Armenia to begin new year with old problems

Armenia made progress in a number of economic indicators over the past year. Economic growth reached 6% for the first time since the crisis of 2008-2009, export almost doubled. The Cabinet of Ministers refused to once again use the practice of increasing salaries and pensions through new international loans.

However, most of socio-economic problems remain unresolved. Monopoly remains an important factor, just like the ever-present corruption, the scale of which grows with each year. According to the international organization Transparency International, Armenia ranked 132 among 176 countries in terms of level of corruption risk in 2016, while in 2015 Armenia was 95 among 168 countries. "Corruption continues to triumph. Authorities repeatedly declared their intention to use Singapore's experience of fighting against corruption, but they never did it," Naira Zohrabyan, deputy of the National Assembly from Tsarukyan Bloc, says.

Factors such as the lack of real competition in business, corruption and arbitrary interpretation of the law by courts became a serious obstacle to attracting investments and increased capital outflow. According to the Central Bank, the outflow of capital from Armenia in October 2017 amounted to more than $115 million, which is much more compared to October of last year, when it amounted to just $76 million. According to the Central Bank, most money went to Russia and the US, around $44 million and $23 million respectively. According to some economists, sudden increase of this indicator means that Armenian market is less attractive for the domestic capital, at least compared to markets of other countries.

Another important problem is the national debt. According to Finance Minister Vardan Aramyan, the external debt will reach $5.4 billion by the end of this year and will amount to 58.8% of GDP. The size of external debt has increased over the past 8-9 years by more than 3.5 times. However, this circumstance didn't affect the development of economy, since authorities took more and more loans to cover previous debts or to resolve a number of social problems.

"The external debt begins to hurt our economic development. Our debt has been increasing over the past 10 years, while the economy is not growing. Today we are in a debt pit," former head of the Central Bank Bagrat Asatryan said. The external debt also hurst population of the country. According to a recently published report of the National Statistics Service, the poverty level reached 29.4% 2016, which two times more than in 2008. Every third citizen of Armenia is either poor or extremely poor. The highest poverty rate is recorded in the Shirak region, where 46% of population lives below the poverty line. According to some experts, current economic growth won't help to overcome the existing poverty level.

It would be unfair to ignore success of the government headed by Karen Karapetyan. In addition to ensuring economic growth and other important indicators, investments in the amount of $1 billion will be attracted to Armenian economy at the initiative of the government. Against the background of investment deficit, recorded in recent years, this step looks very important. In November, the "Armenia's Investors Club", established at Karen Karapetyan's initiative, which unites large Russian entrepreneurs of Armenian origin, announced that it will provide investments. However, it would also be unfair to say that thanks to some progress we can quickly forget about problems that have accumulated over decades. Despite some successes, Armenia begins new year with a lot of old problems.