Foreign direct investment (FDI) in Armenia fell by 27 percent last year despite robust economic growth recorded by the government, official statistics show.
According to the National Statistical Service (NSS), FDI inflows totaled nearly $246 million in 2017, down from $338 million in 2016.They stood at $178.5 million in 2015.
The Armenian Ministry for Economic Development and Investments on Friday declined to comment on reasons for this sizable reduction in FDI.
Vahagn Khachatrian, an economist affiliated with the opposition Armenian National Congress (HAK), said the drop shows that foreign investors do not trust in Prime Minister Karen Karapetian’s reform pledges and, in particular, his cabinet’s stated efforts to improve the country’s business environment.
Khachatrian said that investors continue to be scared away by bureaucratic red tape, government corruption and a lack of competition. Neighboring Georgia attracted $1.8 billion in foreign investment last year because it has a more investor-friendly environment, he told RFE/RL’s Armenian service (Azatutyun.am).
Shortly after being appointed prime minister in September 2016, Karapetian pledged to help attract over $3 billion in domestic and foreign investments in the next few years. He said at least $830 million will be injected in the Armenian economy in 2017.
Karapetian’s government claimed to have honored the latter pledge earlier this year. In a 12-page report, it said $856.5 million worth of various “investment projects” were implemented across the country in 2017. Private investors accounted for just over two-thirds of this figure, the report said, adding that the remaining investments were financed from the state budget as well as foreign loans and grants obtained by the government.
The NSS reported last month that the Armenian economy grew by 7.5 percent in 2017 after stagnating in 2016. Opposition politicians and other critics of the government question the credibility of this growth rate.
NSS figures show that the British island of Jersey was the main source of foreign investments made in Armenia last year. The tax haven is home to an Anglo-American company, Lydian International, which is currently building a massive gold mine in the southeastern Vayots Dzor province. Lydian has pledged to invest a total of $370 million in the Amulsar gold deposit.