Below is an interview with the ex-chairman of the Central Bank of Armenia (CBA) Bagrat Asatryan.

NEWS.am: Mr. Asatryan, what are the economic results of the year 2009?

B. Asatryan: The year 2009 was one of the hardest years in Armenia’s modern history: we faced a huge economic decline. In terms of U.S. dollars, a more than 30% decline was registered as compared with the previous year. Last year, Armenia’s GDP totaled 3,600bn AMD or almost U.S. $12bn. The preliminary results show that the GDP will total 3,000bn AMD or about U.S. $8bn this year. Of course, our economic history has seen an even harder year, 1992. That year Armenia found itself in isolation, all the ways of communication were blockaded and large-scale military operations began. Unfortunately, we had had hard years in our modern economic history, but we had never had an economic decline like in 2009. The year 2009 proved to be a lesson for us. Today we should most seriously think about the causes. For me it is evident that the global economic crisis was not the main cause. It only revealed the defects and unresolved problems in our state and the defects of the Government’s economic policy. The record set by Armenia is evidence thereof. No other country registered such indicators – a 30% decline is a most serious figure.

NEWS.am: A 16% GDP decline was registered in November 2009. What decline do you forecast for the year 2009?

B. Asatryan: In terms of AMD a decline of 15-15.5 per cent can be expected. Last September we registered an 18% decline, in January-October a 17.5% decline and in November a 16% decline. It does not, however, mean positive tendencies in the Armenian economy. The same statistical data show a 6.6% decline in GDP last November as compared with last October. It is too early to talk about positive tendencies.

NEWS.am: What is your opinion of the Government’s work considering the fact that no increase in wages and pensions is budgeted for 2010, whereas the prices for gas and other products are expected to rise?

B. Asatryan: If we speak of the fiscal policy, I would first of all like to note that it is not adequate to the present situation. I would not like to dwell on budgeted revenues or expenditures. The crisis is obvious, and the Government must do its best to prevent a further decline and ensure economic growth, while the budget, unfortunately, does not provide such guarantees.

NEWS.am: Do you think the Government will resort to money emission in 2010?

B. Asatryan: Let us not use the term “emission,” as we are now dealing with different phenomena. In the year 2010, we are going to deal with a large-scale crisis – the Government will spend unearned money. If by the term “emission” we mean this, yes, it can be called “emission.” It can also be designated as an expansionary policy. The Government seeks economic activity by increasing incomes. Another matter is how the money is spent and where it is directed. Will there be a result? It is no secret that corruption is widely spread throughout our country. Will the funds not go into the pockets of a couple of oligarchs?

NEWS.am: The Government forecast certain growth for 2010. What do you think this year will be?

B. Asatryan: It is too early to speak of growth now. Even with the present positive tendencies, we are going to have a hard year. The present preconditions are insufficient for economic growth. Moreover, possible unfavorable developments will cause a decline of 1-2 per cent.

NEWS.am: So what steps should the government take?

B. Asatryan: An approach to the problem should first of all be changed. The Government must realize that Armenia is facing challenges to the system, so it should think of comprehensive changes in all the spheres of our life. The Government needs political will and must be ready to carry out radical changes in all the spheres. The political system formed in Armenia is unable to ensure the country’s progress. Nobody denies the fact that an oligarchic system and oligopolies have formed in Armenia. Many, even the Government, say that this system must be destroyed. Otherwise no economic recovery is possible. The basis is, however, the political system formed over the last decade. Only serious system changes can put an end to monopolies, curb corruption, an integral part of the political system, which stifles any initiative to develop economy and our state and society.

T.P.