Vartan Oskanian: Despite external factors, it is possible to ensure high rates of economic growth in Armenia

ArmInfo. The draft 2016 state budget is defeatist, former Foreign Minister of Armenia, MP Vartan Oskanian thinks. "I followed today the discussions of the budget in the National Assembly of Armenia and I agree with MP Hrant Bagratyan's opinion, that this is a defeatist budget. I also agree that it has already become boring that the Armenian Government since 2008 has been trying to impose its failures and nonfeasance on external factors. I think that despite external factors, it is possible to ensure high rates of economic growth in Armenia. One should be more courageous, put accent on economic growth by implementing tax- budgetary and monetary-credit expansionary policy, even in the expense of increasing budget deficit," Oskanian wrote on his Facebook page.

At the same time he added that for successful implementation of this the Government should possess a concept and program of country's development, political will for conducting necessary structural reforms and have people's trust. At the same time the MP stated that the Armenian Government does not posses any of these factors.

"Since 2008 the Government hasn't managed to present the program of country's development, hasn't provided any investment programs, which could unite the country's economic potential and boost the growth.  Till now only the project of North-South road corridor construction has been presented. Judging from the spent funds, the construction schedule delays and the amount of done work, the North-South road program may be considered as the biggest bluff in our contemporary history", Armenian politician thinks.  According to him, both former and current governments have not managed to conduct the promised reforms and the existing negative factors have become more obvious.

Oskanyan is sure that the prime minister did not managed to reestablish credibility of investors and society towards the country's economy, as a result of which the existing financing of the country's needs keeps to be ensured by harsh tax regime and new credits. He added that during this period the government performed primarily soft financial-credit policy, due to which the Armenia's economy will remain in stagnation in the best case.

"What refers to credibility, its absence remains the main obstacle for our country's development. There is no shortage of funds in the country, the owners of these funds just do not want to invest in the country.  The simple argument can be brought, in 2008 the stock of money totaled around 708 billion AMD, GDP was 3.568 trillion AMD.  This means capital turnover reached 5 times in a year. In 2014 the stock of money totaled 1.674 trillion AMD, GDP was 4.843 trillion AMD, which means the capital turnover was 2.8. In other words, if the capital turnover in 2014 were on the same level as in 2008, the GDP in 2014 would total 4.843 trillion and not 8.37 trillion AMD. Almost two fold more. Of course this is a rough calculation, but I would like to emphasize that the Armenia's problem is not the absence of funds, but in not enough credibility of the owners the funds towards the government and the economy," Oskanyan said. He added that the government should not point at the external factors all the time, particularly, when the world economy tuned to a phase of growth.

To recall, on October 1, the Armenian Government approved the draft state budget of Armenia for 2016, according to which the real GDP for 2016 is estimated at 2.2%, GDP deflator index - 4%, 12-month inflation - 4% (+1.5%), budget deficit - 3.5% of GDP.  Expenditures will total 1 trillion 373.7 billion AMD, and revenues - 1 trillion 183 billion AMD AMD, with the deficit being 197 bln AMD.  Taxes and duties will make up 95.4% of the revenues, and official grants and other revenues will be 2.6% and 2% respectively.  Taxes and duties are expected to total 1 trillion 129 billion AMD, the grants within the European Neighborhood Policy are expected to amount to 24 million EUR or 13 billion AMD, and the grants under target programs will amount $35.6 million or 17.2 billion AMD. Other revenues will total 23.8 bln AMD in 2016.