Armenia has come a long way since regaining its independence in 1991. Years of steady growth following the collapse of the Soviet Union have significantly raised the living standards of Armenians.
In 1994, Armenia was the first among the former Soviet republics to return to growth. This economic revival was a remarkable achievement, especially when I recall that the country was still recovering from the devastating 1988 earthquake that killed over 25,000 people and that armed conflict had broken out in Nagorno-Karabakh and other parts of the Caucasus at that time.
However, the Armenia of today also remains crippled by the legacies of the past and our inability to fully adapt to the modern global economy. These shortcomings threaten to exclude many of our entrepreneurs and businesses from being able to compete at the regional and international level.
Small and medium sized enterprises form the backbone of all economies. Their activities are the largest share of private sector business. They are the main driver of any economy and what create jobs and prosperity.
I believe that if Armenia is to thrive, we must offer a more favourable environment for our SMEs and that is why, if the Tsarukyan Alliance wins the 2 April elections, we have promised to exempt small and medium sized businesses from all taxation for three years.
Setting free our SME’s from the shackles of overbearing taxation will, we believe, provide a stimulus to our economy that will encourage innovation, investment and growth.
But our focus isn’t solely on helping the business sector.
I have personally, over many years, given back to the Armenian people from the fruits of my own commercial success. I have supported many excellent charitable causes in Armenia that have sought to help those most in need.
There are lots of people in need in Armenia, but I do not think you can build a country on charity alone. The state must assume the responsibility of providing certain basic provisions for its people.
To address these injustices, should we gain the support of the voters next week, we will raise the average pension by 25,000 drams (€48) and index it periodically. We will also raise the minimum salary to 80,000 drams (€153) from January 1st, 2018.
The modern Armenia must not leave anyone behind.
We are happy to note that our manifesto appears to be resonating with the Armenian people. The Tsarukyan Alliance recently topped a VTsIOM poll with 26% of respondents saying they would support us. This is a clear and promising indication. We have worked hard to identify the areas where we could make the reforms needed to improve the living standards of all Armenians.
I remain very hopeful about the future of my great country. With improvements in governance and the elimination of corruption, I see no reason why, with strong democratic political leadership, we cannot unite the country behind a new modernising programme that can attract investments and expertise and lead Armenia to growth and prosperity.
It is my intention, should the Tsarukyan Alliance win the upcoming parliamentary elections, to work tirelessly to put in place a technocratic government that understands how the modern world functions and offers a meaningful way forward.
With a strong popular mandate, there is little that stands in the way of Armenia and what it can achieve, despite the geographic and security constraints our proud country is bound by.
Share on Facebook
Share on Twitter
The Eurozone is still vulnerable
The Eurozone is still vulnerable
BRUSSELS – Despite recently experiencing an overall economic uptick, the eurozone remains fragile and uninsured against the risk of another crisis. And a major reason is that it is still vulnerable to asymmetric boom-and-bust cycles.
Simply put, while all eurozone members can benefit during good times, some suffer far more than others during busts. This means that whenever the next crisis hits, safety-conscious investors will flee from fiscally weak countries toward fiscally strong ones that have a proven track record of generating economic growth.
When the economic calculus reverses, we can expect to experience a sense of déjà vu. Each country’s gain will entail another country’s loss, which will undermine inter-eurozone cooperation and fuel political tensions. The effects will likely reverberate through each country’s domestic politics, strengthening forces that favor disintegration.
To be sure, reforms that were implemented in response to the last crisis have improved the situation at the aggregate level; but they have not resolved the eurozone’s fundamental asymmetry. Underlying fiscal positions still vary from one country to another, despite all the efforts to achieve fiscal convergence through top-down rules.
Likewise, Europe’s financial-sector reforms in recent years, while significant, have not provided an adequate solution to the problem. The European banking union has now partly muted one of the primary channels – domestic banks – through which public debt piled up during the last crisis. Financial supervision has been placed at the EU level, rather than being delegated to national authorities. And government bailouts have been replaced with creditor bail-ins, at least when the latter does not threaten financial stability. But none of this will avert the need for public bailouts when the next crisis hits, out of fear that financial contagion will amplify the initial market reaction.
At the same time, Europe’s new crisis-management tools have obvious limitations. With a lending capacity of only €500 billion ($535 billion), the European Stability Mechanism (ESM) will likely not make much of a difference in the next crisis. An alternative option would be to activate the European Central Bank’s “outright monetary transactions” program, in which the ECB would purchase eurozone member states’ bonds in secondary markets. But the OMT, announced in September 2012 but never applied, would be politically difficult to implement. And because, like the ESM, it is conditional, it would do nothing to alleviate the tension between creditors and debtors.
In fact, even a second round of the ECB’s Public Sector Purchase Program would not solve Europe’s asymmetry problem. Because the ECB, together with national central banks, buys government bonds in proportion to each country’s share of ECB capital, the PSPP cannot privilege the countries that are under stress.
High-debt countries are limited in their ability to pursue proactive fiscal-stimulus policies. During the peak of the last crisis, some countries had to spend over 5% of their GDP just paying interest on their outstanding debt. And even after the market turmoil ended, and the PSPP brought interest rates down, high-debt countries last year still spent an average of around 3-4% of their GDP on interest payments. Most of these countries are far from being insolvent. But their debt is like a straightjacket, limiting their capacity to deliver economic growth in good times, and posing a liability in times of crisis.
A formal debt restructuring is often offered as an alternative to ineffective supranational and national fiscal frameworks. In this scenario, market supervision would replace political supervision. But, because some countries are still clearly more vulnerable than others, introducing a debt-restructuring program now would scare investors away from those countries, thereby doing more harm than good.
In the short term, policymakers should explore other avenues for solving the public-debt overhang. The PSPP, as it is currently constructed, allows repatriation of interest on bonds purchased by the ECB and national central banks. But interest savings are modest, because the ECB is formally limited from buying more than a certain amount of each country’s government debt. Lifting this limit would permit the existing framework to be used in the future to alleviate some countries’ fiscal burdens.
Meanwhile, the ECB would need to play a different and more distant role than it has. And independent authorities – such as the European Commission or even an entirely new institution – would need to ensure that savings were put to productive use in each country.
http://bit.ly/2nHF2sT
Share on Facebook
Share on Twitter