EBRD President displeased with dominant influence of monopolies and low competitiveness of Armenian economy

Political will and courage are needed to effectively combat the monopolies in Armenia, EBRD President Suma Chakrabarti told reporters in Yerevan on May 11. 

 

Chakrabarti said that the shadow economy and the monopolies are the key obstacle to investments and to the country's development. To resist these challenges, the authorities of Armenia should display a 

strong political will and courage.    

 

He thinks that to enhance the economy competitiveness, the country should improve the investment climate in order to become attractive for both local and foreign investments. This implies creation of 

equal conditions for all actors, coordinated reforms in customs and tax systems, as well as enhancement of the anti-monopoly commission's role. The EBRD President stressed the need for a specific action plan.       

 

In addition, Chakrabarti pointed out the need to launch an independent institution of business ombudsman in Armenia. He recalled that he had raised the given issue at the official meetings during 

his first visit to Armenia two years before, however, the Armenian authorities were skeptical about his proposal. Now the authorities themselves ask Chakrabarti when the creation of such an institution 

would be possible.   

 

The EBRD head pointed out the experience of neighboring Georgia, where the situation with monopolies in the early 2000s did not differ much from the current situation in Armenia. The goal of the EBRD is to provide advisory, technical and investment support, but first of all it is the authorities that should strive to combat the monopolies, Chakrabarti stressed.   

 

For his part, Mark Davis, Head of the EBRD Yerevan Office, pointed out that the growth of banks' lending to economy sectors has become an effective method to eradicate the monopolies in the country. At 

the moment, over 60% of the aggregate loan book of the Armenian banking system falls on lending to economy sectors versus 9% in 2009. This has enabled the businessmen, who do not belong any monopolistic groups, to have additional financial resources and to develop their business, Davis said. He added that the EBRD Office in Armenia gives high priority to supporting SME and enhancing the affordability of financial resources for them. To recall, earlier the World Bank experts arrived at the conclusion that Armenia's economy is the most monopolized in the post-Soviet space and Eastern Europe.  

 

The EBRD has been active in Armenia since 1993 and to date has invested over EUR889.2 million into 136 projects. In 2014, the EBRD signed 18 projects worth a total of EUR114 million in Armenia.