YEREVAN, October 25. /ARKA/. A former Armenian prime minister unveiled today 10, as he said, most important steps which the government must take to stabilize the economy. Speaking at a news conference, Hrant Bagratian who served in the administration of ex-president Levon Ter-Petrosian in 1990s, said the first step is to sterilize external financial aid.
“From $2 to $3 billion in money transfers enter the country a year, which artificially maintain the exchange rate of the Armenian national currency, the dram. Lump-sum transfers coming from abroad should be sterilized. If $2 billion arrive as money remittances the entire amount must be bought by the Central Bank and added to its reserves, which amount now to $1.5 billion,” he said.
Bagratian added that this must be followed by establishment of stabilization fund to finance economic development. Bagratian said the stabilization fund should be used to bring down interest rates from 15% to 3-4% and the number of entrepreneurs should rise to 40% of the overall population.
The second step, according to him, should be to prevent stabilization or revaluation of the currency.
“The dram should quietly devalue. Given the fact that customs duties in the world have been reduced any revaluation of the national currency in relation to international reserves is fraught with devastating consequences, ” he said.
The third and fourth steps, according to Bagratian is the need to move to a progressive taxation system, and as well as to start taxing the banking sector.
‘Banks are free from risks now, they really are stable, can not go bankrupt, but they work with a wide margin at the expense of industry, and when they say “good” it in fact means” bad “for the industry and the real economy”, he said.
According to former prime minister, natural minerals should be sold, budget be consolidated and tax breaks eliminated by a government decision.
“It is not clear – what kind of a mechanism is used by the prime minister to provide benefits and why,” he said. -0-
