Political Parties and Budget: Armenia continues discussions over 2010 Draft Budget

PanARMENIAN.Net - The 2010 national budget of the Republic of Armenia is not efficient. It's just a program allowing to maintain the country's existence, said Artsvik Minasyan, head of ARF Dashnaktsutyun parliamentary group.

"The national budget doesn't satisfy the goals announced by the government earlier, these being maintenance of macroeconomic stability, consumption incentives and export growth," he told a news conference on Friday.

The government is not in a hurry announce state budget sequester, according to him.

As to the government's resignation, Minasyan said the political majority will hardly agree to it.

*

Armenian President Serzh Sargsyan attended Friday the 9th Armprodexpo exhibition held with participation of 65 companies from 15 countries, including Ukraine, Syria and Austria.

Such events help establish new ties and gain new partners, according to exhibition participants.

"We gift our products to the attendees for their assessment and approval," said the head of BioFood company.

* Interest rates for credits and deposits in Armenia's banking system continue to reduce, Chairman of the Board of Directors of Ameriabank and the Board of Directors of Troika Dialog Ruben Vardanyan told journalists in Yerevan. This is a normal reaction of any financial institution given the availability of such a great amount of spare cash, Ruben Vardanyan said.

Process of consolidation of Armenian banks inevitable, Chairman of the Board of Directors of Ameriabank and the Board of Directors of Troika Dialog Ruben Vardanyan told journalists in Yerevan. The process of bank agglomeration is inevitable, he said.

According to him the process of consolidation of banks will take place in Armenia. That process is objective and aimed at internationalization of Armenia's banks. "Armenia's banking system gradually becomes international in terms of ownership, " Ruben Vardanyan said.

However, he mentioned, that there has not been any agreement yet between Ameriabank and other bank in Armenia.

Pensionary reforms are key element for Armenia's further economic development, Troika Dialogue Board Chair Ruben Vardanyan finds. "That requires serious and cautious steps, as the impact is felt on vulnerable groups of population," he told journalists after official opening of Ameriabank's head office.

Vardanyan also highlighted the importance of refraining from mistakes "not only now but also in 10-20 years' time". "Long-term money allocations are essential for any economy," he added.

Armenian will introduce two-phase pensionary system in 2011, CBA Chair Arthur Djavadyan said November 10 in Tsakdzor, during the meeting of CIS countries' officials dealing with security market management.

Laws on "Investment Funds" and "Cumulative Pensions", are currently at the stage of elaboration.

"The crisis resemble a change of seasons", Chairman of the Board of Directors of Troika Dialog Ruben Vardanyan told journalists in Yerevan. According to him, some processes taking place in the world, inevitably repeat themselves and "the second, third and fourth wave of the crisis" are possible.

"Moving from a planned socialist economy to a capitalist system, we should be ready for the crises that periodically come, and it does not mean the end of the world, it does not mean that we should make stupid decisions and lose money, but we must be prepared to the new phase with fall in oil prices and problems in banks, " he said. Ruben Vardanyan mentioned that in such cases preventive measures are important: monitoring of the situation, severe restrictions of high-risk operations that could multiply the crisis, and some people's actions that exacerbate the effect of crisis several times .

According to Ruben Vardanyan, consolidation of the banking industry is important in such conditions. "We need to strengthen the system, in particular, to increase bank's capital, to enlarge the banks themselves, which will help handling of the situation as a whole," Chairman of the Board of Directors of Troika Dialog said.

Notwithstanding the hard situation caused by financial-economic recession, Armenian and Russian banking systems managed to keep situation under control, Troika Dialogue company's board chairman Ruben Vardanyan told journalist today during the official presentation of Ameriabank's head office in Yerevan.

"Despite complicated situation and increased number of unreturned credits. two countries maintained situation under control," he said.

In the meantime, Vardanyan noted that "Banking industry is evidently livening up, and credit capacities increase. Costs are still high of course, but there is money in the system," he added.

*

During the 5 years preceding crisis, Armenia's economy fixed two-digit growth which was quite a rapid rate on regional scale, IMF permanent representative to Armenia Ninke Omes said. Such growth, in her view, was mostly observed in construction sphere. "Investments in construction were mostly made by foreign states, especially Russia, and partially directed at immovable property acquisition," she added.

"Besides, Armenian national currency fixed 20% growth annually, attracting foreign investors," IMF permanent representative stressed, noting in the meantime that crisis reduced investments, causing a sharp drop in immovable property prices. "Now that construction was reduced by 50%, the sphere makes up 30% of gross domestic product. This actually causes 15% GDP fall," Omes stated.

* Armenia-Turkey railway network may be launched in couple of days following relevant political decision, Transport Minister Gurgen Sargsyan told a news conference in Yerevan. "Railway communication between Armenia and Turkey may be re-established in a couple of days in case there are relevant political decisions over Armenian-Turkish rapprochement," he said.

At that he noted that the country's railways system has always been in good order, and frontier zone is ready for exploitation. Besides he said the quality of communication may be enhanced in case of attracting investments.

With regard to highways, Sargsyan referred to ADB-funded program aimed at highway reconstruction, particularly in the direction of Markara village. "Ministry has several programs in that direction, which will be launched in 2010," Sargsyan said.

Under 2010 State Budget, expenditures in transport a will make up AMD 34 billion instead of the AMD 38.8 billion envisaged for 2009. This is a 12% decrease in comparison with current year, Transport and Communication Minister Gurgen Sargsyan told a press conference in Yerevan.

Next year's budget mainly envisages reconstruction highways of state importance. Allocations to be made for that purpose will comprise AMD 2 billion. The sum will be spent on repairing and building roads with a total area of 63 km., as well as reconstructing transport facilities, particularly 8 bridges. "ADB-funded road reconstruction program will continue in 2010. As a result, we'll put in commission reconstructed rural roads with a total area 118-120km. Expenditures will make up AMD 4 billion," Minister said.

At that he noted that the second, World Bank-funded road reconstruction program costing AMD 18.8 billion will be launched in 2010 for repairing roads with a total area of 100 km.

Minister also informed participants about another key program aimed at construction of south-north corridor. Budgetary allocations for this program will comprise $60 million.

In addition, Minister said that $70 million rural road reconstruction program is currently being negotiated with a Chinese company. "Negotiations will be followed by signing of agreement, and very probably, this program too, will be launched in 2010," Sargsyan said. 1.2% economic growth envisaged by the 2010 national budget is conditioned by the 2009 index, head of the fiscal committee at the RA National Assembly said.

*

"The republic's economy tends to stabilize. The 2009 national budget envisaged a 9.2% economic growth, however, the crises resulted in a 18% slump," Gagik Minasyan said. "The crisis was deep and unpredictable. International structures revise their forecasts twice a month. However, greater slump is not expected." "The government's anti-crisis program will produce result in early 2010," Minasyan said.

Armenia's 2010 state debt service coverage will comprise $123 million, Gagik Minasyan, Chair of NA Committee on Financial-Budgetary Affairs, told today a news conference in Yerevan.

At that he noted that Armenian government has attracted enough credits for mitigating crisis impact and reducing social expenditures. "Armenia is not a special country in that regard since the method is used by many other countries," he said. In that context, Minasyan brought the example of Russia, the world's biggest energy bearer, which managed to accumulate a reserve fund in 2009 and use its lion's share by 2010.

Along with other countries, Armenia is conducting talks with international organizations over restructuring the credits attracted, Minasyan added. "Negotiations with international financial organizations are already under way, and that will alleviate the country's burden in terms of paying off state debts," Chair of parliamentary committee said.

By the end of 2010, Armenia's foreign state debts will make up AMD 3 billion, Gagik Minasyan, Chair of NA Committee on Financial-Budgetary Affairs, told today a news conference in Yerevan. In that connection he said that Armenia's 2009 foreign state debts comprise AMD 3 billion instead of the AMD 1.5 billion registered last year and is expected to increase to AMD 3.5 billion by the end of 2010.

With regard to GDP - foreign debt ratio, Head of parliamentary committee said it will make up 31% by the end of 2009 instead of the 13% registered last year and will increase to 41% in 2010.

Maximum ratio, in accordance with international norms, should not exceed 50% barrier, Minasyan added.

*

Armenian winter resorts are ready to welcome tourists, according to Mekhak Apresyan, head of tourism department at RA Ministry of Economy.

"Two ski routes were accomplished in Jermuk this year. Besides we develop infrastructure and encourage downhill skiing in other northern town of the republics," he said.

He assured that interest in Armenia's winter resorts grows.

22 807 tourists visited Armenia in January-September 2009, sadi Mekhak Apresyan, head of tourism department at RA Ministry of Economy.

"The figure exceeds last year's index by 5.8 %. Tourists are for most part arriving from Georgia, CIS countries, Europe, U.S. and Iran," he told a news conference on November 9.

Apresyan also emphasized that "opening of Armenian-Turkish border will encourage regional tourism."

Armenia can become a tourism center. As Mekhak Apresyan , head of Tourism Department of the economy ministry of Armenia told a press conference in Yerevan, Armenia adopted a relevant law and developed a concept on tourism development. "Tourism is a priority for our country. Our cultural and historical heritage, the centuries-old history open opportunities to make Armenia a tourism center and in steps have already taken in this direction," Mekhak Apresyan emphasized.

A documentary film about Armenia has been shot. The film will be soon shown on Spanish television. Negotiations are held with Discovery TV channel and the Italian RAI to show the documentary as well.

"We recently hosted the crew of the public television of Poland, which produced the program about Armenia," Mekhak Apresyan said, adding that the program will soob be broadcast in Poland. According to him, Armenia is still advertised on CNN and Euronews TV channels.

* Russia has been fully satisfied with the this year performance of the "South Caucasus Railways" company, Nikolai Ryzhkov , Russia's co-chair of Armenia-Russia inter-parliamentary cooperation committee, Chairman of Russia's Natural monopolies committee of Federation Council told the 17th meeting of the committee in Yerevan.

As Nikolai Ryzhkov told reporters on November 9, the meeting summarized the work done by the SCR for the year and outlined the work for the future. "The meeting discussed the ferry, as well as the use of transport capacity in case of opening the border with Turkey," Nikolai Ryzhkov said.

"This meeting shows that opportunities to turn Armenia into the international transport corridor have not yet lost," the Armenian- co-chair of the Armenia-Russia inter-parliamentary Cooperation Committee on Economic Affairs, secretary of the "Prosperous Armenia" parliamentary faction Aram Safaryan said.

An agreement on bilateral cooperation, including development of railway infrastructure of Armenia and improvement of transport links between Armenia and Russia will be signed after the meeting.

In October, 2009, South Caucasian Railways CJSC fulfilled its freight traffic plan by 146.1 %. Freight delivery thus comprised 80448,4 freight/1 km, instead of the planned 55058,7/1 km, the company's press service reports.

Export volumes totaled 47.4%, making up 25.9 thousand tons instead of the planned 54.6 thousand. Import volumes comprised 150.3% or 178.9 thousand tons, instead of the planned 119 thousand.

As to internal freight traffic, it comprised 150.3% or 178.9 thousand tons instead of the planned 70.5 thousand. Such growth is first of all conditioned by flexible tariff policy and permanent enhancement of transportation services.