Gagik Makaryan: Central Bank steamrolls over entire financial system of Armenia

ArmInfo. "I do not quite understand why the Central Bank is trying to control the entire financial system," economist Gagik Makaryan, President of the Republican Union of Employers of Armenia, has told ArmInfo's correspondent, when commenting on the recent statement of ex-prime minister of Armenia, macroeconomist Hrant Bagratyan, who said that the regulation of investment funds' activities should not be within the CBA's powers.        

Makaryan says that in the early 2000s the CB started carrying out the functions of the sole financial megaregulator, which do not fit into its direct functions. In this context, the expert recalls the initiative of not only regulating, but also controlling the insurance system and even interfering in the activities of the labor protection funds. The economist thinks that the regulator should focus its attention on maintenance of the financial market infrastructure. He stresses that the CB should conduct reforms aimed at stimulating investments, as well as facilitate lending instead of the regulating such areas as insurance or investment funds.          

Nevertheless, the expert disagrees with both the ex-prime minister and the economic leadership of the country, who say that creation of investment funds will boost economic growth through investments. He thinks the most competent approach should be to ensure the protection of the investors. Makaryan says that no investor will agree to invest money without having necessary guarantees such as stable market, developed infrastructure for import and export, attractive legislation for investments and business, business environment itself or fair judicial system. He thinks it necessary to familiarize the investors with all the risks in the country. In that case the investors will know what risks they run to receive profit and they will get prepared for that at least. "We should first of all be honest to the foreign investors," he says.

To note, in 2016 the level of direct foreign investments in Armenia's economy dropped to $90 mln, annually falling by 40-50% over the past 5 years. Meanwhile, the Economy Ministry has presented a program, under which investment programs worth a total of 495 mln USD will be implemented in 2017, creating almost 6 thsd new jobs. In addition, the Government calls on the wealthy representatives of Armenian Diaspora to increase their investments in Armenian economy.