Armenia's past mistakes become its present and future

By Laman Sadigova

Armenia entered the year of 2016 with its old problems, multiplied by the new challenges, caused by the current international situation and unwise governmental policy.

The corrupt government still lacks any scenario to survive the economic crisis, while those in the state power are thinking of their private benefits continuing their aggressive policy with regard to regional neighbors.

Last year the country could not improve the economic situation… on the contrary, the last 12 months completely ruined any hope for better life. The external debt has grown up, the migration rate only increases and such trends as the decline in investment and capital outflow remained unchanged.

This year the amount of foreign debt, which now stands at $5.12 billion, may exceed 50 percent of the GDP. The case becomes even worse because the government just wastes the money borrowed.

In 2008, before the current government came to power, the figure was only $1.5 billion. In the last 7 years the external public debt has increased by 3.8 times. The international organization Global Financial Integrity reported that illegal outflow of $983 million in total (which is an evidence of corruption and shadow economy) in recent years indeed worsened the situation.

Apart from the protests of desperate and hungry population, robbed by the officials, there are other, more obvious indicators of the approaching bankruptcy.

The official statistics say that the volume of foreign trade in the first half of 2015 decreased by 20.6 percent compared to the same period in 2014 to $2.19 million.

The other factor that worsens the situation is the crisis in Russia, Armenia’s nearest ally and “big brother.” The transfers from Russia remain an important resource for maintaining the shattered economic situation in this South Caucasus country over the last 15 years. The decline in external transfers was no less spectacular - $478.5 million or 32.3 percent. Thus, Armenian citizens received almost half a billion dollars less than a year ago from abroad. Russian transfers decreased by almost $471.8 million.

Armenia is one of the few countries where imports exceed exports by 3 times. Last year, the government again failed to keep its promise to substantially increase exports and to develop import substitution. The solution of this problem could strengthen both the national currency and reduce the growing unemployment. However, nothing is done to improve the situation and Armenia is on the way to the abyss.

Despite different positive assurances from the government on achieving a stable situation in the country, the economy is continuing to fail. The governmental statements about stability seem insane and funny on the background of the real state of things.

The authorities only strengthened the monopolies through destroying small and medium businesses, instead creating functioning economic model not depending only on transfers.

The dominance of corrupted government, implementing aggressive policy, monopolies and oligarchic structures remains a major obstacle on the way of economic survival.


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