By David Stepanyan, Yerevan. Exclusively for Vestnik Kavkaza
Mark Davis, head of the Yerevan of the European Bank for Reconstruction and Development (EBRD), said that investments of the EBRD in Armenia in 2013 could exceed the 90 million euro invested in 2012. The volume in 2014 has not been set yet, but the bank plans to invest as much as possible in new and interesting projects.
The EBRD has been one of the largest investors in Armenia since 1994. Eurobank has invested 652 million euro in Armenia for realization of 123 programs. The EBRD has focused investments in small and medium-scale business, agriculture, services, construction, production, mining industry and energy. According to Davis, agricultural programs of the EBD could be expanded because the field was especially important in Armenia and had perspective and promising business projects to offer.
The government of Armenia does all that its modest authority can to encourage the EBRD, although developing no promising projects, for example, in the agricultural field. Instead, it implements new multifunctional cash registers. This innovation of the Committee for State Incomes will cost Armenian economic subjects 367,000 drams, or $900. The ‘dire need’ for implementation of the new cash registers has not surprised anyone in the long-suffering economic subjects, considering the fact that they are being replaced for the third time. Curiously, people who are both willing and unwilling to get the registers will have to buy them at the Office for Implementation of Cash Registers. Rumours say that the organization belongs to Armenian Prime Minister Tigran Sargsyan who is notable for his aptitude of having offshore accounts on the Cyprus and appetites for easy money.
European financial experts cannot miss the vain attempts of the Armenian government to ‘assist’ the efforts of Eurobank. The money continues to flow to Armenia under some unexplained logic. However, Armenian citizens these days no longer trust the government or the EBRD, according to social polls of Gallup. Its report says that 74% of Armenians regard the state management system as corrupt. Economists making the analytical report of the US non-commercial organization Policy Forum Armenia in the Armenian community of the US believe that influence of corruption on Armenian economy is enormous. For instance, additional expenses of large companies caused by corruption, in other words, ‘bribes’, total 5% of annual sales, the highest rate among countries studied. It undermines the competitive ability of companies.
Moreover, the public policy is developed and realized mainly to serve interests of the corrupt elite, rather than Armenian citizens. It appears that forced sales of cash registers brought by a state functionary was just a small example reflected in the Policy Forum Armenia. The list of corrupt officials keeping posts for many years says that the new initiative could be taken as a childish frolic of the prime minister. Ex-President Robert Kocharyan, ex-Minister for Natural Resources Vardan Ayvazyan, Speaker of Parliament Ovik Abramyan, head of the State Committee for Taxes and Customs Gagik Khachatryan are just a few names of the list.
Tigran Sargsyan has recently admitted dropping the economic rate in Q4 2013. Though the ‘official’ economy demonstrated a growth rate of 3.2% in the first three quarters and good results in certain field. The EBRD should have wondered why the GDP growth was fading. The fact that no such considerations were made proves the politicized activities of the organization in Armenia.
The list of Armenia’s top 1000 tax-payers published in late October cannot be left without questions either. The structure of the list demonstrated a high density of tax burden in the economy. The first 50 companies paid about 240 billion drams to the state budget in the first three quarters of 2013, exactly half of all the taxes paid by the 1000 names in the list. 62% of all the taxes paid by the top 1000 belonged to the first 100 names in the list, the last 100 names paid only 1.6%. Such polarization in the structure of tax payments is very risky for economy. Considering the small tax role of companies belonging to indirectly affiliated with the government, distribution of tax pressure in the top 1000 list gave European financial experts, who were planning to invest millions of dollars in the ‘liberalized’ economy of Armenia, some food for thought.
