Know-how of Armenian economists to support dram

By Hamid Hamidov
Day.Az writer

A number of Armenian political figures and experts are talking about the country’s development, economic growth and positive financial indicators, so as not to feel left behind Azerbaijan, which makes one not laugh, but rather sympathize with them.

When parents cannot afford to buy a child an expensive toy, the child, desperate to get it, begins to see the toy in his dreams. The Armenian government does exactly the same.

In fact, the current reality makes them face the truth time and again and then do something about it. Unfortunately, the government of this country as a whole is composed of people far from the ideals of professionalism and the steps it takes deserve nothing but an ironical smile.

Here is just one example. Recently, the Armenian parliament discussed the state budget for 2010. It was known long ago that the budget's expenditures will not increase. Accordingly, next year the level of social payments will remain at the level of the current year. At a time when inflation in Armenia is inevitable, such a concourse of circumstances has an extremely negative impact on living standards, specifically those of pensioners and other budget-funded individuals.

This is not the sole example in this respect. It became known recently that the Armenian government hardly supports the exchange rate of the dram. Local officials decided nothing smarter than to sell dollars granted by international institutions as loans. Of course, donor organizations will find out about it sooner or later and will issue loans no longer.

I believe even a child understands the consequences of such actions. The money will run out someday and, hence, the rate of the dram will decline. The government will have to pay off its debts. The projects for which the money was allocated will not be implemented.

Moreover, Armenia constantly experiences a total increase in prices for almost everything. It is not difficult to predict that the country will witness a real bankruptcy next. Armenia will become the third country in the world to officially announce bankruptcy after Iceland and Latvia.

However, some in Armenia very clearly foresee the consequences of the government’s policy including the Dashnaksutun Party. The party reacted very negatively to the 2010 draft budget. The party’s representative Ara Nranyan said the structure of the Armenian economy is fundamentally wrong.  

The MP added that the government is well aware of the need for structural economic reforms. But after the government received international loans, it calmed down and is not going to get perplexed with transformations. Nranyan assured that the Armenian government awaits normalization of economic situation in Russia and the U.S., which will result in a rise of global oil prices consequently boosting capital construction and helping Armenia to achieve its former economic indicators.

However, Nranyan failed to take into consideration one thing. The main point is not just normalization of the economic situation in Russia and the U.S. It is no secret that since its early days of independence, Armenia has survived only through the funds of the diaspora, which turned away from their historical homeland after Nalbandian signed the Armenian-Turkish protocols. So, nothing, even a miracle will help the Armenian economy next year.