, Armenia
Jan 4 2012

Armenia's economic policy is not expected to turn - Economy Minister

January 04, 2012 | 11:13

By Samvel Avagyan

Below is an interview with Armenia's Minister of Economy, Tigran Davtyan.

How would you evaluate the past year in terms of Armenia's economy?

Positively. I believe serious developments took place in Armenia's
economy. It began to rebuild since 2010, when we had a little growth.
And this growth doubled in 2011. It is very important that this
rebuilding is occurring on the account of the development of the real
sector, specifically of industry. In 2011, industry, agriculture, and
export played the role of the locomotive. The sole domain where we had
a reduction was construction. And this is only natural, and this
contributed to the formation of the economy's balanced structure. For
example, the industry's GDP rate was 11-12 percent in the beginning of
the year, but now we are approaching 20 percent. Armenia is becoming
an industrial country, where the real sector plays a great role. That
is why we underscore not only the 5-percent economic growth, but also
the current logical structural changes. I should also note the
double-digit industrial growth, the 25-percent growth in export, and
the 20-percent growth in investments.

In 2011, we had serious investments in close to a dozen enterprises,
and more than a dozen new enterprises were operated. And all these
enterprises meet with best international standards.

I should also note that we confirmed 21 investments projects through
postponing the payment of the value added tax, and as a result we
attracted 84 billion drams [approx. US$ 219,643,394] worth of
investments. By using this tool alone, we had 2.5 thousand new jobs.

Several legislative documents were introduced to the National
Assembly. First, this was the main law `On Free Economic Zones,' and
the principled changes made in the law `On Inspections.' I should also
mention the adoption of the four fundamental laws of the
standardization system, and the dozens of other projects. In general,
we made the legislative field comply with international standards.

Is the new industrial strategy toward export a turn in the economic
policy, as many consider?

No, I would not consider it a turn. It is in keeping with the policy
in 2011, but it contains a new accentuation. That is, we deem this
direction more important, and view it as a priority. We have always
done these operations, and now we specify two directions: industry and
export. We underscore the industry which has an export direction. This
strategy differs from the previous approaches in the sense that it
will not impact on the economic developments, but rather the economic
developments must reflect on the strategy. This is a document which
lives not with its own life, but, rather, it is directly
interconnected with our operations where are reflected those
operations which we already are carrying out. We did not wait for this
document to be approved, to enter into force, and only then to start
carrying it out.

The document also has a second part, which is more technical, and
where the concrete domain projects are depicted. The Government does
not approve these concrete projects, since the domain project must be
flexible and it should change, be clarified, and amended during its

This year is an election year. Does that have an impact on the
Government's steps and programs?

The election year will certainly have an impact on the processes,
accentuations, and operations. Any government in any country feels
that impact. But our policy will remain the same. Our steps will be
just as precise as in the previous years. Of course, we ought to turn
more attention to solving the social problems, but I do not think that
the election process would have an adverse, or an obstructive, effect.
If we recall the previous election years, we would see there was no
substantial impact on economic development.

How justified do you consider Moody's rating agency's latest assessment?

Moody's is a fairly renowned organization, and I see nothing bizarre
in this assessment. For the most part, the change in the rating is
conditioned by outside risks, and Armenia is a part of global economy;
it is linked with the Russian market and the European market alike,
and, to some extent, with that of the US, too. The risks and negative
expectations in that region could adversely reflect on our economic
growth, and, in that sense, that little clarification (drop) cannot be
considered substantial. The ratings of numerous countries, including
of US, are being dropped. But our developments are proceeding
positively, and this year we will have a better macroeconomic
condition. As case in point, the state budget deficit will drop until
the 3.1-percent level of GDP, albeit it was 7.5 percent during the
crisis. In any case, the assessments of Moody's are professional and
we cannot underestimate them.