Monday, June 19 2017 17:22
Naira Badalian

Armenian government has set targets for economic growth for next 5 years

ArmInfo. The purpose of the Armenian government is to ensure an average annual growth of the economy of 5%. This is stated in the officially published program of the Government of Armenia, submitted for approval by the National Assembly of Armenia.

As stated in the proposed program, during 2017-2022. The Armenian government pretends to reach outperforming in comparison with many developed countries of the world economic growth by providing an annual GDP growth of 5% on average.

The program proposes activities aimed at ensuring the business environment in the Republic of Armenia.  "Armenia is a country with small market volumes and its competitiveness is due exclusively to the opportunities of its economy in foreign markets," the program says. Armenia is instructed to be guided by the economic model based on demand, in which the growth of exports can be the locomotive of growth up to 40-45% in the country's GDP. To implement the planned programs, it is proposed to diversify the real sector of the economy and markets. The government's consistent steps to improve the business environment, as is noted, should lead to a simplification of administration and transparency of services provided by the state.

Within the framework of the activities, the Government of Armenia, in the context of the next 5 years, claims to be in the top 20 out of 190 countries of the world in the rating of the World Bank Doing Business.  When implementing complex measures to improve the business environment of Armenia, it is expected that, with all other equal conditions, through the envisaged activities aimed at alleviating the administrative burden for business, reducing corruption risks, increasing the transparency of services provided to the private sector by moving them to the online site , and improvement of the legislative base, in the Doing Business index the republic will rise from the 38th place and take the position among the first 20 countries of the rating.

Consecutive steps are also planned to protect the interests of investors, by improving the relevant legislative framework, as well as initiating institutional reforms. According to the program, investment programs aimed at inclusive growth and creation of new jobs will be supported by the executive body.

There is also a reduction in the unemployment rate by 12 percentage points envisaged, with a parallel increase in employment and wages, with an increase in the nominal minimum wage by 25%.

As a result of planned activities for 2017-2022 aimed at developing tourism in the country, the Armenian government also intends to increase the number of tourists visiting the republic to 3 million per year. In particular, until 2018, it is expected to establish new quality criteria for travel services and the introduction of a register on tourism until 2019. By the end of 2020, it is planned to complete the work on the creation of a single reference network for tourism in the Republic of Armenia, and the Concept on Ecotourism will be developed and approved by the same date.

To note, according to the National Statistical Service of Armenia, per capita GDP in Armenia increased by 8.7% per annum in the first quarter of 2017 - up to 325,727 AMD ($ 671/629 EUR). According to the IMF, Armenia ranked 115th ($ 3511) in the ranking of countries in terms of GDP per capita in 2016, published in April 2017. According to experts of the World Bank, when carrying out economic reform, GDP per capita until 2020 will remain at the same actual level of $ 4 thousand, with a tendency to increase in 2030 to 6 thousand, and in 2050 experts provide per capita GDP exceeding $ 12 thousand. Whereas, according to the actual scenario, this indicator will not exceed $ 8 thousand. At the same time, the poverty level under the reform scenario from the current 30% will decrease to 25% by 2020, by 10% by 2030, and by 2050 will be reduced to a minimum- 0.2-0.3%. If the reforms are not carried out, WB experts predict poverty in Armenia in 2050 at the level of 7-8%.

As for expectations regarding the growth of wages in Armenia, the head of the Armenian Ministry of Finance Vardan Aramyan had previously doubted this question. On March 22 (before the April parliamentary elections in Armenia) he called election promises of political parties about the increase of pensions and wages to be obviously unrealizable. "Already, AMD 446 bln is allocated from the state budget to pay employees of the budget, in the case of wage increase, an additional 250-350 bln AMD will be required, about 260bln AMD are annually allocated for the payment of pensions, and the promised changes will require 130-140 bln AMD For the state budget of Armenia - an unequivocal challenge," Aramyan said. "A reasonable question arises if, with maximum effort, we will raise salaries and pensions for a year, increasing the budget load of 500-600 billion AMD, how are we going to stabilize this issue in the medium term?" By increasing the tax burden by over 10% over the year, or heavier debt burden, I think this is a very dangerous path," the minister said. Meanwhile, according to the February forecast of the Central Bank of Armenia, in 2017 the average nominal wage is expected to grow by 1.5%, with the acceleration of the rate in 2018 to 3.6-4% and in 2019 to 4.8-5.2% ( Against the previously projected 2%, 5% and 6.2% in 2017 - 2019).

To note, in the state budget of Armenia for 2017 the GDP growth is 3.2%. Meanwhile, the World Bank (WB) predicts GDP growth of Armenia in 2017 by 2.7% with the acceleration of rates in 2018 to 3.1%, in 2019 - up to 3.4%. The state budget of Armenia for 2017 laid the GDP growth by 3.2%. According to the updated forecast of the Central Bank of Armenia, GDP growth in Armenia in 2017 will be 3.2-4.4%, according to the IMF forecast of 2.9%, according to Fitch forecast - 2.1%, EDB - 2.9% and Asian Development Bank - 2,2%.

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