By Shakeh Avoyan
The chairman of the Armenian Central Bank (HKB), Tigran Sarkisian, revealed on Friday that less than six percent of some 90,000 enterprises registered in Armenia claim to be profitable, reflecting the country’s “risky” business environment.
He said the vast majority of the other businesses are bankrupt and subject to liquidation. More than 500 of them filed for bankruptcy in the first half of this year, he added.
The figure is twice higher than the total number of bankruptcy cases considered by Armenian courts between 1999 and 2001.
Speaking at an economic seminar in Yerevan, Sarkisian did not mention the widespread underreporting of revenues by many of the country’s most lucrative businesses. Last month, the Armenian tax authorities published a list of about 2,000 small and large companies that claim to have operated at a loss in 2001. Their losses totaled some 90 billion drams ($160 million) -- a suspiciously high figure that led the ministry for state revenues to launch a wave of inquiries into possible cases of tax fraud.
Last year, the ministry initiated the passage of new legislation toughening punishment for companies that post false losses. Those found to have engaged in the practice are to face heavy fines worth 20 percent of their reported losses.
But the Central Bank chief believes that the overall microeconomic situation in Armenia is very difficult and having adverse effects on the fragile banking system. Sarkisian complained that corporate borrowers’ failure to repay bank loans has reached a “terribly large scale,” jeopardizing the existence of local commercial banks. He said few Armenian companies submit business proposals that deserve to be funded by the banks.
The total capital of the Armenian banks fell by 35 per cent to 20.4 billion drams in 2001, only 17 of them being profitable. Their combined earnings stood at a modest 2.4 billion drams. By contrast, the aggregate losses of the 13 other banks amounted to 24 billion drams.