Economic crisis in Armenia

By the end of 2009 Armenia’s economy will have contracted by between 7 and 12%, says former PM Grant Bagratian. He adds that the economic crisis in the country goes deeper than this and will develop into a very serious budgetary and banking collapse.

Bagratian thinks that incorrect economic development policies implemented by the Armenian Government over the last 10 years have been the major cause of the present crisis. He says that the Government has no clear anti-crisis programme in place and the sums allotted for this are misused. Bagratian thinks that in August a precise prognosis of how deep the crisis will become could be made, but this would have to be based on what is happening in Russia at that time.

As is known the state of the Russian economy considerably determines what Armenia’s economy is like. If the oil price increases the economic situation stabilises in Armenia because money transfers from Russia increase, but if the economic crisis continues in Russia the only solution for the Armenian Government would be to introduce a progressive taxation system. The development of the Armenian economy is now very much dependent on the stabilization credit of USD 500 million issued by Russia which will be coming to Armenia in the near future.