Armenian government has gloomy news for businessmen

/By AzerNews/

By Laman Sadigova

Many enterprises in Armenia have decided to halt doing business out of fear for complications arising after the government’s latest round of crippling regulations.

The Armenian government has prepared a not-so-pleasant “surprise” for its citizens, including the very businessmen that are keeping the economy afloat. One that has disappointed all those pinning their hopes on a possibly resolution to the electricity tariffs problem.

Numerous SMEs have recently found out that they are being forced to pay 48.78 drams instead of the previous 41.85 AMD for 1 KW per hour of electricity.

The Chairman of the Armenian Union Engaged in Small Business, Stepan Aslanyan, said that it was "another shameful decision of the government."

After the announcement, experts noted that a rise in electricity prices of more than 16 percent could lead to a severe blow to producers, an increase in the prices of goods and service, and thus an overall decline in both production and consumption.

There are about 50,000 SMEs functioning today in Armenia. According to the chairman of the Republican Union of Employers, Gagik Makaryan, over the past year more than 10,000 enterprises were closed as a result of inspections, regulations, and various forms of "pressure" from the government. And now, there is yet another reason and according to experts, even more entrepreneurs will close their business.

Experts believe that the obstacles to doing business in the country inhibit healthy economic rivalry, which will ultimately destabilize the already weak economy.

Armenian oligarchs from the political elite prevent competition by creating artificial obstacles for businessmen, and thus destroy the country’s economy from the inside and destabilize the already weak economic situation.

Stepan Aslanyan also said “there is no place for business in Armenia anymore. The businesses, already strangled by the sales tax, are now additionally burdened. SMEs have two options: raise the price of goods and become uncompetitive, getting out of the market, or simply leave as many recently have done."

The current government in Armenia can be hardly called functioning as it is purposefully destroying the country from inside. Armenia is seeking to issue a 10-year dollar bond for only the second time on record, with bankers working on the $500 million deal suggesting a 7.625% yield, Global Finance reported. However, these plans seem ironic and unreal considering Armenia’s problems.

When the electricity price hike protests on Baghramyan Avenue reached their peak, Serzh Sargsyan promised to subsidize and reduce costs. It is now clear that this promise was given to calm an exhausted population, since recently during one of the meetings, Armenian Prime Minister Hovik Abrahamyan said that big businesses would not be subsidized and neither would small and medium-sized businesses.

“In the nearest future we will witness the closure of all the new enterprises. According to our surveys, 81 percent of them evaluated their situation as unsatisfactory, and now, if the electricity price rises, this situation will get worse and lead to the closure of all new enterprises," the Chairman of the Armenian Employers Union Gagik Makaryan concluded.

Armenian economic growth, which was relatively weak in 2014, is falling in 2015 and is likely to be negative for the year as a whole, the Coface Country Risk Conference asserts. The situation in the Armenian economy is spiraling out of control and it seems like the authorities know nothing about the economy, as they only seem to be making the situation worse, forcing the people to leave the country and give up on Armenia.