Economy 2010: Expert estimations challenge government promises
Wednesday, 10 March 2010 06:25 | 
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ArmeniaNow The government of Armenia expects an economic growth of 1.2 percent this year, which some experts do not trust given the worst economic performance, a 14.4 percent fall, showed by Armenia among former Soviet countries in 2009.Monopolization of the economy and the presence of oligopolies are cited as causes of the economic slump and slow recovery. Civilitas, a leading Yerevan-based think tank led by former Foreign Minister Vartan Oskanian, in its report for 2009 pointed at the fusion of power and business and the shortage of efficient governance as factors because of which it was much more difficult for Armenia to parry the blow of the crisis. Civilitas Foundation head Oskanian finds that the government response to the crisis was belated and inadequate.
And what did the government offer? The program of state measures included the preservation of macroeconomic and financial stability, jobs by means of providing loans to large employers, the policy of a floating national currency exchange rate, expansion of state expenditure with the attraction of foreign financing.
Republican and regional projects occupy a special place among the anti-crisis measures of the government – the construction of a new nuclear power plant, road construction (about 1,000 kilometers), including the construction of the North-South highway that will connect Georgia with the Iranian border, the program on the reconstruction of rural roads, the program of Yerevan city transport, the project of building the Iran-Armenia railway, the project of the reconstruction of the water-supply system in the whole territory of Armenia, the continuing restoration of the 1988 earthquake zone. As well as a number of “ambitious” ideas on turning Armenia into a regional and even world center on a number of directions – public health, education, financial services and recreation.
Former resident representative of the International Monetary Fund (IMF) in Armenia Nienke Oomes last fall agreed with the estimation voiced by the World Bank’s managing director Ngozi Okonjo-Iweala that Armenia’s economy has an oligopoly-based structure.
“The transition from centralized planned economy to market economy is a long process. Market mechanisms have already been created and are working, but in many spheres there is a deficit of competition,” said Oomes. “Many spheres are controlled by one or two large companies,” she added.
“We will wage a struggle against oligopolies not against oligarchs,” Prime Minister Tigran Sargsyan said in response in late December.
“Our monopolists in fact got a large share on the market not as a result of their competent economic activities, but because of the monopoly status,” said economist Ara Nranyan, a member of parliament with the Armenian Revolutionary Federation (Dashnaktsutyun) faction.
Late last month the main opposition Armenian National Congress (ANC) published a manifesto presenting a “100-step” program of socio-economic policies system reform. The author of the program is ex-premier Hrant Bagratyan.
“The failure of the second-generation reforms led to a totally undesirable structure of the distribution of economy and revenues, in which as few as 15 people are involved in the economic development of the country and there is no entrepreneurial activity. We need to overcome this. It is necessary to invite rather than force people to take part in the country’s development. It is enough for the head of state to say that he can rid the society of Bashi-bazouks (leaderless gangs) and this will be successful. A natural process of self-purification will start,” said Bagratyan.
And Oskanian thinks that solutions should be sought outside the economic sphere. “It is possible to take advantage of the economic crisis to improve the economic climate, ensuring rule of law, abolishing monopolies, dealing with the fusion of business and power and realizing effective and predictable governance,” said Oskanian.
