IMF Leader Urges Better Investment Climate

YEREVAN (Noyan Tapan)–Improving the investment climate must become a priority for the Armenian economy–Director of the European Department of the International Monetary Fund –John Odling-Smee stated in Yerevan.

In his presentation regarding the analysis of the economic situation in Armenia in the 90s–Odling-Smee stressed that in spite of the economic growth of recent years–which is yet smaller compared to international standards–it will take about ten years for Armenia to be able to reach the production levels registered before the crisis.

Among the factors hampering the development was the financial crisis in Russia in 1998 and the political crisis in Armenia in 1999. According to him–experts in the West are even surprised to see how Armenia manages to register an economic growth in such conditions.

The interim strategic program financed by the International Monetary Fund–according to the speaker–makes improvement of management systems and anti-corruption struggle especially important. The IMF also believes that Armenia may considerably improve the level of tax collection and government spending. Reforms–according to Odling-Smee–may yield desired results if they are carried out through the assistance of society–when society believes that the state expenditures serve the whole society rather than the interests of separate groups.

It is undesirable for Armenia to be listed among the poorest nations of the world possibly asking the developed nations to write off its debts–Odling-Smee added.

Speaking at American University of Armenia he motivated this standpoint by the following argumen’s. Although according to the gross domestic product per capita criterion (less than $700) Armenia falls under the definition of poor countries–its debt burden is considerably less than that of the world’s poorest countries and some former Soviet republics (Moldova–Georgia–Tajikistan).

"Armenia–if willing–can service its debt," said Odling-Smee. Secondly–explaining that the writing-off of the debt will have a negative effect on the reputation of the country:

Not only private creditors–but also the states will not want to lend credits to a country that declares inability of repaying its previous debts–stated the IMF leader.

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