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ONE MORE STABILIZATION LIKE THAT AND PEOPLE WILL FIND THEMSELVES IN THE GRIP OF TOTAL POVERTY: LEVON TER-PETROSYAN CONCERNING THE FINANCIAL POLICY OF THE ARMENIAN AUTHORITIES AND DRAM DEVALUATION
ArmInfo
2009-05-01 17:02:00
ArmInfo. As we had predicted during the 1 March rally, great
trials awaited the country's economy, especially as a result of
the impending danger that the dram would be devaluated, the first
president of Armenia, the leader of the Armenian National Congress
Levon Ter-Petrosyan said during an opposition rally today.
The press service of the Armenian National Congress quotes
Ter-Petrosyan as saying: "In particular, I had mentioned in my speech:
"Very soon the government will have to abandon the policy of the
artificial preservation of the fixed rate of the dram. Meanwhile,
the dram will be depreciated not gradually, as it happened with the
Russian ruble, but, simply, as a result of a galloping drop." The
plunge happened two days after the rally, i.e. on 3 March, revealing
the bankrupt, if not criminal, nature of the policy pursued by the
government and the Central Bank. Up to that point the authorities were
assuring the public that the dram had a floating, rather than a fixed
exchange rate, which proved to be a complete lie, since a currency
with a floating exchange rate does not lose 30% of its value in one
day. It became clear also that the $800 million from the reserves of
the Central Bank had been spent not so much for shoring up the dram's
exchange rate, but for a completely different purpose. That sum, as
well as the hard currency that has been collected as the public was
exchanging it for the local currency, has wound up in the accounts of
bankers, high officials and oligarchs, which cannot be characterized
as anything but a plunder of our national wealth in broad daylight.
The authorities are now expressing their satisfaction that
following the plunge on 3 March, the exchange rate of the dram has
stabilized. But it is not clear why they are forgetting that as a
result of the drop in the dram's exchange rate and the subsequent
hike in the prices caused by it, there has been an approximately 30%
decrease in the population's living standards.
Relying on the iron-tight logic of the government, we can even consider
the stabilization perfect if we take into account the very significant
facts that in the first quarter of this year there was a negative
growth of 6.1%, while the tax revenue has constituted only 40% of the
number envisioned by the budget. One more stabilization like that and
people will find themselves in the grip of total poverty. Although
now the dram indeed has a floating exchange rate, it is also not
clear why it is floating in one direction only - toward increasing
and continuing loss of value. That can only mean that no economic
stabilization can be achi eved in the near future. We should not
forget that the banks have found themselves in an extremely difficult
situation because of the losses they have incurred for loans in drams,
and because of the difficulties that have arisen in the repayments of
the loans in dollars. Inevitably, these problems are going to bankrupt
some of the banks, and as a result of that, the dram is going to lose
much more of its value.
As a result of the devaluation of the dram and the increase in prices
the Armenian economy is confronted with yet another alarming problem,
which is the shrinking of the volume of trade and the resultant
sharp decrease in the tax revenue. The budget has become nothing more
than a piece of paper, and the government is operating on the basis
of the most elementary bookkeeping instead of that law, which means
that on any given day it spends as much as it collects, barely being
able to cover the operational expenses of the government and to pay
the salaries of its employees. The catastrophic decrease in the tax
revenue has forced the authorities to tighten the administration of
tax collection, to encourage arbitrariness on the part of the tax
and duty collection agencies, using also the courts as an instrument
for the same purpose. As in the past, the tax burden thus continues
to fall disproportionately on the shoulders of the small and medium
size businesses, which are teetering on the brink of20bankruptcy even
without that problem.
Serge Sargsyan himself confessed during his last press-conference
that the big business continues to evade taxes. If it was a sincere
confession, it would have given hope that the situation would
improve. But as long as Sargsyan occupies the post of the president,
the big business will continue to evade taxes, because the latter is
the most reliable base of his kleptocratic regime and the source of
his personal enrichment."
ArmInfo
2009-05-01 17:02:00
ArmInfo. As we had predicted during the 1 March rally, great
trials awaited the country's economy, especially as a result of
the impending danger that the dram would be devaluated, the first
president of Armenia, the leader of the Armenian National Congress
Levon Ter-Petrosyan said during an opposition rally today.
The press service of the Armenian National Congress quotes
Ter-Petrosyan as saying: "In particular, I had mentioned in my speech:
"Very soon the government will have to abandon the policy of the
artificial preservation of the fixed rate of the dram. Meanwhile,
the dram will be depreciated not gradually, as it happened with the
Russian ruble, but, simply, as a result of a galloping drop." The
plunge happened two days after the rally, i.e. on 3 March, revealing
the bankrupt, if not criminal, nature of the policy pursued by the
government and the Central Bank. Up to that point the authorities were
assuring the public that the dram had a floating, rather than a fixed
exchange rate, which proved to be a complete lie, since a currency
with a floating exchange rate does not lose 30% of its value in one
day. It became clear also that the $800 million from the reserves of
the Central Bank had been spent not so much for shoring up the dram's
exchange rate, but for a completely different purpose. That sum, as
well as the hard currency that has been collected as the public was
exchanging it for the local currency, has wound up in the accounts of
bankers, high officials and oligarchs, which cannot be characterized
as anything but a plunder of our national wealth in broad daylight.
The authorities are now expressing their satisfaction that
following the plunge on 3 March, the exchange rate of the dram has
stabilized. But it is not clear why they are forgetting that as a
result of the drop in the dram's exchange rate and the subsequent
hike in the prices caused by it, there has been an approximately 30%
decrease in the population's living standards.
Relying on the iron-tight logic of the government, we can even consider
the stabilization perfect if we take into account the very significant
facts that in the first quarter of this year there was a negative
growth of 6.1%, while the tax revenue has constituted only 40% of the
number envisioned by the budget. One more stabilization like that and
people will find themselves in the grip of total poverty. Although
now the dram indeed has a floating exchange rate, it is also not
clear why it is floating in one direction only - toward increasing
and continuing loss of value. That can only mean that no economic
stabilization can be achi eved in the near future. We should not
forget that the banks have found themselves in an extremely difficult
situation because of the losses they have incurred for loans in drams,
and because of the difficulties that have arisen in the repayments of
the loans in dollars. Inevitably, these problems are going to bankrupt
some of the banks, and as a result of that, the dram is going to lose
much more of its value.
As a result of the devaluation of the dram and the increase in prices
the Armenian economy is confronted with yet another alarming problem,
which is the shrinking of the volume of trade and the resultant
sharp decrease in the tax revenue. The budget has become nothing more
than a piece of paper, and the government is operating on the basis
of the most elementary bookkeeping instead of that law, which means
that on any given day it spends as much as it collects, barely being
able to cover the operational expenses of the government and to pay
the salaries of its employees. The catastrophic decrease in the tax
revenue has forced the authorities to tighten the administration of
tax collection, to encourage arbitrariness on the part of the tax
and duty collection agencies, using also the courts as an instrument
for the same purpose. As in the past, the tax burden thus continues
to fall disproportionately on the shoulders of the small and medium
size businesses, which are teetering on the brink of20bankruptcy even
without that problem.
Serge Sargsyan himself confessed during his last press-conference
that the big business continues to evade taxes. If it was a sincere
confession, it would have given hope that the situation would
improve. But as long as Sargsyan occupies the post of the president,
the big business will continue to evade taxes, because the latter is
the most reliable base of his kleptocratic regime and the source of
his personal enrichment."