The Government of the Republic of Armenia

"Honorable Speaker of the National Assembly,
Dear Members of Parliament,

First of all, let me express my gratitude to the National Assembly and to all the MPs on behalf of the Government for those discussions that took place during the last three weeks of at the standing committees and the plenary session of the National Assembly.

These discussions enable the government to identify our strengths and weaknesses. Your suggestions enable us to better understand which of the problems are of greater importance to our MPs and political factions. This helps the government to clarify and make corrections to the programs that we are implementing.

Thus, what are the fundamental problems that exist in today’s Armenia? They were addressed in the coalition government’s plans: unemployment, migration, poverty, high levels of corruption. These are the most important challenges at the same time the most serious threats that impede the normal development of our country. The fact that the government, the authorities, our political team take note of these problems creates additional difficulties for our opponents who are trying to find out other threats and arguments for serious criticism, which unfortunately are often groundless. All this of course does not promote dialogue, because dialogue should focus on the most effective ways to find a key to our problems. The programs that we have developed and presented to your judgment pursue exactly these goals.

We are ready to engage in a professional discussion, to answer any question, participate at hearings that will be held in the National Assembly, providing you with detailed information concerning all issues, approaches, and we are going to solve those problems. And we are ready to debate with you whether the ways that you can provide are more effective or the ways submitted by the government are more efficient.

I think that the format of the dialogue will be useful not only for the government and the opposition, but also for society, because society has also become involved in the positive field, search field, which could significantly change the atmosphere of the Republic of Armenia. But doing flown statements here, presenting unsubstantiated accusations against the government, will not bring to any good thing, as it was in the last 23 years. It is not the right way, moreover, our 23-year-young state experience shows that the opponents who choose such a strategy failed to reach a success and the opponents who make a constructive work in the field, who have something to say, make suggestions are estimated by the government, by the people and I think that this is a lesson that we all need to learn. Secondly, in terms of the political assessment, it was easy to criticize the government during the last 23 years, because there were objective grounds for criticism.

Even today most of our opponent’s criticism is fair, right, because they reveal the problems that exist in the Republic of Armenia and it is the obligation of the government to find a solution for these problems, so that our citizens see tangible results. In that sense, of course we agree with the criticism, identified problems, because we name the same problem: migration, unemployment, poverty and corruption.

We have different ideas about how to solve these problems. As regards the political aspect of our assessment of the target that unfortunately we do not hear from our opponents, the political vision of the middle class formation, on the basis of which civil society can be formed. Do we have great success in this field or not in recent years? Our opponents declare that there are some serious success in this arena, particularly in terms of civil society, and from now on any government will be constrained, because of the formation of a civil society and that is the most important political aim, that our country is standing in front of, because without a middle class and civil society, it is not possible to identify the country's economic growth potential. The basis for a sustainable economic growth is civil society.

I would like to suggest the National Assembly holding special hearings on small and medium business, namely what steps should be taken to ensure that the tax burden, tax pressures aren’t big for small businesses, what to undertake to avoid closing of small businesses because of tax administration, what we can come up with legislative initiatives to improve the environment. I think that these debates will bring benefits to all of us, including the government, because it is important for us to have the solutions that you are offering.

We are also willing to make estimates as to what will be a solution to the tax burden on the state budget what it would be like, and whether it makes sense to apply these steps, expect results, and whether they are going to be significant or not. This is a very important economic and political issue, and the future of our state depends on our success in these areas. There are many features of the 2014 budget.

It is regrettable that we have MPs who do not notice those serious and radical changes that we propose each year to the National Assembly. The major change was that we presented a comprehensive plan for the export oriented industrial policy on which resources spent some time organized a public hearing on a business conference, invited our opponents, the private sector and started to implement the plan.

It was a radical change in economic policy in our country, and we can not omit it. Secondarily, changes in social policy, which we implement consistently. We think that the social protection strategy that we implemented in Armenia wasn’t efficient and the international experts have also given the same assessment. We were consistently implementing these changes. Sometimes we make such explanations, interpretations that content of changes we suggest is not perceived properly.

I regret it, but at the same time I would like to ask our partners to listen our arguments and explanations. It is already for several times, that all state officials had an opportunity to present the content of social policy, but, of course, there is a simply perceived populist slogan, that employment benefits are being eliminated, hence our society appears in the mood of misunderstanding. There is no such thing, you see that the social spending are increasing in 2014, the share in GDP and the absolute volume of social spending shows the tendency of growth. We say we are switching from inefficient programs to the investment of efficient ones, as in the regulation of social field we have reached a level that allows us to pass to that very step. We are now passing from simple social policy to a more complicated one, as we have developed 10 projects, which aim to provide a socially vulnerable layer with job opportunities.

We are presenting to you such programs as may increase the efficiency of our social expenditures: they have already reached those layers that really need them. Let us consider a simple example, namely is it right to grant a social benefit to an unemployed ex-bank manager (whose monthly salary makes AMD 2 million) in Armenia with a 32.5 percent poverty level. Is such a policy acceptable? We say no! Providing an AMD 150 thousand-worth benefit to such people is wrong, since AMD 150 thousand should be given to the people who have been deprived of the opportunity of having a job in which you have to train them financially, etc.

The Intention of the change in policy is to pass from the principle of universal social protection to providing the socially uncompetitive layers with more funds, not abstract aid, but the assistance given to them by the state and I think that either you should agree that this approach is better for our country.
Together with you we introduce to a new salary system, which we have prepared for a long period of time, because every time when you were criticized us that this issue is being introduced too late, we were saying that the most serious financial costs to be construed as an integrated system: annually at least 65 billion spending increase. With the 2014 reform we will raise the salary of 238 thousand people.

And finally, in the various branches of the government will be a clear understanding of what should be the salary levels, and state employees have the opportunity to plan their career, their future. This is a serious problem, so that our citizens have long-term planning, rather than short-term. This is a contribution is one of the most important elements to the fight against immigration. If the citizens of the Republic of Armenia have the opportunity to take a 30-year loan and buy an apartment, it means that the future of the young family is bound with the homeland , if the citizens make investment into the pension fund , knowing that 35 years later they will have a secure old age, it means that these people are tying their future with the Republic of Armenia, this means that the people determine their own economic future, our most important goal is to create such an environment and atmosphere for the citizens. From this perspective, this is the one of the most important features of 2014 budget.

We are investing over 20 billion drams to promote the introduction of funded pension system to make the national interest increase to save money today, in front of his eyes at the prospect of long term serious and radical change. The 2014 budget’s next feature lies in the fact that we are adding to the education and healthcare costs. These are serious problems, because the perception of corruption in the first place is due to these two systems, because these systems communicate with almost all the families and here, unfortunately, agreeing to our critics, we note that the perceived level of corruption is high, and we are guilty of it, because the financial models that are embedded in these systems are flawed, and they in turn encourage corruption.

If the government uses health care services and medical services and pays the lower price as the markets, a question arises, namely how to close the gap of the health care services? It creates an objective basis for corruption. We have developed a new financing mechanism, in which the contribution is going to be quite painful, because eliminating the old tradition is not so easy.

However, we expect that the National Assembly will support us in this matter, so that we can introduce a new funding model for health care. It should be noted that the change, which we did together with you and implement a social plan for state employees, gave a positive result. We discussed in this hall, whether the insurance system, which includes the social package, including mandatory health insurance package is effective or not.

We estimate that we agree with the criticism that it is not effective, and I would like to inform you that the Government adopted a decision aimed at increasing the efficiency of the system, from private insurance companies, while at the same time; this function should be performed by the State agency. This means that all of our employees who use social package will use it, but we will change the financial mechanism, to save serious financial resources. And I'm also glad that the insurance companies also recognize that this decision is correct, because the financial abuses that existed are also accepted. These abuses were dangerous because they could jeopardize future developments in the insurance field.

The 2014 state budget will be very hard to comply with, because in reality it figures that we have put our budget based on a rather brave performance, but we are conscious that we are going to goal these indicators, which means that the intense work is waiting for government.

Dear colleagues, we can have a success in this work only in case of cooperation with you, if we are able to bring together all the laws that will ensure economic growth and development in Armenia, discussions, debates, and to make it to the reality. Once again, Mr. Abrahamyan, let me thank the National Assembly for discussions, thank you.