IMF predicts tougher days for Armenian economy

By Mushvig Mehdiyev

The International Monetary Fund has predicted tougher days for Armenian economy as it forecasted a 3.3 percent economic growth for the post-Soviet country in 2015.

Head of the IMF Mission in Armenia, Mark Horton noted that the organization has sharply reduced the economic outlook of Armenia down to 2.6 percent this year.

Last year, the IMF forecasted a 4.8 percent growth for Armenia in 2014, but it revised the figure due to recent developments.

"Hard days are ahead for Armenian economy due to geopolitical developments in the region and sanctions imposed on Russia. The government needs to take careful and decisive measures to cope with the deteriorating economic crisis," Horton said.

He added that the geopolitical developments in the region, anti-Russian sanctions and Armenia's entrance into the Eurasian Economic Union have created an uncertain atmosphere hampering the progress of private sector in the country.

Armenian economy lags in stepping forward because of its strong dependence on economy of Russia. The ongoing events between the West and the northern giant, particularly the economic sanctions imposed on Russia have already taken its tolls on the post-Soviet state's economy.

Analysts and political experts say that Armenia will find all ways blocked after joining the EEU, which will subsequently strengthen its dependence on Russia. Some political experts even believe that the Kremlin doesn't need Armenia.

Horton said the IMF believes that the economic growth in Armenia has been lower than expected figures. "Initially we forecasted that it would be equal to 3.5 percent, but now it has become clear that it will be down by about 1 percent. Domestic and foreign factors are the main reasons behind our new prediction. Complicated economic situation in the region resulted from the crisis in Russia is among the foreign factors negatively affecting the economic growth in Armenia," he added

Horton noted that Russia's economic crisis badly affected the Armenian export to Russia and the remittances from Russia to Armenia. "As for the domestic factors, authorities are failing to pay off the expenses provided from the state budget. Unpaid expenses affects the economic growth in the country."

Horton believes that the slowing economic growth will put the Armenian government in trouble to increase tax collection in 2015. The high-ranking IMF official said the growth in Armenian economy would be 3.3 percent this year.

Armenia's weak economy, first of all, discourages its own people. High rate of unemployment and emigration due to hard social conditions have tarnished the image of the former Soviet state. Citizens are desperately hopeless and looking for a good life beyond the borders.

GDP is calculated at $5,900 per capita to rank Armenia 149th among world's countries. Unemployment rate reaching 17.3 percent reflects the fruitlessness of domestic policy of the government. Most of the people scarcely meet the daily nutrition intake, as 35.8 percent of the population are grappling with poverty. The country with its nearly $8 billion external debt is doomed to failure. Empty hands of the government leave no hope for the citizens. So, they have no way other than leaving their country.

Regarding Armenia's possible membership in the Eurasian Economic Union, he said, the authorities do not have any doubt about joining the EEU. They have done what they should do. The president's recent speeches at the Independence Day ceremony and in New York clearly underlined that the authorities are holding a certain position on the EEU. The expert added that the private business in the country is facing some uncertainties. "They know that there are some

Horton said they also heard about reports that Armenia's EUU joining will be inked in Minsk on October 10.