Azat Artsakh, Nagorno Karabakh Republic [NKR]
02 May 2006

On April 26 the meeting of the NKR government, conducted by Prime
Minister Anoushavan Danielian, took place. Minister of Finance
and Economy Spartak Tevossian spoke about the annual report
on the performance of NKR State Budget 2005. He offered some
macroeconomic indices, describing the social and economic state of
the country. According to the minister, the GDP totaled 51.4 billion
drams in 2005. In 2005 the average exchange rate of the dollar was
457.8 drams (compared with 532.1 drams in 2004), the exchange rate of
the euro was 570.7 drams (compared with 660.7 drams in 2004). Gross
agricultural output totaled 21.1 billion drams, increasing by 5.6
percent. The volume of building on all the sources of funding totaled
12.6 billion drams, growing by 37.8 percent compared with 2004. Foreign
trade in 2005 totaled 133.1 million US dollars (growing by 15.2 percent
compared with 2004). Last year wholesale trade in the country reached
42.7 billion drams, services 5.4 billion drams. In addition, the cash
income of the population mounted to 51.8 billion drams (growing by
20.3 percent), and expenses totaled 49.2 billion drams. Over 3400
jobs were created in 2005 in different branches of the economy. The
average salary totaled 51 127 drams, compared with 41 170 drams in
2004. In 2005 the average retirement benefit totaled 13 440 drams,
growing by 30 percent. Spartak Tevossian says these achievements were
enabled by the steep growth of budget receipts.

The budget receipts for 2005 were estimated at 6485 million drams, the
factual receipts totaled 6570.1 million drams, increasing by 1979.9
million compared with the same period in 2004. Return on tax totaled
5010.3 million drams instead of the estimated 4660 million. It is
notable that budget expenses totaled 20 billion 246 million drams,
which is 94.5 percent of the expenses, estimated at 21424.6 million
drams. Making his observations regarding the bill, Prime Minister
Anoushavan Danielian assessed the report as satisfactory, adding that
it contains specific analyses and facts, and is the best draft, in his
opinion. He viewed the country's achievements in 2005 in the context
of economic reforms. "The mere fact that the GDP almost doubled in
four years and the growth of receipts did not go below 40 percent,
are eloquent indices," said the prime minister. "It is enough to
state that our own receipts of 1 billion 600 million increased up
to 9 billion. The macroeconomic indices suggest that maintenance of
high rates of growth will enable expanding the volume of agriculture
and industry in 3 or 4 years. And the implementation of short-term,
medium-term and long-term programmes can be an important condition
for progress." Emphasizing the importance of growth of the GDP for the
development of different branches of the economy, the prime minister
said it is impossible to deny the 43.1 percent growth of the county's
own receipts, however, the performance of the state budget was 102.1
percent, which should make the members of government think. Considering
the tendency of high risk (although it had been taken into account),
Mr. Danielian said, "such a growth is possible in three or four
years at best," whereas the estimates are not fulfilled in all the
branches. Touching upon inaccuracy in the performance of community
budgets, he criticized the heads of administrations. The prime
minister said that failure to control and the conformist attitude
towards those who cause the failure of community budgets, the head of
the regional administration "encourages this style of work of heads
of communities," and the latter do not feel obliged, instead they
keep soliciting the government for subsidies. "It is necessary to
dismiss such people and draw conclusions," stated the prime minister.

During the meeting of the government Prime Minister Anoushavan
Danielian proposed to set up a state committee, led by Deputy Prime
Minister Ararat Danielian, to coordinate medium-term and long-term
programmes. Since the volume of building in the republic is sure to
grow year by year, whereas a considerable part of building materials
is imported, the prime minister instructed the minister of city
planning, territorial management and development of infrastructures
to work out proposals on developing production of building materials
in the country, that would allow cutting the cost of building. Prime
Minister Anoushavan Danielian expressed concern about the slow rate
of reforms in agriculture. Emphasizing the importance of creating
a system of irrigation to guarantee high yield of arable crops,
Anoushavan Danielian said, "We must direct our efforts towards
expanding irrigated areas. We must not allow oligarchs to seize the
land from farmers just for a song and leave them in confusion.

Farmers must feel protected by the state and have full control of
their land."

>>From among about thirty documents decisions were made on issues
of environment and water resources. In particular, the government
adopted an order on making the list of animals and plants in NKR,
which are on the verge of extinction.

The government adopted a set of decisions on the sale of chemicals
and fertilizers, sale of weapon, bullets, explosives, as well as on
privatization of state and community property. The bill on the annual
report of 2005 on performance of State Property Programme 2004-2006
was adopted.