Shadow economy gaining momentum in Armenia

/AzerNews/

By Mushvig Mehdiyev

Official data shows that shadow economy is growing in Armenia by reaching almost $2 billion a year.

Head of the Union of Employers Gagik Makaryan said the annual level of the black market in Armenia is about $1 billion and the figure is regularly growing each year.

"I'm sure that the annual turnover of the black market has reached $2 billion. The government has no willing to remove the underground economy," he noted.

Black market is part of an economy involving goods and services which are paid for in cash, but hidden from tax registrations. The shadow economy is also a system uniting those who can't find a full-time or regular job. Workers settle down to any activity that pays them under the table in an uneven working conditions with unreported income and unpaid taxes. Oligarchy and monopolistic rule of economy are viewed as the main factors fuelling the underground economy.

Makaryan also referred to the draft budget for 2015, saying it will be focused on social issues. "Considering the high rate of poverty and unemployment in Armenia and other factors, dedicating the budget to social life seems logical," he said.

The World Bank Data's latest report revealed that about 32.4 percent of the population are living under the recognized poverty threshold. The New York-based Trading Economics, which provides accurate information for 196 countries including historical data for more than 300,000 economic indicators, exchange rates, stock market indexes, as well as the government bond yields and commodity prices based on official sources, reported that the unemployment rate in Armenia is roughly 17.5 percent.

Makaryan said the Ukrainian-Russian crisis and the west’s sanctions on Russia are negatively affecting the Armenian economy, as well as the life of Armenians living in its northern neighbor's territory.

"Today we are experiencing a downfall of the private remittances to Armenia. It means that the labor migrants in Russia may return to their country. If the situation remains so in future, the return of the emigrants would be inevitable and this will bring in a new strong unemployment wave," he added.

Western countries' economic sanctions against Russia forced the government to reconsider its economic policy. Russian authorities are reportedly preparing new projects to cut the number of foreign workers in the country. Now, the army of Armenian immigrants in Russia fear to be under the risk of being expelled amid economic crisis. The only condition to stay in Russia is to apply for its citizenship, but it can be very challenging for Armenian labor migrants considering their illiteracy and unawareness of Russia's legislation. The economic experts warn the post-Soviet country's authorities to be ready for a massive comeback of the emigrant citizens.

Makaryan said the current budget doesn't take serious the risks in regard to the crisis in Ukraine and Russia, as well as Armenia's integration into EEU. Moreover, it fails to propose any conception for managing those risks. "These factors are real sources of risk for our country, whilst the 2015 state budget doesn't envisage any measure against it."

A famous saying reads "One who doesn't risk, never gets to drink champagne." The current situation in Armenia shows that the authorities drunk a lot and are subsequently taking a number of risks. But the Statistical Service's latest data on the alcohol production revealed a 9 percent decrease of alcoholic beverages in the country. Decreasing alcohol and increasing risks in Armenia proves the famous saying's credibility wrong and raise suspicion about the existence of the authorities' "secret and peculiar" formulas that they consider before and after turning to any activity.