Publications

Interview of Nerses Yeritsyan, RA Minister of Economy with AmCham Magazine

AmCham Magazine, Spring 2009

AmCham Interview with the RA Minister of Economy Mr. Nerses Yeritsyan

Which is the axis of government anti-crisis policy?
The axis of the government anti-crisis policy is to maintain smooth macro economic policy and ensure the price stability, while managing and adjusting the budget in a flexible manner, and guaranteeing social expenses since the crisis acutely affects low income people.
The second axis that we have been announcing constantly is the same, namely large capital expenses (the approval and financing procedures have been accelerated) and the financing of small and medium size businesses. We obviously encountered progress on this one. We try to push this sector forward both by means of banking system and direct support. The latter refers first of all to agricultural sector, which can provide for better results.
Meanwhile, we are also negotiating and searching for other opportunities to increase investment and keep the demand high in this anti-crisis stage in order to prevent the economic slow down.

The government anti-crisis program was developed in November 2008. Is it possible to review this program taking into account new realities?

The situation is being constantly analyzed, but the anti-crisis provisions that were put forward do not change. It is possible that their volume and promptness change in the process, but the provisions do not change. This is proven also by the response to the crisis in other countries. One can speak about the promptness of our policies, change in the formats of the directions or increase or decrease of financing of various directions based on necessity.
It is hard to make projections in this crisis situation, which is alleged by all policy makers around the world, and Armenia is not an exception. But we must be able to make correct estimates and have timely interference, so that we suffer minimal harm from the impact of the international crisis. I simply want to stress that the crisis is a reality and we have to be able to confront it. Its severity is growing day by day all over the world and naturally our approaches to it need to be changed. Otherwise, all the damages will be transferred to our economy. Our main policy will be creating a buffer, helping us to counterattack the negative effects imported from the developed countries and CIS countries with big markets.

What were the results of the meetings the government held with businessmen? What steps will the government take based on the suggestions of the businessmen?

The discussions were rather effective. This was our first step in the direction of developing industrial policy. Following the assignment of the prime minister, after each meeting we presented the concrete action plan within one or two weeks. We have already started implementing legislative and institutional changes on several activities. We will have to periodically address the other part too, so that we are able to solve the industrial issues accumulated in the various sectors of economy. The crisis creates perfect conditions to speed up this process. We will be able both to counterattack the crisis by speeding up the process of bringing the investments directed to these companies to Armenia, and have a good legislative framework ensuring favorable conditions for industrial policies when the crisis ends.

According to you, what branches of the RA economy contain strong growth potential in the crisis conditions?

It is hard to say in the crisis conditions which branch contains large potential, since all branches suffer from decline and deterioration of general demand. The traditional branches that accounted for big growth have naturally been affected first. The potential for rapid growth will be provided by the sectors that were small but have had a fast growth rate in the past. They have the potential to constitute significant specific weight, if we pursue correct policies in this direction. These are high cost services including information and high technologies, biotechnologies, pharmacology, and new industrial agricultural branches because, in any case, the demand for agricultural products will be high. It is possible to provide for high growth rate in that direction if appropriate policies are pursued. Meanwhile, we will have to be able to improve our commercial conditions for the outside world, which will allow us to increase exports significantly. In other words, the branches with exporting potential both in the service and manufacturing sectors have another chance to develop rapidly. We have to be cautious if we want that growth to take place since it can create opportunities for diversifying our economy.

What developments in our economy can be expected given the dramatic change of the exchange rate of the Armenian dram against the U.S. dollar?

I would not call it a dramatic change. The change took place in one day, that is why it is considered dramatic. Nevertheless, it was a logical change that created minimum expenses and provided for maximum benefits. Without going deep into details on this since the Central Bank has already provided its explanation which I personally share, I will link it to the previous questions and mention that it creates new opportunities for the exporting branches of the economy. In other words, the appreciation of the exchange rate was related to the low level of productivity of our economy and great consumer inclination. Now the situation reverses, meaning that we will consume less, since there are fewer resources that can be directed to consumption. Nevertheless, one can find greater opportunities for manufacturing and exporting. Naturally, capital will be directed to these areas, and we, as a government, need to support the businesses in making investments in the areas that provide for high cost exporting goods. Our activities in this direction are obvious, up to supporting specific companies.