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EBRD: Armenia Needs Substantial Reformation Of Its Business Climate

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  • EBRD: Armenia Needs Substantial Reformation Of Its Business Climate


    YEREVAN, March 6. /ARKA/. Armenia, which has no access to sea and
    limited access to neighboring markets, needs substantial reformation
    of its business climate, enhancement of competition and improvement
    of physical infrastructures, the European Bank for Reconstruction
    and Development (EBRD) said in its transition report for 2012.

    According to the report, long-term growth prospects remain uncertain.

    The country's economy, which is singled out for relatively high degree
    of monopolization, remains reliant on export of raw materials with
    low added value, which makes it vulnerable to shocks experiences by
    its trade partners.

    The EBRD stressed in the report that economic prospects for the
    nearest future are overshadowed by uncertainty across the world,
    and to retain economic growth close to 4% in 2012 and 2013, it will
    be necessary that amounts of money transfers remain large and demand
    from foreign partners, particularly Russia, as well as prices for
    exported raw materials remain high.

    The EBRD experts say in the report that recovery of Armenia's economy
    after the recession has already speeded up and that the growth is
    mainly propelled by mining and processing industries.

    The country's unreformed agriculture recovered after the 2010 decline
    thanks to a better weather and growth in money transfers.

    Construction rallied as well after flagging in 2009.

    The EBRD says in its report that the government continues efforts to
    consolidate the budget for retaining the state debt at an acceptable
    level under the IMF-supported program.

    Growth in lending was considerable and it reflected a low level of
    financial mediation.

    External imbalances were downed, but current account adverse balance
    remains high standing at 11% of GDP.

    The EBRD experts single out the necessity of a breakthrough in
    improvement of business climate among the 2013 top-priority objectives.

    It is also necessary to stimulate domestic and foreign trade by
    modernizing transportation and communication infrastructures, which
    will spur development of export-oriented segments of the national
    economy and will reduce implicit costs in dealings.

    The EBRD also recommends the government to continue efforts for
    development local capital markets.

    The large-scale objective to de-dollarization of the economy should
    be accompanied by a consistent transition of monetary policy from
    actual conjunction with foreign exchange rate to inflation targeting.

    The pension reform to be implemented by the government should
    open strategic opportunities for development of domestic markets
    of securities, bank deposits and equities thanks to institutional
    investors' base, which ensures sustainable demand for long-term
    investments. -0-