Wednesday,
Government Keen To Minimize Cash Payments In Armenia
• Sargis Harutyunyan
Armenian authorities will start enforcing next month serious restrictions on
cash payments in the country as part of their fight against tax evasion.
A government bill approved by the Armenian parliament earlier this year requires
private firms and individual entrepreneurs to carry out transactions worth more
than 300,000 drams ($700) only through the banking system.
For other citizens the limit is set at 500,000 drams. But it will be brought
down to 300,000 drams in July 2023.
The law, which will come into force on July 1, also prohibits local and central
government agencies from making or accepting any payments in cash.
It envisages a similar, albeit gradual, ban on payments of all medical and
education tuition fees as well as private sector wages. The ban will first apply
to Yerevan and be extended to the other parts of Armenia over the next two years.
Prime Minister Nikol Pashinian touted the impending entry into force of these
restrictions during a cabinet meeting last week. He said that his government
will also ban cash payments for real estate and cars.
The head of the State Revenue Committee (SRC), Rustam Badasian, confirmed that
these measures are aimed at reducing the still sizable informal sector of the
Armenian economy. They will result in a “certain increase in tax revenues,” he
said without making concrete financial projections.
Armenia -- The entrance to the State Revenue Committee headquarters in Yerevan,
November 29, 2018.
Garegin Gevorgian, a senior official from the Armenian Central Bank, was
likewise confident that restricting the widespread use of cash as a payment
method will improve tax collection.
Central Bank data cited by Gevorgian shows that payments made in Armenia via
bank transfer, check and credit or debit card have steadily increased over the
last 12 years. Still, they accounted for only a quarter of all transactions last
year.
Suren Parsian, an independent economist, welcomed the government efforts to curb
cash transactions. But he said the authorities should do more to raise public
awareness of the upcoming restrictions and help small and help medium-sized
businesses prepare for their enforcement.
One small business owner, Garegin Gevorgian, criticized the limitations, saying
that many such firms will have to pay more taxes and banking fees. Their tax
burden could be doubled as a result, he claimed.
Individual car traders are also concerned. As one of them, Tigran Hovannisian,
explained, “We are going to have disputes with buyers. A buyer will say that ‘I
won’t transfer the money until you register the car in my name,’ while I will
say ‘I won’t register it in your name until you transfer the money.’”
There are also questions about the authorities’ ability to enforce the new rules
in car and property transactions. Real estate agents warn that home buyers and
sellers may formalize their deals as free donations but carry out them in cash
to evade taxes.
Parliament Majority ‘Undecided’ On Ousting Opposition Lawmakers
• Astghik Bedevian
• Anush Mkrtchian
Armenia - Empty seats of opposition deputies boycotting a session of parliament,
Yerevan, .
The leadership of Armenia’s parliament affiliated with the ruling Civil Contract
party has still not carried out its threats to strip opposition lawmakers
boycotting parliament sessions of their seats.
The 35 lawmakers representing the opposition Hayastan and Pativ Unem alliances
began the boycott in April in advance of their daily demonstrations demanding
Prime Minister Nikol Pashinian’s resignation.
Under Armenian law, a lawmaker can lose their seat if they skip, for
“non-legitimate” reasons, at least half of parliament votes during a single
semi-annual session of the National Assembly. The final decision to that effect
is to be made by the Constitutional Court at the initiative of the parliament’s
leadership or at least one-fifth of the deputies.
Parliament speaker Alen Simonian said on May 17 that he is considering
initiating such an appeal to the court. Several other pro-government
parliamentarians voiced support for the idea in the following weeks.
One of them, Hovik Aghazarian, said on Wednesday that members of the ruling
party’s parliamentary group discussed the possible expulsion of their opposition
colleagues but did not reach a consensus at a meeting held on Monday.
“I personally agree with [Simonian’s] view because that [opposition boycott] can
be considered a violation of the law,” Aghazarian told RFE/RL’s Armenian Service.
According to the parliament’s press office, 14 opposition lawmakers, including
parliament vice-speaker Ishkhan Saghatelian, can now be formally accused of
absenteeism.
Armenia - Ishkhan Saghatelian (second from right) and other opposition lawmakers
lead an anti-government rally in Yerevan, May 18, 2022.
Speaking to reporters late on Tuesday, Saghatelian again scoffed at the threats
to strip him and other oppositionists of their mandates.
“We got our mandates from the people, and the people are now demanding that we
remove them from power as soon possible,” he said after announcing the
opposition’s decision to end the daily demonstrations in Yerevan and to rally
supporters on a weekly basis instead.
Saghatelian also made clear that the two opposition blocs will not end their
boycott of the parliament for now.
Deputies representing them interrupted the boycott on June 3 to try to push
through the National Assembly a resolution rejecting any peace accord that would
restore Azerbaijan’s control over Nagorno-Karabakh. The parliamentary majority
blocked the resolution by boycotting an emergency debate on it.
Opposition boycotts of parliament sessions have not been uncommon in Armenia in
the past. No opposition lawmaker has been stripped of their seat because of that.
Textile Giant Hit Hard By Armenian Currency Appreciation
• Karine Simonian
• Sargis Harutyunyan
Armenia - Workers at the Gloria textile factory in Vanadzor, .
Armenia’s leading textile company is planning to lay off some of its 3,000
workers or cut their wages because of a significant appreciation of the national
currency, the dram, which began shortly after the Russian invasion of Ukraine.
Like the Russian ruble, the dram weakened against the U.S. dollar and the euro
in the immediate aftermath of the invasion but rallied strongly in the following
months. Since the outbreak of the war on February 24, the dram has strengthened
by 13 percent against the dollar and 22 percent against the euro on aggregate.
The Armenian currency has been boosted by relative macroeconomic stability in
Russia, Armenia’s number trading partner, as well as an influx of thousands of
mostly middle-class Russians. Its continuing appreciation is prompting growing
concerns from Armenian companies oriented towards Western and other non-Russian
markets.
They include Gloria, the country’s largest textile factory located in the
northern city of Vanadzor. Its owner, Bagrat Darbinian, complained on Tuesday
that Gloria has been hit hard by the stronger dram because it sells the bulk of
clothing manufactured by it in Europe.
Darbinian said he has to cut production costs to make up for the loss of
revenue. He said he has already told the company’s workers to agree to a 30
percent reduction in their wages or risk being sent on unpaid leave or losing
their jobs altogether.
“I am ashamed of entering our production units,” Darbinian told RFE/RL’s
Armenian Service. “People are already not paid much and I want to cut their
wages. But there is no other way out.”
Armenia -- The building of the Central Bank in Yerevan.
The businessman, who claims to have invested $5 million in the factory in the
last three years, said he has already appealed to Armenia’s government and
Central Bank to help weaken the dram.
The authorities are receiving similar complaints from other export-oriented
entrepreneurs and business executives, notably representatives of Armenian
software companies.
The Central Bank governor, Martin Galstian, made clear on Tuesday that the bank
will not cut interest rates or intervene in the domestic currency market to cut
the dram’s value. Galstian said that the stronger dram is somewhat easing
inflationary pressures on the Armenian economy aggravated by the Ukraine war.
“By artificially weakening the dram we would create an even worse inflationary
situation which would hit all citizens, including exporters,” he told reporters.
Galstian also argued that the stronger dram is making many imported raw
materials cheaper for exporters.
Reprinted on ANN/Armenian News with permission from RFE/RL
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