Despite progress in tackling corruption, the close relationships within political and business circles raise concerns about cronyism and special-interest influence, Heritage Foundation’s 2016 Index of Economic Freedom reads.
Armenia came 54th in the rating, appearing among countries with moderately free economy. Georgia was in the 230th place (mostly free), Azerbaijan coming 91st (moderately free).
According to the report, the diversification of the economic base has increased economic dynamism in Armenia, simplification of business procedures having facilitated regulatory efficiency. Following several years of expansionary fiscal policies, measures have been taken to limit the cost of government.
“Although Armenia performs relatively well in many categories of economic freedom, deeper institutional reforms are needed in areas like judicial independence and government transparency,” the report reads.
According to the Rule of Law component, score of 20 out of 100 has been given to Property Rights in Armenia, Freedom from Corruption having received 37 (worldwide average of both indices was a little over 40).
“Pervasive corruption has been aggravated by Russia’s consolidation of its influence on Armenia’s economy and regional security. Bribery and nepotism are reportedly common among government officials, who are rarely prosecuted or removed for abuse of office. The judiciary suffers from a lack of independence and transparency. Pervasive police misconduct hobbles law enforcement,” the report reads.
Fiscal Freedom has been assessed 83.8, with the world average making up little over 75. Government spending got the score of 80.7, the world average being nearly 65.
Business Freedom has been assessed 77.5, Labor Freedom amounting to 62.2 (world averages are about 60 and 60 respectively). Monetary Freedom got the score of 72.8, the world average being about 75.
“With a 2.2 percent average tariff rate and few non-tariff barriers, Armenia is relatively open to trade. As with many other countries, however, foreign ownership of land is restricted, and bureaucratic hurdles may impede trade and foreign investment. The state no longer has a stake in any bank, but the banking sector, which accounts for over 90 percent of total financial-sector assets, still struggles to provide adequate long-term credit,” the report says.
Armenia has relatively favorable indexes in the component Open Markets: Trade Freedom was assessed 85.6 (world average about 75), Investment Freedom – 80 (world average 52-53) and Financial Freedom – 70 (world average about 50).
