By Susanna Petrosyan, Yerevan. Exclusively for Vestnik Kavkaza
1.5 months have passed since the resignation of Prime Minister Tigran Sargsyan. As a heritage, the new government inherited an unstoppable growth of the poverty level, strengthening of monopolies, restrained opportunities of small and medium-sized enterprises, a roughly threefold reduction of investments in the economy and government debt more than doubling. According to official data, government debt amounted to $1.7 billion in 1998-2008 and exceeded $4 billion in 2008-2014.
The old prime minister was working on reducing debts by receiving new foreign loans, thus accumulating government debt. Paying Russia for a $500-million loan is just one of the examples.
The new government is now a captive of the practice to pay loans by allocating new funds and exploiting the high-level shadow economy. The vivid reduction of investments and Western loans caused a deficit of financial resources in the new government when it need to pay debts and raise salaries for state-paid staff in July.
The lack of financial resources is not an outstanding problem. The obligatory accumulative pension system that stirred up Armenian society deserves special interest in this context.
On May 13, the parliament passed amendments to the law on accumulative pensions. The amendments lifted fines for refusal to make obligatory pensions until September 30. Thus, obligatory accumulation of pensions has turned into a voluntary system that has never been cancelled. The opposition called it a semi-solution to the pension problem. According to Levon Zurabyan, head of the Armenian National Congress faction, the government wants to keep accumulative pensions at any costs and minimal concessions for the population.
Demographic problems remain an important indicator encouraging the government to keep the accumulative pension system. According to Minister for Labour and Social Affairs Artem Asatryan, Armenia does not and will not have enough demographic resources to serve the old pension model. Covering the government debt and solving other financial problems amidst a rising demographic disproportion, in a situation when investments are scarce and foreign loans are dropping, the government is forced to search for financial resources using certain schemes, one of which is the accumulative pension system.
Ex-Prime Minister Hrant Bagratyan said in early spring: “There is no accumulative system, there is a new tax amounting to 5%, income tax increased to 32%.” However, the government’s efforts to realize the accumulative pension system faces hardshell resistance from society. Maybe the new bill will calm the protests, but it does not save the population from an accumulative pension tax used to drain financial resources.
