At the end of the last week the delegation of the World Bank (WB) was in Armenia. The delegation was headed by the managing director of the WB Ngozi Okonjo-Iweala.
That is the reason that despite the fact that the visit was over the weekend, on Sunday, the interest level of journalists was very high. So the journalists agreed to devote two hours of their Sunday to the meeting with Ngozi. Mrs. Ngozi was also interesting because of the fact that she reached her high position in the World Bank by not representing a developed country but Nigeria. Let us mention that she has a very good education (graduated from Harvard), headed the Ministry of Finances of Nigeria several years and she succeeded in providing macroeconomic stability, economic growth and the country attained a reputation of a reliable debtor. And her extraordinary outfit and the innocent habit of forgetting the presence of the translator wouldn’t let us regret about our attendance to the event on Sunday. Thus, on Saturday the delegation headed by Ngozi met with Armenia’s Prime Minister Tigran Sargsyan and his economic team. As the official statement says the Prime Minister briefed her on “the course of ongoing reforms that are primarily aimed at improving tax and customs administration. He said the success of those reforms would significantly improve country’s business environment and expressed readiness to engage foreign experts in their implementation. It was stressed at the meetings that Armenia has been severely hit by the crisis, because of strong dependence on a few sectors for its growth, and on remittances for the financing of investment, but has responded appropriately to the crisis, which was not of its own making. It also entered the crisis with some strength, thanks to a well-capitalized and liquid banking system, a low level of public debt, and a small fiscal deficit. Sargsyan emphasized that the government is implementing a wide-scale program and pay a great deal of attention to anti-crisis projects aimed at infrastructure development, activation of small and medium businesses. Tigran Sargsyan declared tax reform a top priority shortly after being appointed prime minister in April 2008. He swiftly managed to reduce, with President Sargsyan’s assistance, bribery and favoritism within Armenia’s notoriously corrupt customs service. Although the official statement of the government doesn’t say anything about the plans of the Armenian World to overcome the crisis but most probably they have spoken about that as the WB managing director hailed tax and customs administration reforms and anticorruption programs and said that the progress seen in Armenia inspires confidence in success and lays ground for supporting new projects. She pointed out that although the global financial and economic crisis was unprecedented, Armenia reacted properly to it. This gives ground for hope that the reasonable economic policy pursued the government will pull out the country from the row of underdeveloped countries and will make it fit to join advanced states, she said adding that the World Bank and International Financial Corporation supports Armenia’s efforts. The WB managing director welcomed the Armenian World Concept and said that this policy is one of Armenia’s competitive advantages. Of course, as it was expected Mrs. Ngozi didn’t save any words of eulogy addressed to the Armenian government. She also said that Armenia’s successful cooperation with the World Bank sets a good example for other countries. Sargsyan’s commitment to reform is also acknowledged by local commentators. However, few of them think that the former governor of the Armenian Central Bank has the political clout and power to affect the kind of changes that are sought by the World Bank. “You can deal with the technical issues but what you need is a political will to say, “Look, we are going to have zero tolerance of corruption in these areas,” Okonjo-Iweala told journalists the next day. “So we hope the prime minister will get support — and I hope to meet with the president — and that there will be support for this zero tolerance.” Okonjo-Iweala also called for a sweeping reform of tax and customs administration, the creation of a “strong and independent judicial system” as well as a tough fight against government corruption. “You have to fight corruption very strongly if this economy is to have a chance to grow in the future,” she stated. “The World Bank is very proud to team up with the Government and local communities for the implementation of these impressive projects, which in one place enable people with economic opportunities, in another area provide better access to social services, while generating employment at the local level at a time of economic contraction.” said Ms. Okonjo-Iweala. “But it is important that these investments are maintained and that the central, regional, and local authorities provide adequate maintenance financing for them”, Okonjo-Iweala said. "One thing that the crisis has taught us all is our interdependence. While this has added to the global nature of the current crises, it is also a source of strength for investment and growth. Working together with the governments, our development partners and civil society, the Bank is helping improve the lives of the people in the South Caucasus and elsewhere. Together, we can help ease the crisis and enable the countries embark upon a new trajectory of growth, development and social progress," Okonjo-Iweala said. When asked to comment on the perception that the Armenian leadership has a vested interest in preserving the existing economic system, Okonjo-Iweala said, “I think this is a question that the Armenian people will also have to work on and decide for themselves. But obviously it will be in the self-interests of everyone in the country, both policy-makers and citizens, if more competition is introduced.” Armenia will not reach a higher level of development unless its leadership changes the oligarchic structure of the national economy bolsters the rule of law and shows “zero tolerance” of corruption, the World Bank’s managing director warned over the weekend. “I think you can only go so far with this economic model,” Ngozi Okonjo-Iweala said. “Armenia is a lower middle-income country. If it wants to become a high-income or upper middle-income country, it can not do so with this kind of economic structure. That is clear.” However, during the first phase of the crisis both the WB and the IMF would ensure Armenia that the country is able to withstand the impacts of the global crisis. To this remark of ours Mrs. Ngozi said that nobody could ever predict what the impact of the crisis would be (and our government preferred to be silent about this) and to what extent the foreign remittances would decrease. And then she clarified that by “strong position” they meant the stable economic system, low level of state debt, etc. And the head of the WB office in Armenia Aristomene Varudakis prompted that the banking system was quite capitulated as well. As much as we understood if we were not strong enough and if the government hadn’t done a great job we would probably not have had a state by now. For the sake of justice let us mention that besides the words of compliment Mrs. Ngozi also brought up the issues, which don’t enable the economy to move forward. She first of all signified the issues of competition in the competition field by saying that the economy needs to be diversified. In her words, in regard to increasing the level of competition new opportunities are created for Armenia by considering the agreement on free trade with the EU states and the possible opening of the Turkey-Armenia border. Besides that, according to the WB representative in the post-crisis phase the government should continue the reforms in the tax and customs fields, which will provide additional budgetary inflows. And indeed, she once again recalled the importance of having a strong and independent judicial system. “If there is progress around these issues the republic will have grounds for development and strengthening,” mentioned Mrs. Ngozi. Everything is correct. If the above-mentioned turns out to be reality then there will be grounds for the development of economy and the international structures will have grounds to praise the government. But at present, all we receive are recommendations addressed to the managers of a groundless economy.