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  • Save Your Neck!

    SAVE YOUR NECK!

    news.am
    Feb 22 2010
    Armenia

    Last year saw a collapse of the economic policy implemented in Armenia
    and actually approved of by influential international banks, including
    the World Bank (WB). All the economic sectors registered decrease -
    from 0.1% in the agricultural sector up to 36.4% in the construction
    sector. As a result, the gross domestic product (GDP), a barometer
    of economic situation, showed a decrease of as much as 14.4%.

    The decrease in tax revenues caused external financing, namely,
    credits of international banks, to be attracted for the budget gap to
    be filled. With the previously borrowed funds considered, Armenia's
    external debt reached an unprecedented level. As of September 30,
    2009, it exceeded U.S. $2.7bn - an increase of U.S. $1,1190m or 77.7%
    as compared with the corresponding date the previous year. Armenia's
    second largest debt after the International Monetary Fund (IMF)
    (U.S. $823m) is that to the WB (U.S. $545).

    WB Regional Director for the South Caucasus Asad Alam, who recently
    visited Armenia, stated that the WB is elaborating a new assistance
    strategy for Armenia. According to him, Armenia ranks among the
    countries that have shown the best program performance indices over the
    past 10-15 years. The WB renders assistance to Armenia in resolving
    public health, education, road construction, irrigation channels
    renovation and social security problems. Armenia is to receive a
    total of U.S. $550m from 2009 to 2012, with U.S. $100m intended for
    the country's state budget, and U.S. $450m for government investment
    programs.

    Lack of irrigation water is one of the grave problems of Armenia's
    agricultural sector. Both objective and subjective reasons account for
    this. At one time, to resolve the problem, the authorities launched
    a utopian program of using the water reserves of Lake Sevan for
    irrigating the fields in the Ararat valley. At present, more efficient
    methods are applied - well water is used for irrigation as well.

    Dozens of millions of U.S. dollars have been spent on numerous
    irrigation programs in Armenian rural areas over the years.

    In 2009, however, crop production showed a 0.7% decrease instead of
    an expected increase. It would be absurd to account for this by the
    global crisis. Armenia is not going to "suffer from an overproduction
    crisis" due to an extremely low total output per farm.

    Rather, the reason is the Government's poorly developed sector
    management policy, and other factors, including the lack of water. Or
    its price, which is quite high for Armenian farmers, who are not at
    all doing well! In this context, the claims that Armenia is among
    the countries that have shown the best program performance indices
    over the past 10-15 years sound as though diplomatic compliments.

    All this would seem harmless but for the huge debts that have to be
    repaid soon.
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