Several days ago the deputy-minister of economy Moushegh Toumasyan stated that the ministry is revising the predicted index of GDP for 2009. By saying that Toumasyan agreed with the forecast of the European Bank of Reconstruction and Development (EBRD), according to which the actual GDP growth in Armenia will amount to 5.5%. Reminder: Earlier the EBRD forecast an 8.3% growth and according to the state budget of the RA the GDP was planned 9.2%. In the opinion of the former mayor of Yerevan, economist Vahagn Khachatryan that 5.5% is not a realistic forecast either.
“What the European Bank is saying is indeed based on serious calculations but as they rely on official statistics and our statistics have serious problems in terms of their accurateness. And that number is going to be lower. Metallurgy was among the economy branches, which provided most of Armenia’s GDP. Its future for at least 5 years is not going to be bright according to the specialists of the international economy. The main sector, which provides growth, the construction sector, even according to statistical data decreases. There would hardly be growth in the chemical production; neither would there be growth in trade and services sector because the latter depends on the amount of remittances, which drastically reduces at this stage. There are serious issues in the agriculture sector especially connected with the fact that this sector is soon going to be taxed,” mentions Khachatryan. Unlike him, deputy-chairman of the NA standing committee on economic issues, NA MP from the Prosperous Armenia faction Vardan Bostanjyan thinks that the economic growth of 2009 will be no less than 5.5%.
“Due to the economic crisis the 9.2% growth of the GDP, which we planned by the budget, cannot obviously be realized. But I think the growth cannot be less than 5.5%. We should work in that direction because all the initiatives of the government and the projects that are being implemented should definitely provide 5.5% growth. Below 5.5% will be failure for us but even a little higher growth than that will be a real achievement for us,” says Bostanjyan. But economist, deputy-chairman of the heritage party board Movses Aristakesyan had a hard time mentioning any prediction regarding the GDP growth. “I don’t have personal calculations to say whether this 5.5% is realistic or not. At any rate it’s good that the government realized that it won’t be able to provide the forecast index of the GDP. They confess that the international crisis affected us now,” says Aristakesyan. “We have been saying since September that the numbers reflected in the budget were not realistic. At that time they were telling us that there is no need to make the people panic. I am surprised that the deputy-minister confessed this fact. Finally they realized that,” mentions Vahagn Khachatryan. According to him the low GDP rate also provides low tax collection. “Unfortunately the tax revenues don’t show how much each sectors pays tax. There is data only on the VAT, income and profit taxes. For example, the factory of Agarak has been shut down since yesterday. If we consider the fact that only Agarak factory will not be paying taxes we will see that the GDP will decrease. There is only one way for the government to realize its budget project. They should get loans from different countries but this will cause budget deficit and increase of state debt.” The chair of the NA standing committee on financial and budgetary issues Gagik Minasyan says that there are no plans yet in the NA to revise the tax revenues of the budget.
“Even if the government has a project to revise the budget incomes the NA hasn’t received any document yet. This phenomenon exists in many countries of Western Europe, post-Soviet states and the parliaments of these countries revise the budgets and change the planned forecast of the budget index. I won’t be surprised if the same thing happens in Armenia. I don’t know to what extent the prediction will be cut. The NA doesn’t have such tools,” mentioned Minasyan. In the opinion of Bostanjyan at the expense of loans received from various international organizations perhaps most of the budget will be covered. Although there will be the need to cut some of the budget expenses. “The means of international financial institutes may help us overcome most of the problems however we should cut the expenses of the budget to a certain extent. Indeed we cannot cut from the social or defense sectors. I think general state expenses will be cut,” said Bostanjyan. Khachatryan once again mentioned that the government should have thought about the impact of the international crisis before adopting the budget bill. “They didn’t take the risk to confess that. They even lied to the metallurgy companies by persuading them to pay salaries and that everything is going to be OK from February. February came and we are facing the same miserable situation. All the agreements (Iran-Armenia railroad, roads, oil refinery, etc) that Tigran Sargsyan was fond of speaking vanished. This is how they cheated the people in order to maintain their power.”