By Samvel Avagyan
Below is an interview with Armenia’s Minister of Economy, Tigran Davtyan.
How would you evaluate the past year in terms of Armenia’s economy?
Positively. I believe serious developments took place in Armenia’s economy. It began to rebuild since 2010, when we had a little growth. And this growth doubled in 2011. It is very important that this rebuilding is occurring on the account of the development of the real sector, specifically of industry. In 2011, industry, agriculture, and export played the role of the locomotive. The sole domain where we had a reduction was construction. And this is only natural, and this contributed to the formation of the economy’s balanced structure. For example, the industry’s GDP rate was 11-12 percent in the beginning of the year, but now we are approaching 20 percent. Armenia is becoming an industrial country, where the real sector plays a great role. That is why we underscore not only the 5-percent economic growth, but also the current logical structural changes. I should also note the double-digit industrial growth, the 25-percent growth in export, and the 20-percent growth in investments.
In 2011, we had serious investments in close to a dozen enterprises, and more than a dozen new enterprises were operated. And all these enterprises meet with best international standards.
I should also note that we confirmed 21 investments projects through postponing the payment of the value added tax, and as a result we attracted 84 billion drams [approx. US$ 219,643,394] worth of investments. By using this tool alone, we had 2.5 thousand new jobs.
Several legislative documents were introduced to the National Assembly. First, this was the main law “On Free Economic Zones,” and the principled changes made in the law “On Inspections.” I should also mention the adoption of the four fundamental laws of the standardization system, and the dozens of other projects. In general, we made the legislative field comply with international standards.
Is the new industrial strategy toward export a turn in the economic policy, as many consider?
No, I would not consider it a turn. It is in keeping with the policy in 2011, but it contains a new accentuation. That is, we deem this direction more important, and view it as a priority. We have always done these operations, and now we specify two directions: industry and export. We underscore the industry which has an export direction. This strategy differs from the previous approaches in the sense that it will not impact on the economic developments, but rather the economic developments must reflect on the strategy. This is a document which lives not with its own life, but, rather, it is directly interconnected with our operations where are reflected those operations which we already are carrying out. We did not wait for this document to be approved, to enter into force, and only then to start carrying it out.
The document also has a second part, which is more technical, and where the concrete domain projects are depicted. The Government does not approve these concrete projects, since the domain project must be flexible and it should change, be clarified, and amended during its course.
This year is an election year. Does that have an impact on the Government’s steps and programs?
The election year will certainly have an impact on the processes, accentuations, and operations. Any government in any country feels that impact. But our policy will remain the same. Our steps will be just as precise as in the previous years. Of course, we ought to turn more attention to solving the social problems, but I do not think that the election process would have an adverse, or an obstructive, effect. If we recall the previous election years, we would see there was no substantial impact on economic development.
How justified do you consider Moody’s rating agency’s latest assessment?
Moody’s is a fairly renowned organization, and I see nothing bizarre in this assessment. For the most part, the change in the rating is conditioned by outside risks, and Armenia is a part of global economy; it is linked with the Russian market and the European market alike, and, to some extent, with that of the US, too. The risks and negative expectations in that region could adversely reflect on our economic growth, and, in that sense, that little clarification (drop) cannot be considered substantial. The ratings of numerous countries, including of US, are being dropped. But our developments are proceeding positively, and this year we will have a better macroeconomic condition. As case in point, the state budget deficit will drop until the 3.1-percent level of GDP, albeit it was 7.5 percent during the crisis. In any case, the assessments of Moody’s are professional and we cannot underestimate them.
