Lack of Detail Raises Doubts About Armenian Anti-Poverty Agenda

President Robert Kocharian based his reelection campaign earlier this year on a pledge to promote prosperity in Armenia. An ambitious economic program, developed by the Armenian government and quickly approved by parliament, aims to fulfill Kocharian's promise. But the program's lack of detail raises doubts about its chances for success.

The National Assembly, which is dominated by pro-Kocharian political forces, endorsed the government's four-year program in mid-June. Armenian media paid the program's passage only brief attention. The public reaction was similarly tepid. Indeed, Kocharian's campaign promises have been largely overshadowed by contentious presidential and parliamentary election results this year. [For background see the Eurasia Insight archive].

Poverty reduction is a central element of the government program. According to the economic blueprint, the government intends to reduce the overall poverty rate to under 35 percent by 2007. During the same period, it seeks to lower the percentage of the population considered extremely poor to less than 12.5 percent. (The government offers no hint of where these rates stand today.)

The government also promises "to increase pensions every year" so that by 2007 they exceed the price of what economists term a minimal food basket. Again, the document offers no data about the current so-called "food line," or the rate at which it might grow. Nevertheless, the National Assembly demanded no clarification on such aspects, and adopted the program almost without discussion. This was not surprising, since a boycott by opposition deputies has left pro-Kocharian forces virtually unchallenged in the National Assembly. [For additional information see the Eurasia Insight archives].

The program deserves attention, if only because it lays out rather ambitious promises. According to the World Bank, 55 percent of Armenians were poor in 1999; this rate dropped to 50 percent by late 2001. [For background see the Eurasia Insight archives]. If one assumes that this more or less reflects the current poverty rate, then government policies will have to help nearly a third of all poor families escape poverty by 2007. The number of extremely poor people will have to fall by more than 40 percent.

Based on available data, the government seems intent on doubling pensions (from a current average of about $12.50 a month) and tripling schoolteachers' pay, among similar improvements in welfare, healthcare and other programs. How realistic can these goals be?

Government officials say they will seek to increase the flow of revenue into the state's coffers through more efficient tax collecting efforts. Officials add that there are no plans at this time to raise taxes.

While the targets of Prime Minister Andranik Markarian's government are certainly lofty, some local political analysts are hesitant to immediately dismiss them as unachievable. In May 2000, when Markarian became prime minister – replacing Aram Sarkisian, who had taken over the post six months earlier when his brother Vazgen was assassinated during the infamous October 1999 parliament shootings – many observers believed his government would not last long. However, Markarian's government has established itself as the most successful team in post-Soviet Armenian history, presiding over average annual economic growth of better than 9 percent and achieving record growth of 12.5 percent in 2002. [For additional information see the Eurasia Insight archive].

Unlike many other former Soviet republics, Armenia has managed to increase national budgets, in large part via cooperation with Western donors and international financial institutions. It earned praise – as well as the right to draw down $14 million without stringent benchmarks – from the International Monetary Fund in April. Markarian's new plan works off the blueprint of an eight-year Poverty Reduction Strategy Paper, that his old government had begun preparing under the Fund's guidance.

Even though Markarian has surprised skeptics before, many experts say the program's vague targets will make success highly elusive. In discussing his reservations about the program, Edward Aghajanov, a leading economist and former minister of statistics, pointed to a section of the program concerning information technology. The document calls information technology a priority and promises the creation of a National System of Innovations, but offers no tactics for stimulating investment or explanations about the new agency. It merely reads: "The government will keep this sphere in the center of its attention."

"So, if the sphere is in the center, rather than periphery of one's attention, it will develop quite rapidly," Aghajanov says, joking about the program's vague language. He went on to dub the document a "party manifesto rather than a government program."

This judgment, which the quick passage by Kocharian loyalists in parliament does little to dispel, hints at another weakness in the program. Many experts suspect that corruption in state agencies and gaps in the organization of the state machinery will hinder any honest efforts at poverty reduction. The government program promised a vigorous anti-corruption campaign, but provided few details.

The Yerkir newspaper – which readers recognize as an organ of the Armenian Revolutionary Federation, or Dashnaktsutiun, a member of the governing coalition – wrote that economic modernization could occur only if corruption wanes. But the paper, like the government program, delved no further into waging a struggle against corruption.

Haroutiun Khachatrian is a Yerevan-based writer specializing in economic and political affairs.

Lack of Detail Raises Doubts About Armenian Anti-Poverty Agenda

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