Tuesday, 27 April 2010
Question: I have a question to the Prime Minister if Armenia: How much and what kind of investment is the Government of Armenia going to attract into the national economy from the Eurasian Development Bank?
Thank you. First of all, I want to note that we have submitted large investment projects to the Bank because our monetary and credit policy consists in that we do not want to impair the competitive environment of the banking sector of Armenia. And this means that the activities of major international banking structures should have certain specificity featuring large-scale investment projects which, on the one hand, meet the mandate of the bank and, on the other hand, take into account Armenia’s specific features. And from this point of view, we have selected those sizeable projects of regional character and targeting integration in the framework of the CIS which were beyond our commercial banks. In particular, they cover chemistry, energy, mineral processing. These projects are large enough: each of them costs about 100 million dollars. Of course, our applications and appetites should be harmonized with the doctrine of Bank because the Bank should take into account interest, estimate and manage the risks. These projects are being examined with the Bank. I cannot anticipate the developments and say what the outcome will be and to what kind of agreement we shall come. I can only tell you that they are quite exciting projects which have been approved by the Government of pf the Republic of Armenia. Thanks.
Question: Mr. Prime Minister, Armenia contributed to the establishment of the Anti-crisis Fund in the framework of EvrAzEs. Could you tell us please the aggregate amount, the types and the deadlines set for Armenia’s applications?
It is a good question because at the latest meeting of heads of governments we discussed this problem involving the ministers of finance. Subsequently, I called our colleagues’ attention to the fact that the Anti-crisis Fund functioned very slowly especially as considering that the crisis was thought to have been left behind, with very little resources drawn on the Fund. Therefore, there is a certain problem here consisting in that the Fund is managed by the ministers of finance who are known to be very conservative in this respect as they give money to nobody. They deem it to be their basic mission and seem to have coped with it quite successfully considering the current state of affairs with the Anti-crisis Fund. But we have submitted a number of sizeable projects which, in our opinion, could be useful both to Armenia and Russia, as well as to Kazakhstan as they represent mutual interest, and the discussion mainly bore on the terms and conditions on which the Fund could give money to member -countries. We argued that the conditions were too rigid and did not correspond to those principles upon which the heads of government had agreed, the more so that the matter had already been discussed at a presidential level. Those conditions on which funds are made available should live up to their very name that is they should be with lower interest rates, longer repayment deadlines implying a grace period. Otherwise, the activity of the Anti-crisis Fund would be senseless, because any international financial institution can provide us with such costly resources, including the World Bank, the Asian Bank and the European Bank, if the question is that the State should give guarantees under these projects. Our purpose consists in that the Anti-crisis Fund identifies eligible projects so that they could be realized without a State guarantee, promoting, on the one hand, restoration of economic potential and, on the other hand, integration processes. But, unfortunately, this process was delayed, because the Ministers of Finance had to develop various provisions and documents on how all this should work. We have put forward a set of projects before the ministers of finance, and our minister of finance came up with a package of projects at the consultative meeting. Now I do not want to make them public because I feel we had better speak about those projects which have been approved already. Thanks.
Question: Mr. Prime Minister, at the latest meeting of heads of government a common opinion was voiced that the economy in CIS republics is entering upon a stage of recovery. To what extent is it true? And a question to Mr. Finogenov: How you would estimate the anti-crisis policy of the Government of Armenia?
Tigran Sargsyan: Thank you. Last week exactly I delivered a detailed report on how we closed the first quarter 2010. We stated a 5.5% growth of GDP. It is my pleasure that industry is showing fast pace of growth amid shrinking construction. Nevertheless, all other sectors of industry enjoy sufficiently good pace of growth. Foreign trade turnover has increased too. Exports went up some 50% for the first quarter of 2010 with a 22% increase stated in imports. I looked through the figures published in the Russian Federation and Ukraine which had comparable performance in terms of GDP growth – over five percent for the first quarter. This means that we can basically state that the CIS countries have entered into the stage of economic recovery. If these trends are maintained in the second quarter 2010, we will certainly have more confidence in stating that the downturn is left behind. As you know, some economists are skeptical about the regenerative processes observed in economy as they are sure that they may be connected with the expansionary monetary and fiscal policies implemented in the CIS countries.
Some economists seem to be pessimistic about growth indicators: they say that they have a temporary character and that we are in for a new tide of stagnation. But the analysis of the global press and major financial centers shows that the majority leading experts estimate that economic recovery is an obvious fact already. It has forced the IMF to revise the forecast for 2010. And this means that there is a general consensus on that the global economy quits the stage of recession. Perhaps, these rates of growth will not be such as during the pre-crisis period, but growth can be observed in all countries and this inspires optimism. Thank you.
Igor Finogenov: You have just been briefed on the figures and tendencies which characterize Armenia’s current economic position. And I shall say that we positively estimate those steps undertaken in the economy of Armenia as part of response to economic situation. Today’s event is the evidence of how highly we appreciate them. Today we signed a credit facility to the amount of USD 20 million. It testifies that we have a favorable opinion as to the possibility of getting back this money. Note that it is a loan arrangement and not a grant agreement. Besides, I do believe that one more positive moment speaking about Armenia’s good economic status is that the Republic of Armenia does not want to get budgetary support from the Anti-crisis Fund. This is a very serious detail which testifies that public funds are in good order enabling a way out of last year’s deadlock. The fact that the Eurasian Bank has opened its local office in Yerevan testifies that we shall always be ready to back the country both as a bank and as the managing entity of the Anti-crisis Fund should there be any negative tendencies in the economy. I wish to state again that we do not see such trends and are quite optimistic about Armenia’s economic development and the availability of investment demand in the Republic of Armenia. We are studying carefully those proposals received from the Government of the Republic of Armenia, from the business community concerning such projects as are approved for implementation, including by our bank and through the Anti-crisis Fund. We shall continue doing this work.
Question: Mr. Prime Minister, your country has a status of observer in the EvrAzEs. You and the President attend its summits on a regular basis. Has the idea of full membership been discussed in the Republic of Armenia? And if not, why? Yet, I would like to ask you about the Customs Union. We understand that Armenia has no common borders with it. Does this mean that there is no more possibility for building a common market, say with the countries of the Customs Union?
Well, this question calls for a lengthy reply. Full membership in the EvrAzEs is not an end in itself. We have declared that Armenia is interested in integration processes because it is in the best interest of the Armenian economy and our State. The point is whether there are real mechanisms for implementation of economic projects. You were right to note that the absence of common borders may create serious technical problems. In general, worldwide experience has no record of a country entering a customs union without having common borders with it because in such an event it may be denied all the advantages available in the customs union. There is no point in joining a customs union without common borders because you will have to pass the needed formalities in third countries. From this point of view, on the one hand, the customs union creates problems because you should coordinate all custom duties with those countries included in the union, and on the other hand, you cannot benefit from all the advantages offered by such a union. We have discussed this question at the level of heads of the government. You may remember Mr. Shuvalov come to Armenia and discuss this issue in all detail. New ideas have appeared as to how it is possible to realize this project considering the problem of Kaliningrad, and also that it is necessary to work out specific mechanisms concerning the conduct of customs inspections for such goods as have to transit via Kaliningrad to get into the Customs Union. And it seems to me, that the ideas voiced by Mr. Shuvalov were quite interesting, including for Armenia.
If Kaliningrad is deemed as a special a customs area for the union, Armenia too can be looked upon as a special zone with special procedures in place enabling the countries of EvrAzEs to act in the Near East using Armenia’s platform and those services offered to them. It seems to me that once developed these mechanisms will answer the question on how a country with no common borders can accede a customs union. For the time being, this idea is being studied at the level of joint working groups, and if we can find any interesting solutions, we shall submit them for your consideration. Thank you.
