Sargsyan’s Heritage

SARGSYAN’S HERITAGE

Vestnik Kavkaza, Russia
May 20 2014

20 May 2014 – 2:05pm

By Susanna Petrosyan, Yerevan. Exclusively for Vestnik Kavkaza

1.5 months have passed since the resignation of Prime Minister Tigran
Sargsyan. As a heritage, the new government inherited an unstoppable
growth of the poverty level, strengthening of monopolies, restrained
opportunities of small and medium-sized enterprises, a roughly
threefold reduction of investments in the economy and government
debt more than doubling. According to official data, government
debt amounted to $1.7 billion in 1998-2008 and exceeded $4 billion
in 2008-2014.

The old prime minister was working on reducing debts by receiving
new foreign loans, thus accumulating government debt. Paying Russia
for a $500-million loan is just one of the examples.

The new government is now a captive of the practice to pay loans by
allocating new funds and exploiting the high-level shadow economy. The
vivid reduction of investments and Western loans caused a deficit of
financial resources in the new government when it need to pay debts
and raise salaries for state-paid staff in July.

The lack of financial resources is not an outstanding problem. The
obligatory accumulative pension system that stirred up Armenian
society deserves special interest in this context.

On May 13, the parliament passed amendments to the law on accumulative
pensions. The amendments lifted fines for refusal to make obligatory
pensions until September 30. Thus, obligatory accumulation of pensions
has turned into a voluntary system that has never been cancelled. The
opposition called it a semi-solution to the pension problem. According
to Levon Zurabyan, head of the Armenian National Congress faction,
the government wants to keep accumulative pensions at any costs and
minimal concessions for the population.

Demographic problems remain an important indicator encouraging the
government to keep the accumulative pension system. According to
Minister for Labour and Social Affairs Artem Asatryan, Armenia does
not and will not have enough demographic resources to serve the old
pension model. Covering the government debt and solving other financial
problems amidst a rising demographic disproportion, in a situation when
investments are scarce and foreign loans are dropping, the government
is forced to search for financial resources using certain schemes,
one of which is the accumulative pension system.

Ex-Prime Minister Hrant Bagratyan said in early spring: “There is no
accumulative system, there is a new tax amounting to 5%, income tax
increased to 32%.” However, the government’s efforts to realize the
accumulative pension system faces hardshell resistance from society.

Maybe the new bill will calm the protests, but it does not save the
population from an accumulative pension tax used to drain financial
resources.

From: Emil Lazarian | Ararat NewsPress