiated by the two sides. "Now we have
an agreement signed as a result of common sense demonstrated b both
sides," he says. "It testifies to a strong political will, and is
positive."

(Tigran Avetisian)


Reprinted on ANN/Armenian News with permission from RFE/RL
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