Armenia’s Economy Not Hindered by Karabakh Issue Sandoryan Says

YEREVAN (Noyan Tapan)–Economy and Finance Minister Edward Sandoyan stated that the Karabakh issue did not pose obstacles to the economic growth in Armenia.

"There is no Karabakh problem any more–we’ve resolved it," he said–immediately explaining that the matter concerns the economic aspect only–a sphere in which he is an expert.

The minister described the existing drawbacks in the country’s legislation as the most serious setback to foreign investors who are not certain that their interests in Armenia will be protected.

He said that is was essential that Armenia had no international economic rating.

"The lack of an appropriate judicial system costs investors one Karabakh plus ten countries like Chechnya," said Sandoyan. He also pointed out that the first half of 1998 was successful for Armenia–mainly due to the breakthrough from the point of view of investmen’s.

In the first half of 1998 the volume of investmen’s totaled 49 billion drams–which is eight times as much as reported for the corresponding period last year.

However–he said–this growth will break if the government fails to continue its constructive reforms–among which were the reconstruction of the water-supply system–the privatization of the energy sector and the strengthening of the role of the judicial system.

The first half of this year was marked with several important changes–such as an increased budget and broader tax basis. A 69.2 billion drams’ worth of revenue to the budget have already been secured–which is one and a half times as much as the figure reported for 1997.

A 45.3 percent tax revenue and 40 percent budget expenses were implemented–which was much more than previous years.

Among the circumstances contributing to this progress the minister mentioned the revised principle of taxation–according to which the levy of value-added tax and excise duties was implemented "immediately at outlets" and the daily planning of budget expenditure was made jointly with the Central Bank.

Sandoyan highly commended the recently adopted law "on fixed paymen’s" and the government’s decision to standardize the financial documentation–stating that they would simplify the business of taxpayers and minimize their problems with the tax inspection.

"Until recently a businessman–when making a deal–didn’t know how much he has to pay to the tax inspection," Sandoyan explained.

The minister reported that the long-term programs of the government until 2001 inclusively envision a seven percent annual growth with 10 percent inflation.

He added that the ministry planned to introduce a pre-shipment inspection in the customs system to eliminate a subjective approach to customs service.

Sandoyan reported that the government planned to set up a fund with a preliminary capital of about $1 million to provide guarantees to foreign investors. The fund is expected to be expanded specifically based on allocations from the Diaspora.

Sandoyan also stated that an agreement had been reached in the matter of the Kirk Kerkorian allocations under which the earlier indicated term of three years for the repayment of the loan has been extended.

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