IMF Delegation Endorses Armenian Tax Reform Program

YEREVAN (Combined Sources)–A delegation from the International Monetary Fund gave the Armenian Government a green light to implement its new tax reform program during official meetings on Tuesday with Prime Minister Tigran Sargsyan and other high-ranking Government officials.

The IMF delegation was headed by Martha Castello-Branco, and included the IMF resident representative in Armenia Ninke Umes, as well as other officials from the IMF Armenia Office.

According to the Government’s Press Office, the focus of the meeting was the Government’s macro-economic policies and overall structural reforms.

The high profile meeting was also attended by a presidential aide on economic issues, Armenia’s finance and economy ministers, the country’s tax services chief, the Chairman of the Central Bank of Armenia, and the Chairman of the Parliamentary Committee on Economic Affairs.

The delegation presented Sargsyan with the IMF’s report on Armenia’s tax reform program. The IMF report described the program as comprehensive, and acknowledged its aim to reduce poverty, maintain growth rates and decrees corruption.

The IMF is encouraged by the tax reforms that the Armenian Government has set out to enforce, according to Castello-Branco, who added that the new tax policies are in compliance with IMF standards.

The only thing the Government must do now, according to the report, is to implement a number of suggestions and proposals presented in the IMF report.

According Sargsyan, Tuesday’s discussions will serve as a basis for fresh negotiations between the Government and the IMF for new cooperation programs

Improving Armenia’s business environment has emerged as a top priority for Prime Minister Sargsyan, a former chairman of Armenia’s Central Bank, and newly inaugurated President Serzh Sarkisian (no relation to the prime minister).

In April, Armenia’s government took the first steps towards a shake-up of its notoriously corrupt and inefficient tax and customs agencies.

In 2007, the country’s economy expanded by 13.7 percent, marking the sixth straight year of double-digit growth. In an effort to maintain a robust growth rate, the government is banking on an overhaul of the tax and customs sectors, two areas that Sarkisian has pledged will be "at the center of his attention," the presidential administration reports.

"In our country, apart from tax and customs revenues, there are no sources of solving social problems," Sargsyan told an April 18 meeting of the State Customs Committee broadcast by state television. "Therefore, we must follow the path of self-cleansing."

The push for reform first targeted customs, an area where President Serzh Sarkisian claimed that corruption is "thriving." The Armenian leader threatened to fire any official who failed to "work honestly."

According to EurasiaNet, Some entrepreneurs say they have already seen a change. In particular, implementation of a rule that allows businesspeople to fill out their own customs declaration has played a role, one leading member of Armenia’s business community contends. The regulation has existed since 2001, but was never observed until recently.

Meanwhile, President Sarkisian’s administration has moved on to tackle the tax service.

In a May 29 meeting with business representatives, President Sarkisian affirmed that "the state is on the same side as business." Particular emphasis was put on the need for an equitable application of taxes, and the closure of de facto payment loopholes for big business. Members of the business community have been asked to propose additional areas for reform or to amend suggested changes.

"If we fail to improve tax administration, we will destroy our country, our state and our statehood," the Prime Minister admonished senior tax officials at a June 3 meeting. Tax officials’ style of work must "fundamentally" change to reverse the business community’s negative attitudes, Sarkisian added. Salary increases for tax officials and regular training sessions have been slotted to help in that transition.

Government critics, however, remain skeptical about the motivation for the overhaul of the tax and customs systems.

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