ArmInfo. Over the year, Armenia has improved its positions by 2 points in the Index of Economic Freedom moving from 34th to 32nd place (against 47th in 2019). Index of Economic Freedom is an annual guide published by The Heritage Foundation, Washington's No. 1 think tank.
Thus, according to a study by The Heritage Foundation: "Armenia's economic freedom score is 71.9, making its economy the 32nd freest in the 2021 Index. Its overall score has increased by 1.3 points, primarily because of an improvement in fiscal health. Armenia is ranked 18th among 45 countries in the Europe region, and its overall score is above the regional and world averages.
Economic freedom in Armenia has hovered between moderately free and mostly free for many years. GDP growth during the reporting period has continued to be strong. To institutionalize higher levels of economic freedom more firmly, the government needs to maintain its focus on improving judicial effectiveness and government integrity. Stronger rule of law would also have a positive impact on investment freedom.
IMPACT OF COVID-19: As of December 1, 2020, 2,193 deaths had been attributed to the pandemic in Armenia, and the economy was forecast to contract by 4.5 percent for the year.
Rule of law: Armenian law protects secured interests in property, both personal and real, and provides a basic framework for secured lending. Title registration is supported effectively. Courts face systemic political influence, and judicial institutions are undermined by corruption. Corruption is pervasive, is not regularly prosecuted, and has been aggravated by Russia's consolidation of its influence over Armenia's economy and regional security.
Government Size: The top individual income tax rate is 23 percent, and the top corporate tax rate is 18 percent. The overall tax burden equals 20.9 percent of total domestic income. Government spending has amounted to 25.0 percent of total output (GDP) over the past three years, and budget deficits have averaged 2.5 percent of GDP. Public debt is equivalent to 53.4 percent of GDP.
Regulatory Efficiency: Armenia has increased minority shareholder protections by increasing shareholders' rights and shareholders' say in corporate decisions. Transparency has been added to ownership and control structures. Value added per worker has improved. The government continues to subsidize electricity, and the IMF has found that lack of transparency in reporting public-sector spending may be masking the true extent of subsidies to other state-owned enterprises.
Open Markets: Armenia has 11 preferential trade agreements in force. The trade- weighted average tariff rate is 5.6 percent, and 10 nontariff measures are in effect. Foreign investment in various sectors remains regulated. The overall financial sector, not fully developed and subject to state control, is dominated by fairly well-capitalized banks. In the wake of the ongoing pandemic, no capital-control measures have been implemented."
As a comparison, we note that among the EAEU countries, Kazakhstan took 34th place in the rating, Kyrgyzstan - 78th, Belarus - 95th, Russia - 92nd. The neighboring countries of Armenia are ranked in the following order: Georgia - 12th place, Azerbaijan - 38th, Turkey - 76th and the Islamic Republic of Iran - 168th. And the countries of the post-Soviet space ranked in the following: Moldova - 85th, Uzbekistan - 108th, Ukraine - 127th, Tajikistan - 134th, and Turkmenistan - 167th.
To recall, the Index of Economic Freedom is a combined indicator and an accompanying rating that assesses the level of economic freedom in countries around the world. Published by the American research center The Heritage Foundation in conjunction with the business publication The Wall Street Journal. Fund experts define economic freedom as "the absence of government intervention or obstruction of the production, distribution and consumption of goods and services, except for the protection and support of freedom needed by citizens as such." The analysis of economic freedom has been carried out annually since 1995.
