Armenia’s economy is continuing to suffer from a lack of competition, a senior official from the International Monetary Fund said on Tuesday.
“Our assessment is that competition in the domestic market is indeed limited and there is a lot of room for improvement,” Yulia Ustyugova, the head of the IMF office in Yerevan, told RFE/RL’s Armenian service (Azatutyun.am) in an interview.
“We have been raising this question and having very candid discussions with the authorities,” she said. “According to our assessment, it does impede growth.”
Ustyugova said the government should ensure that companies dominating various types of business do not abuse their positions. It is also essential to improve the investment climate so that new firms can enter those sectors, she added.
“We are convinced that the business environment in Armenia is improving,” Prime Minister Karen Karapetian declared a month ago. “But we also acknowledge that we have weak spots which we must definitely work on.”
Speaking in the parliament last week, Karapetian insisted that his government is liberalizing lucrative sectors of the Armenian economy that have long been dominated by a handful of wealthy entrepreneurs. But he said more time is needed to complete that process.
Ustyugova pointed out that the government’s five-year policy program approved by the Armenian parliament in June contains major anti-trust measures. “But the question is implementation,” she stressed.
A World Bank survey released in 2013 said that “oligopolies” control 68 percent of economic activity in Armenia, making it the most monopolized economy in the former Soviet Union. The lack of competition has been particularly acute in lucrative imports of fuel and basic foodstuffs such as wheat, sugar and cooking oil. Economists have long said that de facto monopolies hamper the country’s sustainable economic development.
Echoing government forecasts, Ustyugova said the Armenian economy may grow by more than 4 percent this year after practically stagnating in 2016. But she cautioned that that will not be enough to significantly reduce very high unemployment which official statistics put at about 20 percent. The government should focus on more job creation, including by “retraining those who need jobs,” added the IMF official.
Visiting Yerevan in April, the head of an IMF mission, Hossein Samiei, said the current Armenian government is committed to implementing major reforms needed for speeding up economic growth and reducing poverty. “I’m not saying everything is perfect,” he told reporters. “But hopefully things are moving in the right direction.”
Karapetian has repeatedly pledged to create “equal conditions” for all business since he was named prime minister in September 2016.