STEPANAKERT (Combined Sources)–A joint strategy to combat the global economic crisis was on the agenda of talks Monday between the Presidents of Armenia and the Nagorno-Karabakh Republic, President Bako Sahakian’s press office reported.
Armenia’s robust growth looks set to slow down to single digits this year due to the worldwide economic downturn’s growing impact on the Armenian economy. The Nagorno-Karabakh Republic, economically linked to Armenia, is also set to suffer from the effects of the economic slump on Armenia.
The Armenian economy was on track to expand at a double-digit rate for the seventh consecutive year in 2009 when stock markets in the United States, Europe and Russia began collapsing last September. Economic activity in the country shrunk considerably in the following months, even though local banks remained largely unaffected by the financial meltdown.
Economists say the global financial and economic crisis will inevitably reduce cash inflows from wealthy Armenia’s living abroad and, more importantly, a much a larger number of migrant workers supporting their families in Armenia. A large part of the country’s population is dependent on their remittances.
Another negative consequence of the crisis has been a sharp fall in the international prices of non-ferrous metals, Armenia’s number one export item. Hundreds of employees of Armenian mining companies have already been laid off or sent on indefinite leave as a result. The country’s two largest chemical enterprises have suspended their operations and are facing an uncertain future for the same reason
The Armenian government’s hopes to mitigate the crisis’s effects on the domestic economy by boosting spending on infrastructure projects and giving local businesses better access to cheap credit. Large-scale external assistance is vital for the success of its anti-crisis plan.
The government has been working to secure significant foreign funding for several ambitious projects which Prime Minister Tigran Sargsyan has said will cushion the effects of the crisis, including a government plan to spend $250 million on completing the protracted reconstruction of Armenia’s northern regions devastated by the 1988 earthquake. A project the government says will create 5,000 more jobs in the unemployment-stricken area.
The World Bank late last month announced it would provide Armenia with up to $800 million in loans in the next four years. More than $80 million of the promised funding is due to be disbursed this month. These loans will be used for rural infrastructure projects and channeled into small and medium-sized businesses through Armenian commercial banks.
Russia’similarly pledged last week to lend $500 million to Armenia as part of a “stabilization” loan package designed to assist its regional ally cope with the effects of the global economic downturn.