Armenia requires significant reforms in business environment, increased competition and improved physical infrastructure: EBRD report

YEREVAN, March 7. /ARKA/. As a landlocked country with limited access to neighbouring markets, Armenia requires significant reforms of its business environment, increased competition and improved physical infrastructure, the European Bank for Reconstruction and Development said it its Transition report 2012.

“The country’s relatively monopolised economy remains overly dependent on low value added commodity exports, which makes it vulnerable to negative shocks suffered by its trading partners,” the report states.

Economic prospects are doomed by the uncertain situation in the world, according to the report. In order to confirm economic growth rates at nearly 4% in 2012 and 2013 it will be necessary to increase monetary transfers and demands from international partners, particularly Russia. It is also important to have prices of main raw commodities export quite high. 

The experts highlighted in the document that economic rally rates boosted after the crisis and the main growth catalysts remain mining and processing industry sectors. 

Agricultural sector also rallied from the sharp economic slowdown in 2010 due to more favorable weather conditions and increasing monetary transfers. Construction growth rates also accelerated after the crisis of 2009. 

According to the report, the government continues fulfilling measures on budget consolidation to maintain the state debt at the acceptable level within IMF program.

Lending growth was significant and reflected some low level of financial mediation. Imbalances dropped however negative deficit on the current balance remains high at nearly 11% of GDP. 

As main priorities for 2012 the experts highlight the importance of improving the business environment, boost domestic and foreign trade through modernization of transport and communication infrastructure which will foster the development of export-oriented sectors of economy. 

The EBRD also recommended to the government to go on with the efforts to advance the local capital markets.

“The ambitious de-dollarisation agenda should be supported by a consistent shift of the monetary policy framework from de facto peg to inflation targeting. The upcoming pension reform should serve as a strategic opportunity to develop domestic markets for government securities, bank deposits and equities through an active institutional investor base providing steady demand for long-term investments,” the report stated.—0-