03, 2011

President Serzh Sargsyan’s remarks at the meeting on the priorities of the economic policy

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I have invited you today so that we together adjust our objectives. It is not about reviewing our previous programs or indices set by the budget. The work is underway to meet these goals; we should make that work more efficient and display a more principled approach. I am talking about setting new priorities under current conditions, necessitated by the external negative impulses.

It’s been a difficult winter, difficult first of all from the social point of view. Reduced capabilities of our economy, which has not bounced back yet from the repercussions of the economic crisis, dismal results in the sector of agriculture, caused also by natural conditions, inflation brought about by forceful external pressures and winter troubles have seriously complicated and made life in our country excessively costly. We were literally compelled to face economic winter and solve vital, even if indiscernible for the public, issues. It got to the point that we had to solve on the state level the issue of grain imports – something we haven’t done in a long time.

At the same time, we haven’t ceased to develop programs for spring and among these programs one can mention acquisition of wheat and barley seeds and handing them to the producers on credit; we can also mention the struggle to keep the gas prices stable, and it can indeed be called struggle. I can mention programs to get money and give it to the regions so that they are able to solve long overdue problems. In general, there are many such programs. They are ready, and the time has come to work vigorously.

Our people should be able to feel some relief from their daily concerns as early as May or June; people should feel that incredibly high prices for food and especially for agricultural goods are coming back to more customary prices. This is a problem we have to solve despite difficulties. I expect innovative approaches for the resolution of these problems. I expect each of us every day to solve at least one problem - small or big – but one problem must be solved. With this regard, I have some observations or tasks, if you will, and now I would like to introduce them.

1. To contain inflation in short-term and long-term perspectives will be our priority. Here, I would certainly like to see a more coordinated interaction between the Government and the Central Bank, and, why not, probably some audacious, unconventional steps.

I do realize that planned reduction of budget deficit, economic revival and monetary and credit policies will produce some results – however, it’s not enough, we need more than that. I want us to be more particular about this issue, to involve in the resolution of this problem our Oversight Services and the Commission on the Protection of Economic Competition. I expect certain officials to understand more thoroughly the price formation of some goods, particularly essential goods – how they are being obtained, what are the transportation costs, and what’s the selling price. We have all ways and means to solve this problem in its legal framework. The importers should be worked with seriously, the producers should be worked with seriously and decisive steps certainly must be taken. I believe the time is right to boost competition.

The Government and the Central Bank should realize that in the end of this year, we must have inflation rate at least two times lower than last year, and this target will be constantly in the focus of my attention.

2. About national currency: I would like to start by saying that appreciation of Dram is bad and unacceptable for the economy and for the local producers alike and, in my opinion, it has been hampering our advancement for a long time. I am confident that we can stay clear of such developments. Of course, we all do understand that the exchange rate of the national currency is formed by currency flows, and all forecasts show that we are going to have a very slow and stable depreciation of Dram, throughout the year, without dramatic ups and downs. I believe it is quite normal and good for our producers and, first of all, for our exporters.

3. Today, I have also invited the Ministers, who are responsible for the developments in the main areas of our economy. Annual GDP data and comparative analyses of its composition sector by sector will serve the base for the evaluation of each Minister’s work – we will evaluate your work based on that and only on that analyses.

Area of industry and services, Mr. Davtian, we have enormous work to do. I want you to work on very concrete tasks, be very proactive and stand by our businesses. I believe that your Ministry and you personally represent the business community in the Government. Our Government is a corporate body and if businessmen have problems with other agencies, it is first of all your problem. Excellent foundation was laid last year and year before, and already this year we should see the results. We shouldn’t be complacent with the fact that in 2010 we had 9 percent growth in the industrial area. It is not much because the starting point was low. This year we must have much more serious results. This is your main task.

This year, we also anticipate growth in the construction area. The programs that we have already launched and will be launching soon can become a good start for the revitalization of the construction sector. The allocated resources are sufficient to provide for a serious growth this year. The Ministers of Urban Development and Transportation and Communications should become the catalysts of these programs. You should facilitate these programs. And it remains to be seen if the changes we make – in the areas of licensing and authorization – are of any use. After all, people should have one field, get used to it and work. Or if these changes are really necessary, it should be clarified on the TV and in the papers why we need to do it. I am aware that at its recent sittings the Government has nullified a number of licenses and changed rules. But everyone should know about it, particularly those who are involved in the construction business.

It is said that state programs should serve as engine for other projects. We implement huge projects but inexplicably they do not become the engine. The Ministers of Urban Development, Transportation and Communications must ensure that this year that engine becomes noticeable.

Mr. Prime Minister, I ask you to accept no excuses for the deferment or unjustified procrastination of any program. If a major, significant program has been messed up, it will not go without consequence; those responsible for failure can bring dozen of excuses, but we don’t need excuses.

4. This year the village, the farmer and agriculture will be on top of our agenda. It concerns not only the Minister of Agriculture. Undoubtedly, the Ministry of Agriculture should be very active since the Government views the sector of agriculture as a priority. We should conduct a very purposeful and concrete work. Each of us should regularly visit rural areas – the Prime Minister and all Ministers. I will also conduct regular visits to the rural areas and will take certain projects under my personal control. And the results of these projects should be noticeable; the farmers should know that they are not alone.

In general, it’s pretty odd to me that farmers who have land remain poor. Why don’t these people cultivate their land? One can say that a part of our villagers don’t want to work, etc, etc. There is no such thing. When a person is sure that he can live decently by toiling his land, he will certainly work. Why farmers at the Ararat valley work more on their land than farmers anywhere else? Because they see the results of their labor.

I would like to invite Mr. Karapetian’s attention to another problem. Many times in the past, before you became the Minister of Agriculture, I was told that the farmers had no problem whatsoever with selling their produce. Why don’t we state it publicly? Why don’t you declare that as the Minister of Agriculture you guarantee that they will be able to sell whatever they have grown. Tell it, if that’s the case. If it’s not the case, we don’t need talks like that at all. And in general, we need to constantly expand the capabilities of our processing industry. Especially, in the view of the fact that our processed production can be exported easily. I remember, several months ago, when we visited your enterprise, you said that you were not able to process and export goods in sufficient amounts since internal market was consuming too much. So, now explain it to the people, help them to produce more so that we can process more.

5. An observation related to the work of the Central Bank. It’s no secret that capabilities, human potential, etc make the Central Bank one of the most consummate establishments in our country. Quite naturally, the most important task of the CB is to maintain stable prices. Mr. Javadian, on many occasions you said so yourself that the sector of agriculture plays an essential role in the inflation related issues. If it is so important, why don’t you work more doggedly on funding projects related to agriculture? I realize that our banks are commercial banks, they do business and unwarranted intervention with their work can have nasty consequences. But I also believe we can lead them actively toward agriculture, create necessary conditions; agriculture should have a more prominent place in your activities.

6. I would also like to invite your attention on the decision-making process. I ask all of you when introducing changes, to examine them from all points of view; when introducing changes the perfect law or decision drafting in not the most important thing. The most important thing is for the person who proposes changes to see what the impact would be on different individuals. If we are not able to do it, we will be led only by good intentions. Apparently, changes are always painful, even if they prove to be useful in mid-term and long-term perspectives. People, of course, see and feel perfectly well if the change is for good or not. Good intentions are essential but not sufficient for introducing changes. We should be able to provide essential and sufficient conditions. I am glad that our Government doesn’t view itself as infallible and regularly comes back to the problems, solution of which sometimes creates other problems.

In the nutshell, I mean to say that all our steps aimed at changing the situation should be scrutinized very carefully.

We speak tirelessly about reforms in the tax and customs systems. I would like to repeat that any reform is, certainly, painful, and I appreciate, Mr. Khatchatrian, today’s approaches and desire to conduct these reforms painlessly and in a well-organized manner. It is the right approach; however we should also realize that the moment will come when we will enter a phase of profound change and we should get ready for it now. If necessary, we should engage experts because rapid changes contain multiple risks and can cause shock. And in order not to make a step forward and two steps backward, or two steps forward and a step backward, we have to employ all opportunities to get completely ready. With no qualms, we should also ask for the assistance of the international organizations. I don’t see any problem here. These organizations are meant to help developing countries.

Obviously, in the course of reforms there will appear individuals who will try to address their personal issues, or solve political problems, presenting lies as ultimate truth, who will try to discredit the system. It should be taken calmly and reservedly, at the same time presenting constantly open account on the accomplished works.

Very often criticism contains serious observations and proposals and they definitely must be taken into consideration. We are ready to accept any piece of good and constructive advice. We also must engage those, who give good and constructive advice, in our works, we must do it.

I believe these observations do not set the bar for our work too high. All this is quite doable, and we sometime later should be able to see the results of these changes and inform the public on where we stand.

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