03, 2009

Discussions with the Heads of the Armenian political parties related to the issue of the “Global financial and economic crisis and Armenia”

album picture
album picture
album picture
Today President Serzh Sargsyan invited the Heads of the Armenian political parties to the second thematic debate on the “Global financial-economic crisis and Armenia”.

In his opening remarks the President of Armenia said,
”This is our second meeting in this format. As you remember, the main topic of the first meeting was the NK peace process. All political forces of Armenia, which had something to say, got the opportunity to do so and all those who had questions, asked them. We, in our turn tried to answer those questions, and tried to make visible the path we had taken for our progression. In my opinion, it was a successful endeavor.

Today, the global economic and financial crisis is in the center of the world’s attention since all countries are experiencing its repercussions to this or that extent. Armenia, or our economy, is not an isolated island and we too suffer the consequences of the crisis. The political parties voice numerous opinions regarding the issue, possible approaches are being introduced publicly, and this is a good opportunity to bring them together, to discuss them, and to exchange views.

It was necessary to organize this meeting, and I believe each of you have something to say. Irrespective of our will, we are entering a stage of global and regional changes, when everybody’s approach and opinion should be reckoned with and if possible developed into a common approach and a common view.

The global crisis has forced the developed countries to introduce changes which in the past would be deemed simply unacceptable. Unfortunately, a universal recipe has not been invented yet. Evidently, in this non-standard situation, the Government of Armenia was compelled to undertake non-standard measures. The Prime Minister and the Cabinet constantly inform the public on these measures. Later, we will listen to the Prime Minister, but now I would like to talk briefly about the role of political parties and the public at large. If necessary, I can once again repeat what should be understood without explanation: the crisis is our common problem not only the Government’s. We, the people of Armenia, are not to blame for the crisis; this is not an Armenian issue. At the same time, I believe that the Government and the authorities have no right to hide behind the crisis and blame their own mistakes, their own blunders on the crisis alone. The fact is that if we do not resist the crisis together, all of us will suffer, the entire society. To leave the Government face to face with this peril is at least not wise. I would like to repeat: there are no universal solutions, may be this is one of those rare occasions when it is necessary to invent a bicycle.

Our people have a tremendous ability to find unorthodox solutions in unorthodox situations. It has been proved more than once in the course of our history. Now is the time to fully realize the creative potential of our people. In reality, in many cases hardship and success are intertwined and it is obvious that to achieve great success it is necessary to overcome hardships, and there are many cases when under such circumstances success is much bigger than expected. Just one example: our Artsakh liberation war, our entire struggle for freedom.

Currently, the Armenian Government is engaged in active discussions with a large number of experts, it also continuously cooperates with the leading specialists of the world financial institutions, and meticulously analyzes the measures undertaken by other countries, as well as the proposals of our own independent experts made publicly and directly. This is, undoubtedly, the right path. However, I believe that at this stage this kind of consultations with the political parties is necessary. Let me explain why.

The way the crisis will evolve in our country greatly depends also on the public perception of the crisis and the public attitude. The behavior of each of our citizens and the behavior of our society as a whole will determine the success of the measures to be taken to mitigate the negative developments. I am confident that the problem belongs mostly to the realm of perception, public perception. You may spend tens of billions of dollars and still to no avail if the society is overwhelmed with panic and uncertainty toward the future. I believe that everyone who is concerned with the future of our country at this juncture is willing to become a promoter of responsible actions and rational behavior. I trust that our political parties in particular possess a great potential and possibilities to act in this way. That’s the reason I attach importance to this meeting. Certainly, I don’t mean the people and the parties who are led by the principle “the worse the better.”

Everyone is talking about the global crisis, offering advice, and proposing arrangements starting from planning personal and family budget and up to the drawing the state budget. However, there is a misunderstanding I would like to talk about. The misunderstanding lies in the misperception that this crisis is exclusively of financial and economic nature, with the subsequent social repercussions. The global crisis is a grave challenge for the political realm, to the system of values and morals. Individual’s behavior in time of crisis reveals his or her merits, morality, and the degree of readiness to accept political responsibility. The easiest, of course, the safest thing to do is just to offer criticism.

Thanks God, our society has been able to act wisely in this crisis, without panicking unduly which would have further complicated the things. Farmers are trying to get seeds with whatever resources they have, to sow and harvest. Businessmen have been actively seeking new ideas and initiatives – and this is, of course, praiseworthy. Political establishment loves to give advice – “you do this and you do that”, and so on. Are we - political parties – ready to act in step with the reality? Are we ready to be modest, wise and most importantly not to succumb to panic and not to create panic?

Specialists suggest that in time of crisis it is more beneficial to work for smaller wages and lower profits rather than not to work in the anticipation of high wages and larger profit, i.e. not to work at all. I am asking you: Are we – the Armenian political parties – ready to work in politics without anticipating political dividends? These are times when reaping political gains, taking provocative and scheming actions means to add to the crisis rather than to counter its consequences. Can we find solutions for the problems unknown before? Today, we will at least try. I am confident that our Government is willing to listen to the proposals which offer reasonable solutions, and it goes not only for the today’s discussion. We will ask the Prime Minister to comment on the observations of all the Heads of political parties. We will also try to outline a permanent format for the exchange of new ideas.”

Afterwards, Prime Minister Tigran Sarkissian made a brief statement. He said in particular: ”As the President has already said, every country in the world is affected by this global crisis. Each country has its own methods of mitigating the consequences of the crisis. Now about our approaches on countering the crisis through all the merits and demerits of our economy: On November 14, 2008 we presented to the National Assembly our anti-crisis program the logic of which is based on three pillars. Which are they? First, the implementation of the infrastructure projects. Second, earmark assistance to the enterprises, which are going through temporary difficulties. And the third, assistance to small and medium enterprises.

In critical situation, the uninterrupted work of the infrastructure becomes one of the most important tasks for the government. Our anti-crisis program envisages the following measures directed at the uninterrupted work of the vital infrastructure and implementation of new projects: First, implementation of the road construction projects – construction of 800-1000km of roads in 2009-2012, which will require nearly 110 billion AMD. Housing construction in the earthquake zone will require close to 75 billion AMD, including the construction of the Masters’ Town. The establishment of the All-Armenian Bank and Mortgage Foundation – 9 billion AMD. Construction of a new nuclear power station and a new railroad also requires large-scale investments. On the second direction: To make the economy more resilient, a pinpointed assistance will be provided to individual enterprises to create new jobs, encourage local production to substitute imports, increase production, to increase the use of local materials, and foster the implementation of innovative technologies. Unorthodox tools will be used to achieve this objective such as state guarantees, subsidies, including in the area of agriculture, direct loans, and participation in the entrepreneurial capital. The operative center has already approved 18 programs, requiring almost 25 billion AMD.

The third direction: Small and medium enterprises are the backbone of a stable economy, and their role becomes even more prominent in times of crises. Toward this end the state is undertaking the following steps: expansion of loan programs for small and medium enterprises, and 15 billion AMD have already been allocated from the state budget for this purpose. Assistance provided to small and medium enterprises by the World Bank, European Bank for Development and the Asian Bank will also increase sharply. Establishment of specialized exporting enterprises aimed also at the better utilization of export potential for our agricultural produce. Decrease of tax burden for small and medium enterprises and, in particular, increase of the ceiling for the added value tax from the current 3 million Armenian drams to 58 million drams. Expense justification through the receipts and bills, and approval of documents in the amount of 36 million drams annually instead of 1 million drams. Transfer of hotel and restaurant businesses into the area of fixed taxation and deferment of the taxation for added value up to three years for equipment import. A considerable simplification of tax administration, particularly for the enterprises with the turnover up to 100 million AMD, and the elimination of a mandatory accounting regulation. Introduction of simplified tax reports, termination of the commissions formerly accepting tax reports, elimination of the regulation on mandatory filing a monthly report on added value tax if the turnover is less than 100 million ADM instead of former ceiling of 60 million drams, establishment of the accounting assistance centers, introduction of standard services, participation in the GSP+ system which will considerably reduce taxation of the products exported from Armenia to the EU. The strength of these three pillars will be conditioned by the effectiveness of our social policies. We have introduced the regime of tight budgetary cutbacks to protect social obligations of the state and to fulfill them in time and in full measure. Pensions, social benefits, and teachers’ salaries have already been increased, which in our opinion will help alleviate the consequences of the crisis for the most vulnerable segment of the society.

We have also planned a number of measures which will restrain unjustified price hikes and provide for an increased flow to the state budget from the major businesses. Among these measures are: a mandatory external auditing for major companies, rigid penalties for major business which fail to provide receipts, increase of fixed pay for casinos and prize games, increase in base taxation for the gas stations.

All the mentioned above measures have been developed after consultations with businesses. We will be transparent and we will introduce mechanisms to ensure public monitoring of the implementation of the anti-crisis program. Since there is no consensus regarding the best way to overcome the global crisis, and there are many uncertainties and the situation is changing rapidly, we are pretty sure that this program will be in a constant need of improvement. We are open to new ideas and would appreciate a constructive criticism.”

After the Prime Minister’s statement, the consultations were continued behind closed doors and lasted for over five hours.

← Back to list