Armenia marred by its shadow economy

/By AzerNews/

By Laman Sadigova

Armenia’s First Deputy Minister of Finance Pavel Safaryan claimed that this year's tax revenues will be lower than envisaged by the state budget.

The Armenian government, in spite of repeated assurances about economic growth and creating conditions for fair competition in business, in fact, took no real steps to remedy a number of negative phenomena that have been gripping the country for many years now.

Moreover, all the decisions of the Armenian government have been casting a negative influence on the country’s economy.

The authorities have not taken any steps to check monopolistic trade practices in the country. Moreover, frequent scandals in the country show that the officials themselves figure in some of those scandalous “stories,” and that a number of them are accused in corruption cases and have been favoring a “shadow economy.”

Shadow economy has been typical of Armenia's economic life since the time of the Soviet Union. Though the economy has considerably changed since then, but such negative traits never vanished.

"I am not aware of any step taken by the government, which would be aimed at the checking the shadow economy,” said former Prime Minister Hrant Bagratyan.

Vahan Khachatrian, the representative of the opposition party, Armenian National Congress, said the last five to six years, did not demonstrate any economic problem having been solved. He also said that the only ideology that Armenian authorities followed was to go in for loans when problems appear. “The current disappointing situation is the result of such an approach.”

These problems, left unsettled, have led to the deplorable situation in which Armenia is suffocating due to excessive loans. The inept government, alien to the idea of proper budget planning and economic policy management, believes that the policy of borrowing is the only way to stay in power.

The official figures show that it proposes to collect 1 trillion 138 billion AMD in taxes and fees. However, the tax collection decreased by 13 percent in the second half of the year.

The Deputy thinks that the decline in tax collection is associated with the lower economic growth, compared to what was indicated in the budget.

Many experts are convinced that the most significant reason for such a decline in tax collection was the high level of the “shadow” economy in Armenia, which accounts for no less than 55 percent of the GDP.

The country's economy is strangled by the monopoly regime dominating in Armenia.

Black market, which surely hides the “missing” money, is part of the goods and services sector, where people pay in cash, but transactions are successfully hidden from tax authorities.

The shadow economy is a system that ends up involving those who cannot find a full-time or regular job in the country which is suffering from the unemployment. Workers then take up any activity that pays them something under the table in uneven working conditions, thus leading to unreported income and unpaid taxes. Oligarchy and monopolistic economy are viewed as the main factors fuelling the underground economy.