The socioeconomic situation in Armenia is unlikely to markedly improve next year due to slower GDP growth anticipated by the government, Prime Minister Hovik Abrahamian said on Monday.
“In the context of tense geopolitical developments, promising an immediate betterment of all aspects of social welfare would be a populistic but not honest approach,” Abrahamian told lawmakers as he presented his cabinet’s draft 2016 budget.
The proposed budget envisages only a marginal increase in government spending, which will not translate into increases in public sector salaries, pensions and poverty benefits. It is based on the assumption that the Armenian economy will grow by 2.2 percent in 2016.
Although the government expects faster growth this year, Abrahamian cited “authoritative economists and international structures” as saying that the wider region is now facing even more serious economic challenges than during the 2008-2009 global financial crisis. He singled out the collapse in oil prices, which has plunged Russia into recession and cut vital remittances from Armenian migrant workers.
“In the face of such deterioration, our sole path to social welfare is to create jobs by means of stimulating investments and ensuring economic growth,” the premier told members of the parliament committees dealing social and economic issues. “It is essential to stimulate domestic manufacturers and foster exports.”
The grim economic outlook prompted strong criticism from an outspoken opposition lawmaker, former Prime Minister Hrant Bagratian. He accused the government of lacking the ambition to improve the lives of ordinary Armenians.
Bagratian also dismissed Abrahamian’s pledges to facilitate job creation, saying that it will be hampered by domestic oligopolies led by government-linked individuals.“Our problem is that only 10 people invest,” he claimed. “We don’t let the economy decentralize itself so that its benefits trickle down to everyone.”
“Only 7.5 percent of the population is self-employed,” complained the oppositionist. “It should have been 45 percent.”
Abrahamian and some members of his cabinet, notably Finance Minister Gagik Khachatrian, have extensive business interests which critics say make them disinterested in genuine reforms.
Khachatrian insisted on Monday that the scale of government corruption and economic monopolization is grossly exaggerated by Armenian media critical of the authorities. “The public buys into what you, the media, spread,” he told reporters. “Because of you and us, the public, as a rule, accepts bad news more easily than positive news.”