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Armenia: the calm before the storm?

06.06.2012  |  15:41

Armenia: the calm before the storm?. 27323.jpeg

Armenia's attention is now focused on forming a new government after the parliamentary election. President of the country has already reassigned Tigran Sargsyan as chairman of the executive authority. Tigran Sarkisian himself, after his nominating as prime minister, at a meeting with the media pointed out that such a development was was expected for him. He added there was an agreement with the President that the Cabinet should be presented to the public until June 15.

Judging by the signals coming from the ruling Republican Party of Armenia (RPA), the old Cabinet won't be seriously changed (except, of course, the appointment of new people to ministerial posts previously belonging to the party "Prosperous Armenia", which has refused to join the coalition government). This was stated by the vice-speaker of parliament, a spokesman for the RPA Eduard Sharmazanov.

The first signs that the cabinet is unlikely to be dramatically changed are already visible, since according to the decree of Armenian President, the Minister of Foreign Affairs, Defense and Emergency Management were reappointed to their post.

Old faces and new policy?

Although the major personnel changes in the new government are not expected and in general the Cabinet will remain the same, some economists still belive that the Cabinet will show new qualities. The head of the Union of domestic producers (UDP) Vazgen Safaryan says that during 5 years, the Armenian government must focus on the industry development, especially on development of the food processing industry.

Speaking of the mining industry, the economist stressed that Armenia was mostly exporting concentrate, rather than the finished product. "For example, last year Armenia exported 127 thousand tons of copper concentrate, and this year it is planned to increase its volume to 140 tons. However, the development of processing industry will increase profitability of the given sector by more than three times", the head of the UDP believes. According to current data, the share of industry in Armenian GDP amounts 21%, whereas in Soviet times it reached 70%, Vazgen Safaryan added.

In addition, according to Safaryan, the Armenian government should make great efforts to develop agriculture, which is "the base" of economy, small and medium businesses. It should simulate the industry with subsidies and a reduction in the tax burden. In his view, the development of industry and diversify of the economy are related to the issue of the sovereignty of Armenia in terms of reducing its dependence on such structures such as the World Bank (WB) and International Monetary Fund. "Armenia's external debt, which has mainly accumulated as a result of obtaining loans from the WB and IMF, was directed not at the development of the real sector of the economy but at the structural reforms in the state", Safaryan said.

In 2011, the volume of Armenia's external debt totaled 3,568 billion (36.1 percent of the GDP). According to official figures, it will increase to 4,462 billion dollars (33.9 per cent of GDP) by 2015.

Meanwhile, according to Safaryan, despite the fact that the Government won't be significantly changed, for the implementation of the above-mentioned projects the Cabinet must show its new qualities and creative approach in its work. The very economist showed his skeptical attitude to the fact that the same persons would be able to implement a new policy. Forthcoming Presidential elections would also impede this, he said. "After the presidential election, as always, many projects may be delayed as a result of various political arrangements", he concluded.

Arshaluys Mgdesyan

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