Armenian Reforms Still Too Slow, Says EBRD

Armenian Reforms Still Too Slow, Says EBRD

Armenia -- Erik Berglof, chief economist of the European Bank for Reconstruction and Development, at a news conference in Yerevan, 9Mar2011.
09.03.2011
Ruben Meloyan
The Armenian authorities are still too slow to carry out reforms that are essential for ensuring faster and sustainable economic growth, the European Bank for Reconstruction and Development (EBRD) said on Wednesday.
In a report presented by its chief economist, Erik Berglof, the bank concluded that the authorities have yet to demonstrate that they have learned the right lessons from the global financial crisis which has hit Armenia hard. It said they should do more to improve the domestic business environment and tax administration and tackle widespread government corruption. The International Monetary Fund and the World Bank similarly think that such reforms are necessary for the country’s sustainable economic development. The Armenian authorities seem to accept this prescription, having repeatedly pledged to take relevant steps. Prime Minister Tigran Sarkisian and Central Bank Governor Artur Javadian outlined measures planned or already taken by them in a November 2010 letter to the IMF’s managing director, Dominique Strauss-Kahn. Berglof said the authorities should enforce legislative changes approved by parliament and take other concrete actions. “Armenia is not the only country that has problems with implementing business environment reforms,” he told a news conference in Yerevan. “It has a lot to do with a lack of competition, concentrations of certain sectors, oligarchic structures.”According to the report, Armenian businesspeople interviewed by EBRD experts feel that economic activity in the country is also hampered by the sizable informal sector of the economy and the lingering fallout from the 2008 post-election unrest. “There is a sense that the political environment is still not entirely predictable,” said Berglof. The Armenian economy grew by 2.6 percent last year after contracting by over 14 percent in 2009. Like the authorities in Yerevan, the IMF and the World Bank, the EBRD expects it to expand by over 4 percent this year. The London-based development bank has invested 352.6 million euros ($490 million) in mainly private Armenian firms since the mid-1990s. This has taken the form of equity purchases and direct loans.