Government’s ‘Anti-Crisis’ Policies to ‘Manage’ Financial Storm

YEREVAN (Combined Sources)–Armenia can mitigate the impacts of the global financial crisis, Armenia’s Economy Minister Nerses Yeritsian said Wednesday, reported Armenpress.

The impact of the crisis on the Armenian economy is not alarming, he was quoted by Armenpress as saying.

Yeritsian said Armenia is equipped to manage the deepening crisis ripping through the world’s financial markets, adding, however, that the Armenian government is nevertheless working to mobilize “all possible resources to conduct necessary actions in case of a problem. “

“The consequences are still easily managed,” he said, noting that the Armenian government has made “anti-crisis” earmarks in the state budget to combat any adverse consequences caused by the financial crisis.

The government will make the details of its “anti-crisis strategy” public in the coming weeks through a massive media and PR campaign, Prime Minister Tigran Sargsyan was quoted Wednesday by Golos Armenii as saying.

“I have already stated that collective consultations will be an important part of our anti-crisis program,” Sargsyan said, adding the government would permanently consult with international financial organizations and business circles about a possible way out of the difficult economic situation.

Yeritsian said the Prime Minister’s will study new ideas and opportunities for small and medium-sized enterprises to determine the type of support the government will provide potentially ailing sectors of the economy.

One immediate “anti-crisis” mechanism, he said, will see the government working with its Central Bank and the World Bank to ease credit for small and medium-sized businesses, opening up of credit by the German “KfW” Bank will provide quick relief.

The Prime Minister, meanwhile, described Armenia’s Central Bank as “the only remedy from the crisis,” saying that economy’s stability during the financial storm will largely depend on its “robust banking system,” bolstered by the Central Bank’s policies.

Aside from the relief said to be provided by the Central Bank, the government will also increase capital investmen’s in a number of infrastructure development projects and social programs, according to Yeritsian, who described what he called a “global devaluation” in prices as an opportunity for Armenia to increase its expenditures.

But the government has to ensure a further 20 percent rise in tax revenues if it is to successfully execute its budget for next year that was approved by parliament last week.

The budget envisages that total government expenditures will grow by 13.3 percent to 945 billion drams in 2009.

Armenia’s Finance Minister Tigran Davtian earlier this month appeared confident that the tax authorities will meet the record-high revenue target as a result of continued economic growth and improved tax administration, RFE/RL reported.

However, the global crisis may seriously complicate the government’s fiscal performance. The recent plunge in international prices for non-ferrous metals, Armenia’s number one export item, is already hitting the local mining and metallurgy industries hard. Hundreds of employees of Armenian mining companies have been laid off or sent on leave in the past two months.

The largest of those companies, the German-owned Zangezur Copper and Molybdenum Plant, has long been one of the country’s leading corporate taxpayers. Its chief executive, Maxim Hakobian, told RFE/RL earlier this month that Zangezur’s contributions to the state budget will likely drop by at least 20 percent in 2009.

According to Davtian’s statement, however, the collection of taxes is unaffected by the financial crisis and is “proceeding according to plan.”

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