As it’s known the government of Armenia consents all of its economic policies with international structures – the International monetary Fund, World Bank and other organizations. Of course the reason is not that they underestimate their knowledge and skills but because they periodically receive money from those organizations. However, when it comes to statements sometimes the “solidarity” between our government and the international organizations is infringed. This was once again expressed yesterday during the press conference of the director of the Armenian office of the World Bank Aristomene Varudakis. The journalists asked whether Armenia has overcome the crisis with honor as was claimed the minister of economy of Armenia Nerses Yeritsyan. Varudakis questioned this claim, saying that the January growth only means that “the acute phase of the crisis is over.” “But it doesn’t necessarily mean that the crisis is over because the economy contracted by 15 percent last year,” he said. “If it grows by 2 percent this year and perhaps 3 or 4 percent next year, it will take three to four years for the economy to come back to the income level of 2008,” Varudakis told a news conference. “So it is very likely that the economy will remain weak for quite a prolonged period of time.” Armenia’s Gross Domestic Product increased at an average annual rate of around 10 percent in the decade preceding the recession. The Armenian government forecast late last year a GDP growth rate of 1.2 percent for 2010. A senior official from the International Monetary Fund said last week that it could exceed 2 percent. Varudakis stood by the World Bank’s view that renewed robust growth is contingent on a greater diversification of the Armenian economy that in turn requires a radical improvement of its investment climate. He said the authorities in Yerevan have taken some “steps in the right direction.” “But I think what is missing there is some bold initiatives, bold and ambitious steps to reduce the role of oligopolies in the economy,” stressed Varudakis. “As long as some important markets, especially for imports, are dominated by oligopoly players, this reduces the possibility for other market entrants, especially small enterprises to grow and make money and invest in other sectors of the economy.” “Also, it will be very important to have transparency regarding possible linkages between dominant businesses and public officials,” he said, clearly referring to the widely held belief that the so-called “oligarchs” enjoy high-level government patronage. Moreover, it is too early to speak about the overcoming of the crisis in Armenia because even the developed countries shun making bold statements on that. For example, in the US GDP growth was registered but the unemployment level is still very high and real estate price is really low. According to Varudakis if globally the economy restores slowly then it will definitely affect Armenia, for example, the copper price, investments and foreign remittances. As of the lauded banking system of Armenia then Varudakis thinks that the banks have major liquidity but they don’t fully use it to recover the economy. Yesterday among the themes was the foreign debt of Armenia. Aristomene Varudakis also said Armenian banking system has high liquidity level both in hard currency and Drams, but he added that it is not used fully for allocation of loans. The 2010 government budget projects a 1.5% inflation for 2010. The IMF projects a 6% inflation. Armenia’s foreign debt may grow next year to 45% of its GDP and to 50% in 2012. Speaking Varudakis, said this situation is not dangerous, because the bulk of the foreign debt are loans, allocated at privileged terms. Varudakis said further that the government should use any opportunity to attract loans at concessionary terms and get more taxes. Let us mention that our government signifies very much this advice of the World Bank and starting from the beginning of the year it has done its best to increase the inflows of the state budget. For example, the National Competition Council, according to Varudakis, may activate tourism in the country. He once again mentioned the importance of diversification of the economy and prevention of oligopolies. But he says that harsh and decisive steps are missing especially when fighting against oligopolies and reforming customs administration. Varudakis believes that the opening of the Armenian-Turkish border will play a key role in the fight against oligopolies, as a result of which not only the costs of exportation or importation will decrease but the competition will be more active. Besides that, the opening of the border will have a positive impact on the region. Prime Minister Tigran Sargsyan has publicly acknowledged the need for such reforms. Addressing parliament in November, he said the oligopolistic structures “pose a very serious challenge” to the state. Some observers believe, however, that he lacks the power and political clout to take on them. Varudakis commented on the economic situation as he announced the disbursement of two fresh World Bank loans to Armenia worth $12 million. One of the loans worth $7 million is designed to finance infrastructure projects in 35 mostly rural communities across the country. The bank already financed such projects last year as part of its efforts to help the authorities mitigate consequences of the crisis. Its overall anti-crisis lending to Yerevan totaled $280 million in 2009. “But this doesn’t mean that concrete businesses should be targeted. The customs administration should be able to create equal conditions for everyone.” “This also doesn’t mean that concrete businesses should be targeted. Simply equal conditions should be created to ensure that each person can do business. The relations between dominant importers and state officials should be transparent,” says Varudakis. Can you find anything wrong in the words of this person? Hardly. But the interesting thing is that the members of the government are saying the same words. So do all the dominant businessmen and oligarchs, who do their best to exclude equal business conditions in Armenia. As of the exclusion of targeting concrete businesses we indeed agree with Varudakis. The problem is that the government, which Varudakis has great expectations from, has showed its courage by targeting the business of Sukiasyans. “This is a question, which we cannot avoid. The targeting of concrete businesses and the creation of obstacles for concrete businesses may create dangerous impact on the country,” during yesterday’s press conference said Aristomene Varudakis as a response to the question of our reporter as to what extent could the arrest of Saribek Sukiasyan affect the business environment of Armenia. “I think the government is aware of this,” added Varudakis. But it remained unclear what Varudakis meant when he said that the government is aware – of the arrest or the consequences? On the other hand it doesn’t change anything.
