Azernews.Az

By Laman Sadigova

Armenia is on the verge of economic collapse as the economic growth is predicted to be at zero at the end of 2015.

This harsh but truthful statement was recently made by the head of the IMF’s Middle East and Central Asia Department, Masood Ahmet, at a meeting with local journalists in Yerevan.

The announcement considerably upset the government, which has neither a program nor scenario to push forward the poor economy, instead hoping for a magic hand.

Over the past two years, the Armenian economy has totally collapsed. Independent experts in Armenia are sounding the alarm: the economy is bursting in all directions.

This situation is not very surprising considering that the government’s ill-conceived, aggressive policy towards its neighboring countries has lead the country into the situation when is has income predominantly a property of the Northern Giant and partially, of the West.

President Serzh Sargsyan, without having any remedy for the country, triumphantly announced that the country would enter the Eurasian Economic Union two years ago. The government also openly lied to its own nation about how this poor, weak post-Soviet country would receive economic benefits and security.

The secretary of the Heritage party’s parliamentary faction, Tevan Poghosian, said the failure of the country in the EEU was quite predictable. "Firstly, they were talking about short-term and long-term benefits for Armenia. Now we see that it was just the words left on paper,” said the deputy, and added "all the arguments, which were cited in support of the entry in the EEU, were just beautiful formulations aimed to convince the people."

Mismanagement is not the only factor for the economic failure of Armenia. This poor and corrupt post-Soviet country pursues ill-conceived foreign policy, which is why lacks the opportunities needed for its people to survive.

Now the whole country and especially its desperate population, who are destined to bear the burden of the incompetent administration’s actions, are reaping the “benefits” of such an unwise policy.

For a couple of years, the decline in foreign trade, which was already low, reached 20 percent. Foreign reserves have fallen by $1.5 billion, 40 percent decline, GDP fell by 10 percent, and thus the external debt that increased to $4.7 billion.

Armenians were frozen in anticipation of the "economic miracle" after joining the EEU, but the miracle did not happen. No one could predict that Russia – the leading force in the Union – would face enormous economic difficulties itself. Money transfers from Russia decreased by 10.7 percent in 2014.

In of the first half of 2015, non-commercial private revenues decreased by 35.7 percent, despite the fact that the share of remittances from Russia are at about 90 percent. And, by the way, international financial institutions clearly point out that Armenia is heavily exposed to major upheavals in the Russian economy, which seriously affects the balance of payments and growth prospects.

Not surprisingly, 30,000 people left the country this year, according to the official statistics. Independent experts, however, believe that this number is conservative and was grossly underestimated by the Armenian authorities.

But looking deeper, at the heart of the dismal economic situation in Armenia is the short-sighted and aggressive policy of Yerevan, which has driven itself into regional self-isolation.

Today, the country does not require constitutional changes, but needs changes to its ruling elite, foreign policy, economic policies, the judicial system, and mainly in the mindset of the society.

Only decisive and drastic changes can give this weak country at least a glimmer of hope for the future, whereas now there is no light in the end of the tunnel.

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