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ARMENIA: WAITING FOR SECOND-GENERATION REFORMS
Vestnik Kavkaza, Russia
June 3 2013
Author: Susanna Petrosyan, Yerevan, exclusive to VK
The presidential elections in Armenia were held more than three months
ago, but the situations in the economy and the social sphere are still
a matter of great concern. Only in May huge crop losses in some areas
took place due to heavy hail, and in mid-May dairy products became
more expensive by 8-10%.
Companies that produce dairy products explain this rise by the increase
in purchase prices for milk and for imported raw materials.
The State Commission for Protection of Economic Competition began
studying the market of dairy products and requested the Ministry
of Agriculture of Armenia to provide information on the dynamics of
the purchase prices for milk. But history shows that if prices for
something rise in Armenia, despite all the assurances and discussions,
the prices will not drop.
At the end of last year, Armenia's foreign debt stood at 1.508
trillion drams or $ 3.738 billion. In January-May, the inflation rate
rose to 3%. The main catalyst for the acceleration of inflation was
the group of food products, for which the average prices this year
raised stepwise from 101.6% in January to 104.2% in April. Similarly,
the prices of clothing and footwear also increased; the prices for
essential commodities rose significantly. According to the National
Statistical Service, consumer prices in April rose by 3.9% - compared
to the same period last year. The expected increases in tariffs for
gas and electricity will also significantly complicate the situation
of citizens in the summer.
According to the chairman of the Union of Employers Gagik Makaryan,
the country still does not create conditions for development of small
and medium-sized businesses, and many small businesses today, after
years of work, can only be closed, because of the reduction in the
number of consumers, the cause of which, in turn, was the decrease
in the level of life and the increase in the number of poor.
Today, many experts see a way out of the situation in the reform
of the second generation. The need for reform was pointed out by
the representatives of the International Monetary Fund. After the
election of the Council of Elders of Yerevan head of the Armenian
IMF mission Mark Horton and IMF Resident Representative in Armenia
Guillermo Tolosa in a joint statement called on the authorities to
implement decisive and radical reform. According to representatives of
the IMF, there is the need for further measures to stimulate private
investment, create a level playing field for all market investors,
improving tax collection, etc.
The first phase of reforms in Armenia began in the early 90s and has
been held back by the Government Grant Bagratyan. The reforms demanded
their logical continuation, but the transformation process stalled in
1999. According to the professor, vice-rector of the Russian-Armenian
University Edward Sandoyan, today Armenia is in a situation where its
economy is very difficult to be called a "free market": the Armenian
economy has characteristics which formally belong to a market economy,
but on the content they are far from that, "We have high levels of
corruption and low competitiveness of the economy as compared to our
peers. The country is inefficiently promoting the export-oriented
economy, and this is the only direction for our future development",
the scientist and economist says, who believes that the country has
institutions that protect property rights at a rudimentary level, and
there is still no effective legislation, administration or judiciary.
What kind of philosophy leads the Armenian government today? The most
striking indication of its ideology is the statements made by various
members of the ruling Republican Party of Armenia (RPA) that only
in the ranks of political power there are the most professional and
competent staff. In this regard, the statement by one of the leading
ideologues of the Republican Party, vice-chairman of the party Galust
Sahakyan that the Republican Party is going to be in power as long
as there is a danger of war, is even more surprising for its candor.
Judging by the current trends of the settlement of the Nagorno-Karabakh
conflict, the period when the Republican Party will be in power
will last a long time. And when we consider the role and place of
Sahakyan in the hierarchy of the ruling party, it is possible to
make an unambiguous conclusion about a serious intention for the
continuation of essentially a one-party rule and holding further
monopoly of power by the Republican Party.
In the economic sphere, the monopoly of power of the RPA is expressed
in the rule of clan-oligarchic system that ensures the development of
large monopolies at the expense of small and medium-sized businesses.
However, these political and economic realities leave an imprint on
the appropriate social services. The situation is characterized by the
further impoverishment of the people, the further loss of economic
independence by the vast majority of them, which in turn greatly
facilitates the manipulation of these segments of the population
by the authorities, whose main task is to maintain at all costs
the monopoly on power and to ensure its reproduction. The existing
system is a reality. While this scheme works, all statements about
the need for a second phase of reforms will remain empty promises,
even regardless of who makes these statements.
http://vestnikkavkaza.net/analysis/economy/41012.html
Vestnik Kavkaza, Russia
June 3 2013
Author: Susanna Petrosyan, Yerevan, exclusive to VK
The presidential elections in Armenia were held more than three months
ago, but the situations in the economy and the social sphere are still
a matter of great concern. Only in May huge crop losses in some areas
took place due to heavy hail, and in mid-May dairy products became
more expensive by 8-10%.
Companies that produce dairy products explain this rise by the increase
in purchase prices for milk and for imported raw materials.
The State Commission for Protection of Economic Competition began
studying the market of dairy products and requested the Ministry
of Agriculture of Armenia to provide information on the dynamics of
the purchase prices for milk. But history shows that if prices for
something rise in Armenia, despite all the assurances and discussions,
the prices will not drop.
At the end of last year, Armenia's foreign debt stood at 1.508
trillion drams or $ 3.738 billion. In January-May, the inflation rate
rose to 3%. The main catalyst for the acceleration of inflation was
the group of food products, for which the average prices this year
raised stepwise from 101.6% in January to 104.2% in April. Similarly,
the prices of clothing and footwear also increased; the prices for
essential commodities rose significantly. According to the National
Statistical Service, consumer prices in April rose by 3.9% - compared
to the same period last year. The expected increases in tariffs for
gas and electricity will also significantly complicate the situation
of citizens in the summer.
According to the chairman of the Union of Employers Gagik Makaryan,
the country still does not create conditions for development of small
and medium-sized businesses, and many small businesses today, after
years of work, can only be closed, because of the reduction in the
number of consumers, the cause of which, in turn, was the decrease
in the level of life and the increase in the number of poor.
Today, many experts see a way out of the situation in the reform
of the second generation. The need for reform was pointed out by
the representatives of the International Monetary Fund. After the
election of the Council of Elders of Yerevan head of the Armenian
IMF mission Mark Horton and IMF Resident Representative in Armenia
Guillermo Tolosa in a joint statement called on the authorities to
implement decisive and radical reform. According to representatives of
the IMF, there is the need for further measures to stimulate private
investment, create a level playing field for all market investors,
improving tax collection, etc.
The first phase of reforms in Armenia began in the early 90s and has
been held back by the Government Grant Bagratyan. The reforms demanded
their logical continuation, but the transformation process stalled in
1999. According to the professor, vice-rector of the Russian-Armenian
University Edward Sandoyan, today Armenia is in a situation where its
economy is very difficult to be called a "free market": the Armenian
economy has characteristics which formally belong to a market economy,
but on the content they are far from that, "We have high levels of
corruption and low competitiveness of the economy as compared to our
peers. The country is inefficiently promoting the export-oriented
economy, and this is the only direction for our future development",
the scientist and economist says, who believes that the country has
institutions that protect property rights at a rudimentary level, and
there is still no effective legislation, administration or judiciary.
What kind of philosophy leads the Armenian government today? The most
striking indication of its ideology is the statements made by various
members of the ruling Republican Party of Armenia (RPA) that only
in the ranks of political power there are the most professional and
competent staff. In this regard, the statement by one of the leading
ideologues of the Republican Party, vice-chairman of the party Galust
Sahakyan that the Republican Party is going to be in power as long
as there is a danger of war, is even more surprising for its candor.
Judging by the current trends of the settlement of the Nagorno-Karabakh
conflict, the period when the Republican Party will be in power
will last a long time. And when we consider the role and place of
Sahakyan in the hierarchy of the ruling party, it is possible to
make an unambiguous conclusion about a serious intention for the
continuation of essentially a one-party rule and holding further
monopoly of power by the Republican Party.
In the economic sphere, the monopoly of power of the RPA is expressed
in the rule of clan-oligarchic system that ensures the development of
large monopolies at the expense of small and medium-sized businesses.
However, these political and economic realities leave an imprint on
the appropriate social services. The situation is characterized by the
further impoverishment of the people, the further loss of economic
independence by the vast majority of them, which in turn greatly
facilitates the manipulation of these segments of the population
by the authorities, whose main task is to maintain at all costs
the monopoly on power and to ensure its reproduction. The existing
system is a reality. While this scheme works, all statements about
the need for a second phase of reforms will remain empty promises,
even regardless of who makes these statements.
http://vestnikkavkaza.net/analysis/economy/41012.html