Armenian Premier Tells Bloomberg How He Intends to Develop Economy and Combat Corruption

The impoverished ex-Soviet republic needs “profound change”, Karen Karapetyan, who took office in September, said in a interview with Bloomberg in Yerevan. “We’re proposing the most rapid change that’s possible, including measures to combat corruption by streamlining bureaucracy and a government fund to support enterprise,” he said. “Businesses shouldn’t be obstructed by corrupt officials seeking payments for administrative decisions or by dominant rivals using political ties to restrict competition,” said Karapetyan, a former mayor of Yerevan who took office after returning from Russia, where he worked in Moscow since 2012 for a subsidiary of Gazprom PJSC, the world’s largest natural gas exporter. “We will create an even, competitive, level playing field.”

Karapetyan told Bloomberg that Armenia’s foreign debt is $5.8 billion with GDP at $10 billion, while growth of 3.2 percent in 2017 won’t be enough to raise living standards significantly. “We also have external debt growing faster than the GDP growth and growing faster than revenues,” he said.

Some Changes Are Coming

Karapetyan also said changes in the leadership of the customs service and in the tax code are improving transparency, and he won’t allow dominant players to use “administrative support that isn’t available to others” to suppress competition. “No one is immune and no one is privileged,” he said.

While he’s focused on immediate improvements, Karapetyan said he’ll also form an advisory group including foreign specialists to “brainstorm how we can develop the country” for the long term, including with tax changes and support for businesses in areas such as health care, education and agriculture.

Armenia rejected a trade pact with the European Union to enter Russian-led Eurasia Economic Union of former Soviet States in January last year. While critics say there’s been no economic benefit so far, nobody knows what would have happened if Armenia hadn’t joined and “the negative impact could have been much greater,” while membership doesn’t stop Armenia developing EU trade, Karapetyan said.

Armenia’s also seeking to bolster trade with Iran following the lifting of international sanction over the Islamic Republic’s nuclear program. Karapetyan said he’s ordered plans developed by December 25 to implement a free economic zone near Armenia’s southern border to boost ties in areas including agriculture and food production. “We clearly understand that reduced public spending may have a downside effect,” while businesses are delaying investment until after the elections, Karapetyan said in his interview.

Amid speculation he’s a short-term appointment to improve the ruling Republican Party’s prospects, it’s “inappropriate” to say if he’ll be prime minister after the vote because “nobody can predict the outcome”, he said.

Even so, he’s seeking to develop clear long tern plans over the next six months so that “from 2015 we’ll have sustainable year-on-year growth.”

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