Armenia`s Cabinet approves Doctrine of Economic and Institutional  Transformation of Armenia

ArmInfo. The Armenian government approved the "Doctrine of Economic and Institutional Transformation of Armenia" at its January 8 meeting. Prime Minister Nikol Pashinyan  himself presented the document.

"Overall, this is essentially a guideline, as well as a statement of  our intentions," the head of the cabinet said. "This document is  about where we are now and where we want to go next," he added.

According to him, the 42-page document is built on a new paradigm of  economic development that reflects the ideological foundations of  "Real Armenia" and transforms the role of the state in the economy,  placing the individual at the center of the system according to the  formula "the state must strengthen the individual, and the individual  must strengthen the state."

In this context, Pashinyan recalled that he has repeatedly stated  that "an RA citizen, if he disagrees with the policies pursued by the  authorities, can stage a revolution at any time," once again  emphasizing "the decisive role of the citizen in governing the  country." "Initially, it consisted of over 100 pages. However, we  must take strategic documents seriously, meaning they must be  compiled as concisely as possible, as time is the most precious  resource.

A document that can be 10 pages long should not be 11 pages long. A  strategy that can be 15 pages long should not be 16 pages long. A  one-page briefing should not be one and a half pages long; a  three-word sentence should not be six words long," Prime Minister  Pashinyan clarified.

As the head of government noted, preliminary estimates indicate that  Armenia's economy demonstrated real growth of over 50% between 2018  and 2025. This is one of the fastest growth periods recorded since  the country's independence. At the same time, GDP per capita more  than doubled, reaching $9,433 in 2025 (according to preliminary  estimates), securing Armenia's new status as an upper-middle-income  country. At the same time, this rapid growth has exposed structural  vulnerabilities in the economy and questions about its long-term  sustainability.

However, Armenia's economic performance in recent years has been  largely driven by demand-led growth.  This was due to significant  capital inflows, increased consumer consumption, and sustained income  growth.  Thus, GDP grew by an average of 8.9% per year between 2022  and 2024. Over the same period, the Armenian dram appreciated by  approximately 20%, driven by strong external demand, an influx of  financial resources, and a highly productive workforce, which largely  absorbed inflationary pressures.  While these demand-driven factors  contributed to economic growth, their long-term sustainability  remains uncertain. Since this growth is largely driven by external  demand and temporary capital inflows, rather than productivity  factors, it is clearly subject to gradual adjustment. Therefore,  economic policy should aim to ensure a proportionate adjustment and a  "soft landing." Additional risks could arise if capital inflows  decline or immigration reverses, leading to an economic slowdown.

As stated in the explanatory note to the document, the Republic of  Armenia has been undergoing economic, institutional, and  security-related transformations in recent years. Rapid, but  demand-driven, economic growth, external shocks, demographic  challenges, rapid technological change, and existing institutional  challenges require a unified, systemic, and long-term approach to  economic and public management.

It is noted that Armenia's economic dynamics in recent years have  been shaped by both domestic reforms and rapidly changing external  factors, which have accelerated growth while simultaneously creating  new structural challenges. Progress toward increasing deep  productivity, economic diversification, and developing value chains  requires a more systemic approach, as the export structure remains  heavily concentrated in limited sectors, and the financial system  relies primarily on bank lending, with an underdeveloped capital  market and limited participation by institutional investors.

"Current economic and institutional policies are implemented based on  a number of separate documents, strategies, and programs that are not  fully integrated into a unified ideological framework. Under these  circumstances, it is necessary to adopt a unified ideological and  political-strategic document that will affirm the long-term vision  for the economic and institutional transformation of the Republic of  Armenia, define the core principles and pillars of a new economic  policy paradigm, and provide a unified basis for medium- term budget  planning for existing and newly developed sectoral strategies and  programs," the document states.

The draft resolution of the Government of the Republic of Armenia "On  Approving the Doctrine of Economic and Institutional Transformation  of Armenia" proposes to lay the ideological foundations for a new  economic paradigm, "Real Armenia," which enshrines the role of the  state as a people-centered system that simultaneously serves  security, sustainability, and institutional strengthening.

The adoption of this legislative act, as noted, presupposes the  elimination of fragmentation in economic and institutional policy,  the enshrinement of long-term, forward-looking, and clear principles,  and the creation of a unified structural system of programs and  subprograms, thereby ensuring a forward-looking, systemic, and  predictable nature of public policy.

As a result of the adoption of the draft and the implementation of  its provisions, it is expected that: - Economic policy will become  forward-looking and systemic; - Policy predictability and confidence  in the investment climate will increase; - A unified system of  programs and subprograms will be formed; - The effectiveness and  accountability of public administration will be strengthened; -  Armenia's economic resilience and security stability will be  enhanced.