Hrant Bagratian: Armenia's import sector should be
gradually demonopolized in order to overcome crisis
13-03-2009 19:00:00 | Armenia | Economy
YEREVAN, MARCH 13, NOYAN TAPAN. The consequences of the
global financial and economic crisis will have a much longer
impact in Armenia than in Western countries as Armenia has been
affected not only by the financial crisis but also by a
structural one, the former prime minister of Armenia Hrant
Bagratian said at the March 13 press conference. According to
him, in the past 4 months about 800 million USD from Armenia's
foreign reserves was spent to maintain artificially the exchange
rate of the dram. In his opinion, this sum was spent to sell
dollars cheaply to 3-4 persons-importers. Whereas, as he noted,
the authorities should have adopted a floating exchange rate
policy long ago, as a result of which the damage done to
exporters would not have been so great.
H. Bagratian said that in 2008, Armenia's GDP fell by 10% in
October on September and by 31% in November on October. Then GDP
grew in December on November, and a sharp decline of 62.8% was
recorded in January 2009 on December 2008. After showing a
two-digit economic growth for the 8 consecutive years, the
country went into an economic decline. According to the former
prime minister, the level of unemployment is high in Armenia,
the mining industry and construction have come to a halt, and
the gem and jewelry sector has suffered a decline.
In the words of H. Bagratian, the authorities are currently
intervening in formation of the exchange rate and, more
dangerously, in inflation. "They seem to do something to please
the people, but it will crash later because the economy is a
market one," he noted.
He expressed an opinion that in order to get out of the
current situation, first of all it is necessary to let the
dram's exchange rate float, then to review the banking policy.
Besides, the import sector should be demonopolized gradually.
Whereas, in his words, the authorities are not conducting a
correct policy of struggle against consequences of the economic
crisis so as "not to hit the pockets of a number of oligarchs".
In this case, according to him, the whole consequence of the
economic crisis "will lie on the shoulders of the poor".
H. Bagratian forecast that the depreciation of the dram
will continue and during a year the exchange rate of the dollar
will fluctuate within 400-850 drams.