Government Declares New ‘Emphasis’ in Economic Reform

YEREVAN (RFE/RL)–The recently formed Armenian government unveiled its plan of actions on Thursday–announcing a "shift in the emphasis of economic reforms" which will focus on job creation and poverty reduction to remedy the "extremely difficult situation" in the country.

The government of Prime Minister Andranik Markarian–who will submit the program to the parliament on Friday–vowed to double Armenia’s gross domestic product in the next "seven to eight years" while maintaining recent years’ macroeconomic stability. The government warned at the same time that it might be forced to cut expenditures later this year if the worse-than-expected revenue collection does not improve.

"The government considers the direction of economic growth towards the reduction of poverty as the aim of its economic policy," the program says. "In this regard–it is necessary to not only ensure macroeconomic stability and implement appropriate fiscal and monetary policies–but also look at economic reforms through the prism of their social consequences." The authorities–it says–will put a greater emphasis "on the real sector of the economy" and launch a "radical reform of the civil service involving in particular a merciless fight against corruption and the system of clans."The government will view the fight against corruption as one of the cornerstones of its activities."

Pledges to combat the endemic corruption–which is believed to stifle economic development–had been made by previous Armenian cabinets in the past. But they were largely unsuccessful.

To spur continued economic expansion Markarian’s cabinet will strive to "simplify" the tax legislation and enterprise registration and reduce the number of economic activities subject to government licensing. It will also help local businesses find markets abroad–which should be facilitated by Armenia’s "maximum integration in the world economy," including the membership of the World Trade Organization.

According to the program–this is supposed to result in the "at least 25 percent" growth in Armenian exports each year. The average pensions and public sector salaries will double in the next three years–according to the program. However–the government acknowledges that it is not on track to meet the 6 percent growth target for this year–with the economy expanding by a meager 0.3 percent in the first quarter.

The downturn is taking its heavy toll on the collection of budget revenues. The document reveals that the shortfall could total 45 billion drams ($85 million) or 17 percent of projected revenues by the end of this year if the current trends continue.

"The absence of a qualitative change in the execution of the state budget in the next few months would force the government to propose corresponding corrections in the budget to the parliament," the program says.

In the light of the revenue shortfall–the release of some $50 million in fresh loans from the World Bank becomes even more vital for the authorities. On Monday–the National Assembly approved a 5.5 rise in government expenditures. The extra funds worth $26.7 million will be drawn from a special fund that includes proceeds from the privatization of state assets. The increase could thus been offset by possible budget cuts.

The absence of a vote of no confidence in the government would amount to the approval of its program by the parliament. The majority of lawmakers are believed to be loyal to Markarian. Mindful of this fact–none of the minority opposition factions has signaled an intention to challenge the cabinet.

Meanwhile–President Robert Kocharian–who promised last month to share with the prime minister responsibility for the executive–said late on Thursday that successful implementation of the program requires "consistent work." Kocharian spoke to reporters after presiding over a cabinet session.


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