Armenian Economy: a Diagnosis

PFA's "Armenia: Averting an Economic Catastrophe" Report

The Cover Page of PFA's "Armenia: Averting an Economic Catastrophe" Report

Policy Forum Armenia, a Washington based Armenian think tank and advocacy group, has published an in-depth report, which might well be the best diagnosis of Armenia’s economic  woes available out there.

Unlike the optimistic wish-like projections of the Armenian officials, or the softened, politically colored evaluations of World Bank and IMF officials on the state of the Armenian economy, this report lays out well reasoned and factually backed criticism of key aspects of the Armenian economy, dwelling on public debt, fiscal policy, taxation, inflation and the banking sector.

The report warns that unless drastic changes in the economic policy direction and political-economy landscape are carried out, within the next 3 years, Armenia will be forced to undergo a large and painful devaluation of its currency, the dram, and/or an external sovereign debt restructuring or default.

The report also comes up with recommendations on “averting the economic catastrophe” and while it says all the right things, some of the statements in the report are slightly idealistic, as I find it hard to understand, for example, how exactly “leaks from, and corruption within the budget should be curtailed” from the report’s recommendations. Still, this approach of pointing to the problem and offering solutions is a welcome practice, which could serve a great lesson especially to Armenian opposition politicians and affiliated economists.

Download the English or Armenian version of the report.

PS: I know some of the people involved in the Policy Forum Armenia. They are brilliant professionals genuinely concerned with the fate of Armenia. And even though they might have a slight pro-opposition bias in their evaluations, this report should be taken very-very seriously.

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