The Government of the Republic of Armenia

The 2009 State budget bill is based on a medium-term program. The medium-term spending program reflects the Coalition's electoral program, as well as the electoral program of the President of the Republic of Armenia, that is the goals set before the Government. The budget is designed based on these indicators. There is a question which worries everybody: whether the Government has chosen the right strategy amidst global financial and economic crisis or there are alternatives to this strategy? What is this strategy? Firstly, we have prioritized macroeconomic stability to raise the country's resistibility in the face of various challenges. Secondly, we have highlighted the maintenance of financial stability to provide for private sector investments. And, thirdly, we have made a point of stimulating economic growth by all means. Moreover, we have brought to your notice an unprecedented array of tools which have not been used by the Government over the last 17 years, namely: incentives for domestic manufacturers, availability of State guarantees, participation in the capital of private enterprises, provision of subsidies to help them develop business programs and so on. The Members of Parliament keep on asking us whether the Government has developed an accurate timetable for implementation of these measures. Yes, dear colleagues, we have a precise timetable and action coordinators. I wish to inform you that we have already carried into effect the first program I presented to the National Assembly during an earlier statement. The Government has already extended 17 billion drams to the Armenian-German Fund by the CBA in order to provide loans to small and medium-size businesses. This money will help create thousands of new jobs in Armenia which is extremely important for the year 2009. Secondly, we have started implementing all those large-scale and sizeable programs as announced by the RA President from this very rostrum. In particular, the Government has endorsed a bill on the establishment of a pan-Armenian bank. The CBA budget stipulates funds for the creation of a pan-Armenian bank, an investment fund and mortgage fund. These are objective targets to be implemented during 2009. Work is underway towards the construction of a nuclear power plant. The first results will be reported back to you as early as this December. Railway construction activities have started, too. We have introduced this program to our partners and have discussed it with corresponding international financial organizations.

We will prioritize infrastructures and, first of all, energy, agriculture, water. We are planning to spend 900 million dollars at least. To this end, we have negotiated with the World Bank, the European Bank and the French Bank for Development. We are due to get long-term credits for these sectors under concessionary interest rates. Quite naturally, by spending money on infrastructures we will create more favorable conditions for economic development.

Another major task is the rehabilitation of the disaster zone where we are going to invest 77 billion drams. Work is due to begin in 2009. You may be aware that tenders have been announced for building entities. The first round is already complete, with the successful bidder having to proceed to preparative work. About 5000 new jobs will be available in Gyumri. Building entities have informed us that work contracts have been concluded only with 1000 workers and currently there is a need for extra workforce. All this is due to propel economic growth in the near future.

Dear colleagues, I want to draw your attention to the fact that our actions will be complex and operational ones, which means that in 2009 we will hold joint consultations with international organizations, domestic NGOs and MPs in order to get them involved in the implementation of anti-crisis actions. Worldwide experience shows that it is the most effective method.

And now, dear colleagues, I want to go into the details of the question which worries you most of all, namely the proposal on reconsidering the salaries of the high-ranking officials. During the discussion of the question of increasing wages in the judicial system numerous concerns have been voiced which I would like to answer. Raising wages in the judiciary is one of the components of our complex program. We shall carry out similar actions in other spheres as well. From this perspective, we had better not focus only on increased wages as it seems to be clear that increased wages are not but a single component of this complex program. I wish to look at this question from the following perspective: which strategy do we have to embrace in raising wages for high-ranking officials? Our principles are as follows: firstly, we must observe the principle of internal and external justice. What does it mean? The principle of internal justice means that salaries shall be calculated proceeding from job descriptions inside the system. Job descriptions and job identities will help build up a scale of posts to separate individual offices and ensure internal fairness. Harder work must be given higher remuneration. Once the system is up, we will have accurate rules and criteria to provide for internal fairness. The principle of external justice implies that we should take into consideration the correlation between market wages so as the specialists holding public offices might get wages comparable to the market ones. Wages currently applicable on the market must be a point of reference for us. What matters most is that we should provide for justice amidst high-ranking officials rather than between different systems, with the problem consisting in that you cannot refer to market wages because the market itself does not allow for jobs like yours which means that there must be a political consensus concerning this issue. International experience testifies thereto.

High-ranking officials' wages, internal and external justice depend on political consensus. We have conducted polls among MPs, presidency staff, ministers, Cabinet representatives to get an idea about the possibility of a political consensus in the Republic of Armenia. The factors with which we have tried to decide upon the issue are as follows: the role of public officials in decision-making processes, in particular, their responsibilities in respect of defining corresponding goals and priorities - whether they have target-setting or decision-making powers, A second factor is the influence exercised, namely to what extent the decisions passed by a public official can affect a given sector or the whole country. The third factor is the complexity of a specific task. In particular, I mean the importance of the areas or the range of spheres supervised by public officials. A fourth factor is the aptitude of entering into dialogue, his/her negotiating, understanding and communicating skills etc. And lastly, we must consider the qualification of our officials, their command of a corresponding sphere, foreign languages, computer skills etc. Proceeding from the above and based on the international experience, we have worked out an indicative scale by dividing the posts into four different groups. We shall submit this document to your attention. Based on the political consensus reached during the discussions with the National Assembly, the Government will design a comprehensive concept regarding wages which in the long run will streamline the relations between different areas, departments and, in this case, we shall deem that we have reached a political consensus on this question. This is our approach. We understand that MPs seek a soonest possible decision of the issue. There is an arrangement made with the Speaker of the National Assembly concerning the format of such discussions. Notwithstanding, I think that the problem itself is a complex one, as individual agencies and political forces may have their own vision of what should be their place and weight inside this scale. We have drawn upon international expertise because many countries have gone through this stage and their know-how can be useful to us. These discussions testify once again that we are facing quite a sensitive problem. Therefore, we believe that we should spend more time on the achievement of a consensus as after that it will be easier for you to present your legislative initiatives to the Government.

In conclusion, I would like to underscore that we are going to face many challenges in 2009, because for the first time, economic potential has been estimated over the existing economic growth possibilities. This means that we have to make a joint effort in the direction of economic growth. Once again, I want to thank you for these interested discussions which helped us understand the problems of concern to both the members of parliament and the society as a whole. We are convinced that we shall succeed in addressing these challenges together.