According to the forecasts of the international rating agency Fitch, the growth of Armenia’s economy will slow down significantly this year. Economic growth of 5.2 percent is expected instead of 7.1 percent of the previous year.

Fitch has singled out the 2 main factors that will make it possible to mitigate the risks arising in the external sector and contribute to the formation of economic growth. The agency has high hopes especially with the start of operation of the Amulsar gold mine.

“We predict that economic growth will stabilize at around 5 percent in the medium term, as the impact of the shocks recorded in recent years on the supply side will gradually decrease. At the same time, the dynamically developing information and communication technology sector and the start of operation of the Amulsar gold mine will continue to contribute to growth,” Fitch noted.

At first glance, this may be an ordinary economic forecast, but in reality it is a direct assessment of the 8-year policy of Nikol Pashinyan’s governments regarding Amulsar. The program that was close to launch in 2018. After the revolution, it came under political intrigues and was conserved for years, bringing with it serious problems.

The start of the project was initiated by the previous authorities of RA, creating all the conditions for its implementation. We are talking about an unprecedented initiative in the scope of investments, which was obstructed by the current authorities for years, thus, on the one hand, raising the price of its implementation and putting the state in front of financial problems, on the other hand, they delayed the economic and financial benefits that we should have received a long time ago.  

The current government inherited not a project in the initial stage, but an investment program worth hundreds of millions of dollars, the start of production of which was planned already in 2018. But the implementation of the project failed due to the efforts of the government. Of all the possible options, the worst was chosen: not making a decision. The issue of Amulsar gradually moved from the scientific and legal field to the field of political calculations. The authorities were trying not to antagonize environmental groups, bear the legal responsibility of closing the project and lose a large foreign investment at the same time. It was not possible to realize those three goals together. As a result, the government simply postponed the resolution of the issue.

But it was not without loss. Each passing month and year increased the cost of mine operation, aggravated the investor’s financial problems, delayed exports, tax revenues and job creation.

Already in 2019 Recently, “Lydian International” appeared in the process of insolvency. After the restructuring, the assets of the project came under the control of the creditors. One of Armenia’s largest foreign investments, which planned to start production in 2018, became a bankrupt company within a few years, facing international disputes and problems finding new financing. 2024 it became known that the “Amulsar Investor Ventures LLC v. Republic of Armenia” case is being examined in the international arbitration court, and the government, in order to protect the interests of the state, is forced to involve an American law firm, paying millions of dollars for its services.

 The turning point related to the operation of Amulsar took place only in 2023. at the beginning, when the government, the Eurasian Development Bank and Lydian Armenia signed an agreement to restart the program. According to it, the Armenian government should receive 12.5 percent of the company’s shares free of charge and take measures so that the project is implemented without obstacles, and the Eurasian Development Bank should provide a loan of up to 100 million dollars for the continuation of the project, in parallel with the funds involved by the company.

 2024 in January, the government accepted 12.5 percent of the shares of “Lydian Armenia”. In the official message, it was specially emphasized that the state receives the shares without making a monetary investment in the capital of the company and “without any obligation on the part of the government”. But 1 year later, within the framework of the “no-obligation” shareholding, the government provided “Lydian Armenia” with a budget guarantee of up to 150 million dollars, so that the company could attract credit funds.

Thus, after years of delay and political games, the government returned to the same starting point. Only this time its price was much higher. The mine remained the same, the gold reserves remained the same, the technological program remained the same, only the amount of risk falling on the state changed.

At the moment, preparations for the operation of the Amulsar mine are still ongoing. So far, it is not known when the operation will start. But as we can see, Fitch has assigned a serious place to Amulsar in the forecasts of Armenia’s economic growth. It can help improve the foreign trade balance, create jobs, pay taxes and royalties, and stimulate economic growth. However, all that does not mitigate the losses that the economy and the state budget suffered during 8 years due to the fault of the authorities. Not counting that this whole process related to Amulsar was a serious blow to Armenia’s investment confidence.

 Although after years of delay it was finally decided to restore the operation of the Amulsar mine, no one was held responsible for the losses and damages caused by the unnecessary disruption of the project.

HAKOB KOCHARYAN

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