A philosopher once said- all you need is one minute to get amazed and many years to do amazing things. This philosopher, who has lived in ancient Greece, would be amazed if he were to live in Armenia. As for us, we have simply gotten used to it all and don’t get amazed.
We are not amazed when we hear about marks, especially economic marks and especially when officials talk about that. However, recently the foreign “Heritage Foundation” fund, which has a pretty high reputation, really amazed us. In the 2006 “economic liberalism” index, Armenia shares the 27th place with the Bahamian Islands and Japan and is ahead of Spain, Norway, Italy, Sweden and many other “less liberal” countries. We have talked about this index before. At the time (2005), when Armenia was in the 42nd place, we said that the economic liberalism index doesn’t mean that we can compare our economy with the economies of France and Japan. We have simply been graded well and that is why we have went up the ladder.
We got 2 points for foreign trade, taxes, government interference in economy and standards for salaries and prices. In other words, we are doing well. Let’s recall that the norms are evaluated on a 1-5 grading system. If the given field is given a grade of 1, this means that everything corresponds to the free market economy standards. We have two fields that have gotten this grade-flow of capital, foreign investments/bank system and finances. Whereas we can accept the grade for the first field, in other words, no limitations set on flow of capital, opening/using international bank accounts, not everything is “ideal” in the banking system. Specialists of the “Heritage” fund claim that the legislation on banking and control has improved, the number of banks have decreased by two times, and the specific weight of the banks with international capital is rather large. The only obstacle in this field is that trade banks have problems with returning loans, which can be explained by the imperfection of the judicial system.
Of course, the abovementioned is correct, however, the reality of it is that banks in Armenia don’t do their real job which is to collect the miscellaneous money of citizens and use that for business purposes. If anyone in Armenia says that he plans on getting a loan from the bank in order to start a business or enlarge it, people will simply laugh at that person. Banks usually give small loans for a short period of time to redeem. That is not enough for starting a business, especially if we take into consideration the percentage rates of the loan. It’s the same with hypothec loans, although there are discussions about taking certain steps in this field. We must mention the fact that people have started to trust the banks more during the past couple of years ago, however, many still don’t believe in the banking system and prefer keeping their money under their beds rather than in banks. There are objective sides to all this, but giving a grade of 1 is pretty extreme.
According to sources, our Central Bank has “helped” the “Heritage” specialists in grading this field. We can probably explain this by the 2 points (good) given to “financial loans policy”. Foreign specialists have most probably not paid attention to the verifications about the low inflation rise. They have only stated that the average inflation rate in Armenian throughout the years of 1995-2004 has been 5.71%. But what they didn’t talk about how the dollar-dram exchange rates went up and down and didn’t give any reason as to why didn’t.
The most important standard in a market economy, the right to defend property, was given the lowest grade-3. They probably heard about what happened on Buzand street…Shady economy received a lower grade-3.5, although, according to “Heritage” specialists, this number has increased by 0.5 since last year.
The government system has received a very low grade-4. “The business environment continues to be risky, not only because the laws in favor of business are not applied, but also because of corruption,” states the publication. What’s interesting is that the grades given to the system and the criticisms have not changed during the past couple of years. You get the impression that our officials are the ones causing the most problems in our country. What’s even more interesting is that they are the ones that are mainly talking about our high marks in the index. Too bad that we are not in a pre-election period and this kind of document is not taken into account.
In order to not make an impression that we are trying to criticize everything, I must say that it is great that we are placed 27th in the index. In any case, with this index Armenia’s business environment will attract more foreign investors with potential. However, any Armenian who tries to start a business when he doesn’t even have the means, will hardly agree with the fact that our economy is that liberal. After all, each country must first of all think about its citizens and then others.