Yesterday RA Prime Minister Tigran Sargsyan made a speech at the National Assembly of Armenia, which related to the budget of 2009. As usual Sargsyan read a little lecture for the RA MPs, which related to the financial crisis, its reasons, consequences and the lessons learned from the crisis.
Armenia’s prime minister spoke of the risks that the country faces in view of the continuing global economic crisis as he visited parliament for a state budget. Addressing lawmakers from the parliament tribune Tigran Sargsyan said, however, Armenia is ready to face up to the challenge and make sure the crisis has a minimal impact on the country’s developing economy. Among the risks for the Armenian economy created by a continuing global market decline the premier, in particular, mentioned dwindling and delayed private investments, shrinking private remittances, a temporary halt in the mining industry pending a surge in international prices for minerals, some delayed investment projects and reduced investment activity in the construction sector, which has so far been a key driving force behind the country’s robust economic growth. Sargsyan also said that reduced consumption and negative expectations among creditors might come on the heels of these negative trends. At the same time, Sargsyan sounded optimistic about the ability of the government to continue to maintain a steady economic growth for the years to come. “Our economic growth will be essentially shored up by the construction of a new nuclear power plant and the Iran-Armenia railway, the establishment of a pan-Armenian bank as well as mortgage-loan and investment foundations,” Sargsyan said. The projects were first announced by President Serzh Sargsyan who said in a major policy speech in parliament in early October that they will be a high priority on the government’s economic agenda in the coming years. Premier Sargsyan also announced expected allocations from the Asian Bank that will, in particular, target the initiative of building, through the Bank’s assistance, a highway connecting Armenia’s southern region of Meghri with the Georgian Black-Sea port of Batumi. Armenia also expects some $800 million in loans as a result of its ongoing negotiations with the World Bank, the premier announced. According to Sargsyan, the establishment of free economic zones in the airports of capital Yerevan and the country’s second largest city of Gyumri is also on the cards. Armenia’s government is taking extra precautions to tackle new economic challenges. “Fortunately, the first wave of crisis has passed Armenia’s financial system, but we have to meet new challenges, as an economic slowdown usually follows a financial crisis,” the premier was quoted saying. The prime minister has charged to set up a commission to discuss business proposals. “We will announce bids for those programs in order to fulfill business objectives and provide job placement opportunities,” Sargsyan added. The government will offer state guarantees for enterprises. “The government will have a share in the capital enterprises, so that it can have a clear idea of their business programs and control them,” the prime minister said, adding this can help local business avoid losses. “Following the example of developed countries, we will increase subsidies to the private sector in order to meet possible challenges,” Sargsyan continued. The government will make public all those programs, according to the premier. “Unfortunately, we have few business programs,” Sargsyan said, adding a few months ago the government charged the governors to study business environment in their regions. “We have asked the National Academy of Science to make its own suggestions,” Sargsyan said. The commission under the prime minister’s supervision will try to find practical and effective solutions to existing problems. Investments in construction of Armenia-Iran railway will total $2bln. The large-scale program offers good investment opportunities, the premier said, adding the government has negotiated with the private investors over their possible participation in the project. Armenia’s Transport Minister Gurgen Sargsyan previously said the World Bank and the Asian development Bank would co-finance the railway construction project. It has been fixed that one of the sections of the railway will pass though Jermuk-Meghri. The railway is likely to pass through Sisian and Kapan. Some 100km of the railway will pass though Iran, with the starting point being the Armenian border. The last station of will be Merand in Iran. Specialists say the railway will be constructed in six years. In soviet times, Yerevan-Yeraskh-Nakhijevan (Azerbaijan)-Meghri railway, which does not work now, used to link Armenia and Iran. The new railway will pass through the territory of Armenia, opening an alternative route for imports. The only railway linking Armenia and other countries passes through Georgia. The prime minister stated that thereby the government will give assistance to the private sector. “There will be programs for extending businesses or programs to set up new businesses and to create new jobs. We will discuss all that. We have established a new toolkit to interfere and tackle negative impact. In particular, we will provide state guarantees to those organizations which need them and will present programs which will meet our requirements. We will buy shares of those companies which will enable the government to get precise information about the implementation of those programs, the financial state of those companies, as well as manage the companies, which will enable us to sell those shares in future, which means the government will not sustain losses but will support business. We will grant subsidies and use all the other mechanisms which the developed and developing countries are adopting today as tools for tackling the negative impact,” Tigran Sargsyan stated. He said there are two options. A policy of existence is adopted, that is extinguishing fires that occur in one place or another, or we are proactive and adopt an economic policy which will use the possibility of the global economic crisis and foster economic development. Prime Minister Tigran Sargsyan said the global economic crisis creates opportunities for developing countries since the capital escaping the crisis of major developed markets tends to seek for more stable environment, and the Armenian government will be trying to get Armenia to benefit from this tendency. By the way many of the MPs, in particular the Republican MPs, deserve double thankfulness because they had to listen to the same speech 2-3 days ago at the session of the RPA session. Or maybe they realized that revision is the mother of wisdom.