Yesterday the permanent representative of the International Monetary Foundation (IMF), Ninke Omes told journalists about the opinion of the executive directors of the mentioned institution spoken on November 22. The mentioned document appreciates the economical growth, inflation limits, the fiscal and monetary policy implemented by the existing government and the reformation in the system of fiscal and monetary policy. We wander why they are late to publish this document.
“This was a very long bureaucratic process. The main reason is the fact that first of all it had to be approved by the government, thus we need much time before the government would approve the mentioned document”, said N. Omes. However, the IMF representative said that the mentioned document and the statement of the working group were published on December 12. By the way, this document is not translated into Armenian.
“We think that there are many development opportunities in Armenia. For people that are not informed about Armenia it is enough to observe the macro-economic digits. Those digits and marks can describe Armenia in an interesting manner, but it does not mean that everything is good in Armenia. Poverty has been reduced in Armenia, but still over 30% of citizens are down the poverty line (receiving less than 15.000 dram a month). The official statistical unemployment digits are low, but according to our non-official sources, unemployment covers 20-30% in Armenia, which is too high” said N. Omes. As an example of problems the latter spoke about low tax incomes and said that even though the tax incomes had been increased, they were still much lower than the real potential. “The reason is not the fact that tax dues are low, but the fact that many businesses don’t pay taxes or pay less than they have to. The corruption and shady economy level is too high in Armenia too”, said the IMF representative. However, they said that the IMF targets macro-economy and they are not experienced in fighting corruption.
In the previous statement the IMF expressed their concerns about the relationship of the taxes and GDP in Armenia (tax/GDP relationship covered 14,5% in 2005). The IMF expects this mark at 14,7% this year. “This means that the growth of tax incomes has exceeded the GDP growth. The GDP growth is mainly conditioned by construction business development, which mainly is not taxed. If the mentioned growth in construction did not exist, the GDP would not grow, but would fall. Agriculture is not taxed either. These are the reasons why the taxation department cannot increase the taxes/GDP relationship. It is lower than the planned mark in the document of poverty reduction, which was planned as 16,2%”, said N. Omes.
The IMF representative also said that the Armenian government should not revise the inflation mark and change it very often like they did this year (at the beginning of the year they defined it at 3%, but in August they revised it and defined at 5%). “By changing the inflation mark every month people will lose their trust to the monetary policy” said the IMF representative.
The mentioned IMF report contains some actions to be done by the Armenian government by the end of this year. Thus, the government should develop recommendations to the parliament to amend the law on non-governmental organizations for the purpose of clarifying some points in their activities. “The number of organizations that are obtaining a status of non-governmental organizations tends to growing every year. However, they are not included in the budget and there are some problems connected with monitoring of those organizations” says N. Omes. The latter also says that the IMF wants the parliament to amend the law on banking secrecy too so that the CB can publish information about the banks that have had failures and the supposed penalties. According to them, this will enable citizens learn information about banks and see which of them are more confidential.
The IMF document contains one more interesting point: “The directors petitioned the government to prepare a long-term strategy targeted to stopping gas financing by the end of 2008 and provide full self-financing for the purpose of decreasing mid-term fiscal risks”. Concerning this point N. Omen says that it “is not transparent enough”. “It is not clear what they have agreed with “Gazprom”. The financing methods are not transparent since they are not written in the budget and are managed by the defense ministry. The next problem is the fact that the mentioned financing is not effective and the target group, the poor, can’t use that opportunity” said N. Omen.
It is very interesting that when preparing the mentioned report the IMF based on the official information provided by the state statistics department, ministry of finance and economy and the Central Bank. “The IMF does not have the opportunity to observe all the information in details, but we do analyze it. Thus if there are strange things we discuss them carefully” assured N. Omes. The latter brought an example connected with money transfers to Armenia. According to the CB information (monitored the money inflow through banking transfer systems), in 2005 the capacity of money transfers exceeded one billion dollar. “We think that this sum is overstated. When we analyzed that information we saw that some part of that transferred money can’t be considered as private money transfers since most of that money was sent to be invested in real estate property in Armenia” said N. Omes.