Announcement

Collapse
No announcement yet.

Armenia - Index of Economic Freedom 2004

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Armenia - Index of Economic Freedom 2004

    Armenia - Index of Economic Freedom 2004

    Rank: 42
    Score:2.58
    Category:Mostly Free
    View PDF
    http://www.heritage.org/research/features/index/country.cfm?id=3DArmenia

    Quick Study

    Trade Policy2.0
    Fiscal Burden2.3
    Government Intervention2.5
    Monetary Policy2.0
    Foreign Investment2.0
    Banking and Finance1.0
    Wages and Prices3.0
    Property Rights3.0
    Regulation4.0
    Informal Market 4.0


    Population: 3,068,000
    Total area: 29,800 sq. km
    GDP: $2.3 billion
    GDP growth rate: 12.9%
    GDP per capita: $761
    Major exports: diamonds, copper ore, scrap metal, machinery and equipment
    Exports of goods and services: $691 million
    Major export trading partners: Israel 21.0%, Belgium 18.3%, Russia 13.9%, US
    8.3%
    Major imports: natural gas, petroleum, mineral products, prepared foodstuffs
    Imports of goods and services: $1.2 billion
    Major import trading partners: Russia 16.4%, Belgium 10.2%, Israel 9.7%, US
    8.0%
    Foreign direct investment (net): $89 million




    The Republic of Armenia remained committed to the gradual pursuit of a
    democratic society and free-market economy in 2004. President Robert Kocharian,
    weakened by political instability and opposition attempts to secure a
    no-confidence referendum, became more willing to use authoritarian measuresagainst his
    critics. The government will look to improve political and economic relations
    with neighbors Russia, Turkey, and Azerbaijan; the latter two have maintained a
    trade embargo with Armenia over the disputed region of Nagorno-Karabakh.
    Economic policy continues to be guided by the economic and fiscal policies and the
    poverty-reduction strategy developed in cooperation with the World Bank and
    the International Monetary Fund. Reforms should provide improvements in the
    banking sector, transparency, and enforcement of anti-corruption measures.
    Privatization of state-owned enterprises, begun in 1994 following an aggressive land
    privatization program in 1991, has been slow. According to the Economist
    Intelligence Unit, of the nearly 900 businesses that the government has offered for
    privatization, 320 were divested in 2003. Armenia's government intervention
    score is 0.5 point better this year. As a result, its overall score is 0.05
    point better this year.

    Trade Policy


    Score:2.0
    According to the World Bank, Armenia's weighted average tariff ratein 2001
    (the most recent year for which World Bank data are available) was 2.5 percent.
    Most imports are free of prohibitions, quotas, or licensing, but the
    government imposes a value-added tax on certain imports to support its industrial
    policy, and the European Bank for Reconstruction and Development reports that
    cumbersome customs procedures act as a non-tariff barrier.

    Fiscal Burden


    Score:2.0
    The Embassy of Armenia reports that Armenia's top income tax rate is 20
    percent. The top corporate tax rate is 20 percent. In 2003, government expenditures
    as a share of GDP decreased 0.5 percentage point to 18.9 percent, compared to
    a 0.6 percentage point decrease in 2002.

    Government Intervention


    Score:2.0
    The World Bank reports that the government consumed 10.1 percent of GDP in
    2002. In 2003, based on data from the Ministry of Finance and Economy, Armenia
    received 5.7 percent of its total revenues from state-owned enterprises and
    government ownership of property. Based on the newly available, more reliable
    data on revenues from state-owned enterprises, Armenia's governmentintervention
    score is 0.5 point better this year.

    Monetary Policy


    Score:2.0
    Between 1994 and 2003, Armenia's weighted average annual rate of inflation
    was 4.01 percent.

    Foreign Investment


    Score:2.0
    Armenia offers equal official treatment to foreign investors, who have the
    same right to establish businesses as native Armenians in most sectors of the
    economy. Unless specifically authorized, foreign investment is not allowed in
    consumer co-operatives, collective farms, government enterprises, and
    enterprises of strategic significance. The government continues to restrictownership of
    land by foreigners, although they may lease it. The International Monetary
    Fund reports that there are no restrictions or controls on the holding of
    foreign exchange accounts, invisible transactions, current transfers, or
    repatriation requirements.

    Banking and Finance


    Score:2.0
    The central bank adopted a reform and consolidation program in 1994 after
    several banks had collapsed. The banking system is improving as supervision
    increases, regulation becomes more efficient, and minimum capital requirements are
    increased. The Economist Intelligence Unit reports that all banks now adhere
    to international accounting standards; under the revised standards, several
    banks were closed, and the number of banks fell from 58 in 1994 to 22 at the
    beginning of 2003. Foreign banks account for 40 percent of banking capital.The
    Ministry of Finance and Economy, which regulates the insurance industry, allows
    the presence of foreign insurance companies. The last state-owned bank,
    Armsberbank, was sold in September 2001.

    Wages and Prices


    Score:2.0
    According to the U.S. Department of Commerce, `The state continues to control
    prices for utilities and public transportation, keeping them artificially
    low. From time to time, the government conducts rationed sales of basic foods and
    other consumables (sugar, powdered milk, matches, soap) to the most needy
    groups at prices much lower than market prices.' In January 2002, the Armenian
    State Repository set new prices (which are used to calculate the tax on
    exploitation of natural resources) for nonferrous, rare, and precious metals. At the
    beginning of 2004, the government raised the minimum wage.

    Property Rights


    Score:2.0
    Private property is guaranteed by law, but neither legal enforcement nor the
    judicial system provides adequate protection. According to the Economist
    Intelligence Unit, `A further consideration [for investors] is the underdeveloped
    and corrupt judiciary, which is a substantial impediment to the enforcementof
    contractual rights and obligations, thereby keeping business risk high.â=80=9D The
    U.S. Department of Commerce reports that `the Constitution's provisions do not
    insulate the courts fully from political pressure, and in practice, courts
    [are] subject to pressure from the executive and legislative branches and some
    judges [are] corrupt. Lengthy public trials sometimes [are] a problem.â=80=9D The
    same source also notes that Armenian courts `are becoming increasingly
    independent. The Ministry of Justice is gradually limiting its involvement in civil
    cases.'


    Regulation


    Score:2.0
    A corrupt bureaucracy often applies regulations haphazardly, and political
    strife hampers the progress of any reforms. The Economist Intelligence Unit
    reports that `a high level of corruptionâ=80¦results in firms directing activity
    underground in order to reduce their vulnerability to extortion by government
    officials.' According to the U.S. Department of Commerce, `Changes in legislation
    are only rarely announced or publicly disclosed before implementationâ=80¦.
    [B]ureaucratic procedures can be burdensome and time consuming when an investor
    negotiates a contract with the Armenian government, as the contract may require
    approval by several ministries.' Corruption continues to affect business. The
    U.S. Department of Commerce reports that `bribery is widespread andis the most
    common form of corruptionâ=80¦.'

    Informal Market


    Score:2.0
    Transparency International's 2003 score for Armenia is 3. Therefore, Armenia'
    s informal market score is 4 this year.

    From: Emil Lazarian | Ararat NewsPress
Working...
X