Hovik Abrahamyan’s economy and the ‘legacy’ he left for successor
10-09-2016 10:46:23 | Armenia | Politics
On September 8 Armenia’s prime minister Hovik Abrahamyan announced his resignation ‘in order to give way to a coalition government,’ promised by president Serzh Sargsyan in the wake of a violent standoff at a police station in Yerevan in July.
ARKA news agency tried to take a retrospective look at Abrahamyan’s premiership, who was appointed prime minister two years ago, to find out what kind of a legacy he left to his successor.
Hovik Abrahamyan replaced Tigran Sargsyan, who left his post against the background of mounting social discontent. Days after his appointment as prime minister thousands of young people took to streets to protest against the government’s plan of introduction of mandatory pension system. The new prime minister had to listen to the arguments of the opponents of the new pension scheme encouraging them to discuss all relevant issues and concerns at the negotiating table. As a result, the introduction of the new pension system was postponed until 2017.
Another wave of unprecedented protests was triggered by the government’s plan to raise electricity tariffs by 16% in June 2015. The protests, dubbed ‘electric Yerevan’ lasted for about three months and continued even after Abrahamyan announced the decision to pay compensation to low-income families. Only after the resignation of Electric Networks of Armenia’s Russian chief the popular anger calmed down to some extent.
The tension once again heated up in July this year, when a group of armed men seized a police compound in the capital city. The incident led to mass protests in the capital, when people took to the streets to demand the release of a jailed opposition politician and the resignation of the government and the president.
Eventually, the armed group had to surrender, following which president Sargsyan announced plans to form a government of national accord. This promise actually stemmed from the two-week standoff, which killed two police officers. In a sense, it was a "sentence" for Abrahamyan. Immediately after that announcement media began to speculate about his imminent resignation.
During Abrahamyan’s premiership Armenia joined the Russia-led Eurasian Economic Union, which he described as ‘a promising integration association.’ Armenia also restored and accelerated all infrastructure projects with neighboring Iran and Georgia, aimed at deepening regional integration.
In recent years, despite a decrease in the level of poverty and the growth of wages, the unemployment and migration have grown. The level of poverty in 2013 was 32%, in 2014 - 30%. The minimum wage was raised to 50,000 drams in January 2014; in 2015 it increased by another 5,000 drams. In 2016 the government failed to raise it to 65,000 drams as promised.
During Abrahamyan's term in office the country’s population, according to official numbers, decreased by 16,200 to 2,998,600 people. At the same time, unemployment rose from 16.2% in 2013 to 18.5% in 2015 and 18% in the first quarter of 2016. During his tenure Armenia's foreign debt increased by $593.9 million from $3.899.1 billion in 2013 to $4, 493 billion in July 2016.
The GDP projection for 2016 is t 2.2%, however, for three years, the government has failed to meet the projected GDP growth targets.
This situation in the economy is exacerbated by endemic corruption, monopoly and oligarchy, as well as the unresolved transport and logistics problems. This is the “legacy" left by the outgoing prime minister to his successor Karen Karapetyan, whose main task will be to restore the broad trust of the population in the authorities by taking decisive and bold steps in reforming the economy.
There is another important fact - the parliamentary elections to be held in the country in April 2017. Will the new head of government have time to gain a foothold in his new status and implement much needed economic reforms or would only become a "guest of honor"? In any case, the final configuration would emerge only after the 2017 parliamentary elections and the end of president Sargsyan’s second term in 2018, when the full transition from the semi-presidential form of government to a parliamentary republic will be completed.
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