WB Expert: Armenia`s joining EITI will ensure involvement of public sector in decision-making process in the mining sector

ArmInfo. Armenia's joining EITI international initiative (Extractive Industries Transparency Initiative) will boost and encourage involvement of public sector in the process of decision making in the mining industry, World Bank Consultant of mining sector Narine Tadevosyan stated on the sidelines of the first official session of EITI working group held in Yerevan on November 25.

According to Tadevosyan creation of common trilateral platform in the country for cooperation among civil society, representatives of the field and the government will help solve the sector's problems with combined efforts. "There are a lot of cases when public sector raises issues demanding solution while the government does not react to them in due form. As a result there is no dialog in Armenia and the given platform may ensure such a dialog in the best way", the expert stated.

The WB representative recalled that more than one and half years ago the Armenian government discussed the reasonability to join the Initiative. On July 28, 2015 former Prime Minister Hovik Abrahamyan stated about the country's political readiness to initiate the process of joining, later discussions with stakeholders were held. As a result the incumbent Prime Minister Karen Karapetyan approved the structure of the Council, which will coordinate preparatory work for joining EITI. The process will take 2 years. "We hope that the application will be ready till the end of the year and next year Armenia will become candidate country for joining the initiative", the Consultant stated.

According to Tadevosyan after joining the Initiative financial transparency and accountability of the field's companies will significantly grow in Armenia. At the same time the Armenian government takes a responsibility to implement all the programs, which will be included in the action plan as a result of discussions within the common trilateral platform.

According to the WB expert on the current stage there are no exact calculations of the Initiative's impact on the level of Foreign Direct Investments, and the possible growth of the field's share in the country's GDP.  "There are no such calculations yet, but they will be made and included in the action plan. As of today the Armenian government expects World Bank's assistance in the issue of developing the sector's policy, within which relevant research will be conducted to serve as basis for further work", she stated.

EITI is a coalition of governments, civil society, investors, and international organizations.  It was established in 2002 based on the initiative of the then Prime-Minister of Great Britain Tony Blair during the conference on Sustainable Development in Johannesburg. The goal of the initiative is raising the transparency and improving the quality of the management in the extractive industry by publishing regular reports, adhering to standards, and strengthening the institutional potential. Within the framework of the Initiative, the extractive companies shall disclose the information on tax and non-tax payments to the governments, while the latter shall publish the reports on the received revenues. The transparency of the information on the received revenues, which is achieved due to the EITI standards, allows the parliaments of the countries, non- governmental organizations, and the citizens to control the activities of the companies and the government.  Not only does such civil control hamper the cases of misuse in this sector, but it also contributes to more effective development of the countries as a result of improved economic conditions and more active attraction of direct investments. As global experience shows, the extractive companies win only as a result of the greater transparency thanks to the formation of equal and predictable economic relations.

To note, the recent study by Heidelberg Institute, which evaluated the impact of the Initiative on the volume of foreign direct investments (FDI), has showed that once the country becomes EITI candidate the investments increase significantly and GDP grows at 2% points on average. In other words, the country's joining EITI becomes a precondition for foreign mining transnational companies to enter this country. As President of the American Chamber of Commerce in Armenia (AmCham) prominent economist Tigran Jrbashyan stated in an interview to ArmInfo's correspondent Armenia's joining the EITI in the capacity of the candidate can result in attracting foreign direct investment of around $200 million, since in this case the attractiveness of mining projects as investment projects grows sharply.

To recall, in Jan-Sep 2016 versus the same period of 2015 growth in mining industry and surface mining totaled 13.7% to 188.4 bln drams (versus 40.5% growth a year before). In Jan-Dec 2015 amount of mining industry totaled 221.2 bln drams with 50.4% y-o-y growth. Within the year the sector ensured 5032.1 bln drams or 4.4% GDP growth.

FDI in mining sector totaled 15.545 bln drams in H1 2016 versus negative 69.09 bln drams for the same period of 2015.