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Armenian PM Defends Economic Policies In Face Of Global Crisis

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  • Armenian PM Defends Economic Policies In Face Of Global Crisis

    Journal of Turkish Weekly, Turkey
    Jan 2 2009



    Armenian PM Defends Economic Policies In Face Of Global Crisis


    The Armenian prime minister believes the set of measures foreseen by
    the government will help Armenia cope with the negative consequences
    and minimize the impact of the continuing economic crisis in 2009.

    Tigran Sarkisian said more investments in infrastructure development
    and several large projects to be launched by the state will provide
    new jobs for people to offset possible redundancies elsewhere.

    "We should essentially increase our spending in such directions as
    infrastructure development, including road and housing construction,
    rehabilitation efforts in the [1988 Spitak] earthquake area, projects
    in the energy sector, irrigation and drinking-water-supply systems,
    which coupled with a drastic increase in lending to small and
    medium-sized enterprises will create new jobs," Sarkisian said in an
    interview with RFE/RL's Armenian Service last week.

    "Besides we also plan to carry out several large projects that will
    provide essentially help in dealing with the consequences of the
    crisis," he continued. "These, in particular, include the construction
    of the north-south highway with the assistance of the Asian
    Development Bank, a program which has regional significance and is due
    to be carried out jointly with Georgia, as well as the construction of
    a new nuclear power plant, and the construction of an Iran-Armenia
    railway. All these programs also imply the creation of new jobs."

    Sarkisian also referred to some international evaluations, including
    those made by Moody's International ratings agency, predicting
    stability for Armenia in the immediate future.

    But he added: "All predictions made in the world today change every
    week and it is conditioned by the circumstance that the global
    financial and economic crisis is gathering new momentum and there is
    no methodology or institution that would be able to make precise
    predictions as to how long this crisis will last and what impact it
    will have on developing countries. So, I think it would be more
    correct if instead of spreading pessimistic sentiments, which by
    itself creates negative expectations and deepens the crisis, we should
    speak realistically."

    Sarkisian concedes that Armenia is expected to end the year with a
    tremendous foreign-trade deficit, with imports exceeding exports
    nearly fourfold.

    But he cited the example of the United States, which "in the past 28
    years has imported more goods than it exported and by no means is
    among the world's worst economies."

    "Naturally, Armenia has a very serious problem, that is, structural
    readjustments are taking place, a new structure of the economy is
    emerging, and we should be able to understand what the future of our
    economic system is and what structure our economy should have,"
    Sarkisian said.

    "Many dream of the day when we will have a strong machine-building
    sector, when we will manufacture and export goods like those in China
    or India. But I think all realize well it is not a future for us," he
    added. "Our strategy is to focus on an economy based on labor and
    intellect rather than materials, which means that we should primarily
    pay attention to the balance of payments, not the export of
    commodities, but the export of services, and carrying out economic
    activities not only in the territory of Armenia, but also in its
    worldwide diaspora."

    The prime minister is hopeful that Armenia will manage to carry out
    successful reforms required for continued U.S. government aid under
    the Millennium Challenge Account.

    "We have, indeed, made pledges to our own people to make these
    reforms, also in terms of forming a system of good governance. It is
    not a secret that we do have numerous difficulties, such as
    corruption, bribery, an ineffective governance system, low revenues,
    the presence of more than a hundred thousand socially vulnerable
    families, and we should overcome these difficulties also due to the
    Millennium Challenge Account program," Sarkisian said.

    "We are extremely grateful to our American partners for the technical
    assistance that they have rendered to the Armenian government so that
    we can overcome all these existing difficulties," he
    added. "Therefore, we have developed a clear program, which has also
    been appreciated by the Millennium Challenge Account office. And the
    program of these measures has a timetable and people who is in charge
    of ensuring its proper execution."

    Government Reforms

    Sarkisian also rejected allegations by some government critics that in
    the past several months the central bank has reneged on its adopted
    "floating" policy for currency exchange rates and has sought to keep
    the national currency from depreciating against major world currencies
    with financial interventions on the foreign-exchange market.

    "Our concept that we have developed together with the International
    Monetary Fund in 1993 implies that Armenia sticks to the so-called
    "floating" exchange rate policy for its national currency, which means
    that it is formed by the supply and demand existing on the market. We
    have remained committed to this policy and will stay committed to it
    in the future. We are not going to make artificial interventions in
    the formation of the exchange rate because it is fraught with many
    consequences," he emphasized.

    Sarkisian also spoke in favor of creating equal conditions for
    competition in the agricultural sector, though he said this would not
    include protectionism. He also said that beginning next month, large
    agricultural enterprises will have to pay value-added taxes like
    enterprises in other sectors do.

    "This strategy implies that agriculture, like in any country of the
    world, should also be taxable," he said, noting that the sector has
    been exempted from all taxes thus far.

    The prime minister also reiterated the government commitment to fight
    corruption and stressed the role of the active engagement of
    civil-society organizations and opposition political parties in the
    anticorruption measures.

    "That's why I urged all opposition political parties to have an active
    participation in our anticorruption program, in particular through
    monitoring, which is one of the key instruments," Sarkisian said,
    adding that this control will essentially increase public faith in the
    program and will raise its efficiency.

    Rejecting Restrictions

    Responding to the question about the state of democracy in Armenia in
    a year that has seen plenty of criticism from various international
    organizations of how Armenia has been handling its worst-ever internal
    political crisis, Sarkisian said: "Freedom of speech, democratic
    values do not imply that our country should be sliding into
    chaos. Freedom of speech is not arbitrariness. People should also have
    a sense of responsibility."

    In particular, he responded to opposition claims that the authorities
    restrict its freedom of assembly by refusing to provide space for its
    political gatherings.

    "We provide the government conference hall to organizations on a
    contractual basis and if so, the rules stipulated by the contract must
    be respected," he said. "We have added one point to our contract that
    if an organization fails to observe the rules, then it does not get
    the conference hall at the second time of asking. This is a democratic
    approach.... If we do not respect our word ourselves, no one will
    respect it."

    Sarkisian also denied any political implications behind the
    parliament's decision to suspend the tenders for TV frequencies in
    view of the mandatory digitalization of broadcasting in the
    country. Government critics say the move is primarily aimed at
    preventing A1+, a television station critical of the authorities, from
    returning to the air after it was controversially pulled off in 2002.

    Sarkisian said he regrets that the decision to postpone tenders for TV
    frequencies has become a matter of political speculation.

    "All international organizations with which I have dealt with
    regarding this matter fully accept our reasons. Furthermore, we had no
    alternative to this decision," he said. "We could not announce a
    competition for two years because we have an international commitment
    to achieve digitalization in the broadcasting sphere and time should
    be given to the private sector to get ready for the tenders in which
    this transition that we must complete within five years should be
    considered."

    The prime minister also disagrees that financial penalties against
    Bjni, a leading mineral-water producer, are in any way linked to its
    owner, pro-opposition lawmaker Khachatur Sukiasian, who has been in
    hiding since the start of the government crackdown on opposition
    members who backed to former President Levon Ter-Petrossian in the
    February presidential election.

    "I do not agree that there is any political persecution in this
    case. But I agree that one must not be persecuted for political views,
    especially in the economic sphere," he said. "As for Bjni, it is
    obvious that the company made serious violations, evaded taxes. And I
    would want you to focus on this issue in the first place. Didn't it in
    fact evade millions in taxes? It is essential to answer this question
    and by answering it we will refrain from such political speculations.

    "The exercise of tax control started a long time ago and it concerned
    not only Bjni, but also other enterprises, including those working in
    the same sphere. Such violations were found at many enterprises. But
    unlike Bjni those enterprises admitted their fault and fulfilled their
    tax obligations. Meanwhile, Bjni is trying to politicize the matter to
    avoid fulfillment of obligations that it has toward the state budget,
    which is inadmissible," the prime minister concluded.


    Source: RFE/RL
    By Anna Israelian, Ruben Meloyan
    Friday, 2 January 2009
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