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Prime Minister Tigran Sarkisian publicly berated Armenia’s Ministry of Transport and Communication on Thursday over what he called a misuse of government funds earmarked for the reconstruction of rural roads across the country.

Sarkisian also accused the ministry of inflating the cost of ongoing roadworks financed from the state budget.

The government set aside $17 million, currently worth roughly 6.8 billion drams, for that purpose in July 2008 to partly make up for the suspension of a road rehabilitation project that was due to be funded by the Millennium Challenge Corporation (MCC). The U.S. government agency cancelled the $67 million project altogether earlier this year, citing the Armenian authorities’ poor human rights and democracy record.

The government has received this year two World Bank loans worth over $55 million to press ahead with the scheme covering about 1,000 kilometers of country roads. The funds were approved in February and August as part of the World Bank’s efforts to mitigate the impact of the global recession on the Armenian economy.

Speaking at a weekly cabinet session, Sarkisian revealed that the Armenian Finance Ministry has closely monitored the government-funded roadworks and found unspecified “numerous” abuses. “I don’t even find words to describe the waste of financial resources there in this time of crisis,” he said, raging at Transport and Communications Minister Gurgen Sargsian.

“Mr. Sargsian, I am assigning you to take this matter under your personal control so that not a single penny is wasted there. The strict oversight will continue. We have to do away with all those ‘traditions’ that have existed in the construction sector,” he said, referring to widespread bribery in the selection of contractors

According to the prime minister, the government’s oversight service has calculated that the government-funded segment of the project, which covers 26 rural roads across Armenia, can be implemented with 5 billion drams. Transport Ministry experts had estimated the cost at 6.8 billion drams.

“This is the reason why I am angry,” continued Sarkisian. “What do the people sitting [at the ministry] and demanding large sums think? After all, the minister of transport and communications had been instructed to cut costs.”

Speaking to RFE/RL after the cabinet session, Sargsian argued that the higher cost was calculated by his ministry on the basis of quality standards set by the MCC. He said it can be reduced only with less rigorous construction requirements. “I think we will satisfy all those wishes and expectations expressed by the prime minister,” added the transport minister.

The government also approved 1.7 billion drams ($4.4 million) in additional funding for road construction. The Armenian premier said it will allow construction firms to complete work on 12 country roads by the end of the year. “We can’t fail to make these expenditures because we would otherwise nullify the work done by them before,” he said, citing the approaching winter.
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