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How to stabilize Pakistan’s economy?

Amjed Jaaved

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Pakistan approached International Monetary Fund for 13th time since 1988 to get a bail-out. This programme is touted as a recipe to `reduce Pakistan’s public debt’ and `stabilize the economy’. The suggested panacea is `market-determined exchange-rate’ coupled with tax-evasion. But a free-floating exchange-rate is no magic wand or panacea for economic stability.

Unresponsive exports

Devaluations are unlikely to stimulate Pakistan’s export potential as its industrial production including that of textiles, is now in shambles. They only balloon debt burden. IMF’s own 1996-Economic-issues series booklet `Moving to a Flexible Exchange Rate: How, When, and How Fast?’ cautions against over-optimism. The booklet (by Rupa Duttagupta, Gilda Fernandez, and Cem Karacadag) concludes with advice `Both fixed and floating exchange rates have distinct and different advantages. No single exchange rate regime is appropriate for all countries in all circumstances. Countries will have to weigh the costs and benefits of floating in light of both their economic and their institutional readiness’.

Effect on public debt

When the State Bank of Pakistan devalued rupee in July 2017, then finance minister, Ishaq Dar (now an absconder) claimed the State Bank of Pakistan acted without his volition. The Dar-time devaluation inflated our debt burden by Rs 2,300 crore. Again, under PTI government Rupee happened to be devalued by 3.8 per cent, or Rs5.06, to an all-time low at Rs139.05 to dollar (increasing debt burden by Rs. 3500 crore). The government devolved blame on `SBP for devaluing rupee without informing it. We have low productive capacity and depend on services. The industrial sector’s contribution to the total Gross-Domestic-Product Growth was only nine per cent and its weight in the size of the economy was 20.8 per cent. IMF puts country’s growth rate at 2.5 per cent. After witnessing a four per cent growth rate in the last fiscal year, cotton production declined 17.5%. The production of rice and sugarcane also fell by 3.3 per cent and 19.4 per cent respectively. Even the 65% debt-to-GDP ratio will be higher than the statutory limit of 60% set by parliament in the Fiscal Responsibility and Debt Limitation Act.

Slow growth rate, poor productive capacity and dominant services sector foretell that our rupee will further weaken vis-a-vis dollar.  Even without further devaluation, Pakistan’s external public debt was US$74 billion as of end-February 2019. It would be whopping US$31 billion in the next seven years, July 2019 to June 2026. The country’s economic growth rate has slowed down to 3.3 per cent, the lowest in nine years.  The slow pace of economic growth coupled with currency devaluation reduced size of the economy to around $280 billion from $313 billion at the end of the Pakistan Muslim League-Nawaz (PML-N) government’s term. Almost every sector has made negative contribution to growth rate of 3.29% during fiscal year 2018-19 ending on June 30.

India’s recent budget aims at growth rate of 12 per cent a year (8% growth discounting inflation at 4%). Pakistan’s growth rate would be minus 10 per cent a year (3% growth less 13% inflation). How could this poor growth rate stabilise economy as per text-book burden-of-debt models?

Write off `odious debts’

Pakistan should tell the IMF `we reject forced devaluations (quasi-floating exchange) and shall pay debt in rupee at contracted loan rate of about Rs. 2.5 to a dollar’. That would deflate Pakistan’s debt burden and make IMF bailout successful. Too, the IMF should write off `odious debts’. James K. Boyce and Madakene O’Donnel (eds.), in Peace and the Public Purse (. New Delhi. Viva Books 2008, p, 251) say debt forgiveness (or relief) helps stabilise weak democracies, though corrupt and incompetent.  Debt relief promotes economic growth and foreign investment. In fact, economists have questioned justification of loans given to prop up congenial regimes.  They hold that a nation is not obliged to pay such `odious debts'(a personal liability) showered upon a praetorian (p. 252 ibid.). Legally also, any liability financial or quasi-non-financial, contracted under duress, is null and void. Sachs (1989) inferred that debt service costs discourage domestic and foreign investment.  Kanbur (2000), also, concluded that debt is a drag on private investment.

FDI. Pakistan should improve `ease of doing business’ to attract foreign-direct investment. According to World Bank, Pakistan ranks 136 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings.  State Bank of Pakistan reported on February 18 that foreign direct investment (FDI) during July-Jan FY19 declined by over 17 per cent compared to the same period last year. Pakistan’s prime export sector is stagnant (overtaken by China and Bangladesh).  It suffers from low investment in modern machinery, energy shortages, and inadequate efforts to integrate into global supply and retail networks.

Learning from India

India ranks 77th. As of February 2019, India is working on a road map to achieve its goal of US$ 100 billion worth of FDI inflows. In February 2019, the Government of India released the Draft National e-Commerce Policy which encourages FDI in the marketplace model of e-commerce. According to World Bank, private investments in India is expected to grow by 8.8 per cent in FY 2018-19 to overtake private consumption growth of 7.4 per cent, and thereby drive the growth in India’s gross domestic product (GDP) in FY 2018-19.

Apart from being a, Foreign direct investment (FDI) is a debt-free primum mobile economic growth. Foreign companies invest in India to take advantage of relatively lower wages, special investment privileges, such as tax exemptions, etc. share technical know-how and generate jobs.

India relaxed FDI norms across sectors such as defence, public-sector undertakings, oil refineries, telecom, power exchanges, and stock exchanges.

Equity inflows in India in 2018-19 stood at US$ 44.37 billion. During 2018-19, the services sector attracted the highest FDI equity inflow of US$ 9.16 billion, followed by computer software and hardware – US$ 6.42 billion, trading – US$ 4.46 billion and telecommunications – US$ 2.67 billion. Most recently, the total FDI equity inflows for the month of March 2019 touched US$ 3.60 billion. During 2018-19, India received the maximum FDI equity inflows from Singapore (US$ 16.23 billion), followed by Mauritius (US$ 8.08 billion), Netherlands (US$ 3.87 billion), USA (US$ 3.14 billion), and Japan (US$ 2.97 billion). India is the top recipient of Greenfield FDI Inflows from the Commonwealth, as per a trade review released by The Commonwealth in 2018. In October 2018, VMware, a leading software innovating enterprise of US has announced investment of US$ 2 billion in India between by 2023. In August 2018, Bharti Airtel received approval of the Government of India for sale of 20 per cent stake in its DTH arm to an America based private equity firm, Warburg Pincus, for around $350 million. In June 2018, Idea’s appeal for 100 per cent FDI was approved by Department of Telecommunication (DoT) followed by its Indian merger with Vodafone making Vodafone Idea the largest telecom operator in India In May 2018, Walmart acquired a 77 per cent stake in Flipkart for a consideration of US$ 16 billion. .In February 2018, Ikea announced its plans to invest up to Rs 4,000 crore (US$ 612 million) in the state of Maharashtra to set up multi-format stores and experience centres.

Kathmandu based conglomerate, CG Group is looking to invest Rs 1,000 crore (US$ 155.97 million) in India by 2020 in its food and beverage business, stated Mr. Varun Choudhary, Executive Director, CG Corp Global.

International Finance Corporation (IFC), the investment arm of the World Bank Group, is planning to invest about US$ 6 billion through 2022 in several sustainable and renewable energy programmes in India. As of February 2019, the Government of India is working on a road map to achieve its goal of US$ 100 billion worth of FDI inflows.

In February 2019, the Government of India released the Draft National e-Commerce Policy which encourages FDI in the marketplace model of e-commerce. India is planning to allow 100 per cent FDI in Insurance intermediaries in India to give a boost to the sector and attracting more funds. Revised FDI rules allow100 per cent FDI in the marketplace based model of e-commerce. Also, sales of any vendor through an e-commerce marketplace entity or its group companies have been limited to 25 per cent of the total sales of such vendor.

In September 2018, the Government of India released the National Digital Communications Policy, 2018 which envisages increasing FDI inflows in the telecommunications sector to US$ 100 billion by 2022.

In January 2018, Government of India allowed foreign airlines to invest in Air India up to 49 per cent with government approval. The investment cannot exceed 49 per cent directly or indirectly.

No government approval will be required for FDI up to an extent of 100 per cent in Real Estate Broking Services.

In September 2017, the Government of India asked the states to focus on strengthening single window clearance system for fast-tracking approval processes, in order to increase Japanese investments in India.The Ministry of Commerce and Industry, Government of India has eased the approval mechanism for foreign direct investment (FDI) proposals by doing away with the approval of Department of Revenue and mandating clearance of all proposals requiring approval within 10 weeks after the receipt of application.

The Government of India is in talks with stakeholders to further ease foreign direct investment (FDI) in defence under the automatic route to 51 per cent from the current 49 per cent, in order to give a boost to the Make in India initiative and to generate employment.

In January 2018, Government of India allowed 100 per cent FDI in single brand retail through automatic route.

Tax on the rich

Pakistan needs to learn from India’s recent budget about innovative measures to tax the rich. With so many billionaire politicians and tycoons, it is an un-reaped bonanza.  In India’s recent budget, surcharge on individuals earning more than Rs 5 crore a year was raised up to 42.7%, even higher than US super-rich tax of 40% tax. India even contemplated imposing inheritance tax.

Pakistan’s tax structure could be reformed in light of insights in IMF’s Tax Law Design and Drafting (volume 1; International Monetary Fund: Victor Thuronyi, ed.1996.Chapter 10, Taxation of Wealth). Pakistan taxes `income-‘tax capacity, not accumulated-capital to tax inheritance and estate.

Magnetised/Chip cards 

Pakistan needs to adopt card based transactions to get rid of money-laundering and hawala (hand to hand) csh dealings.

Inheritance tax. India’s Budget 2019enhanced taxes on the super-rich bracket. However, an inheritance tax also is on the anvil. This tax suits Pakistan the most. India did away with English zamindari system (British gifts of estates) in 1948. But, Pakistan is barred from putting upper limit on private property and undertaking land reforms because of Shariat Appellate Bench of the Supreme Court decision dated August 10, 1989.  The verdict was delivered nine years after it was first filed by the Qazalbash Waqf, a religious charity based nearby Lahore. It was a 3-2 split decision and was made effective from March 23, 1990.

Inheritance tax is a tax that you pay when you receive money or property from the estate of a deceased person.  Unlike the estate tax, the beneficiary of the property is responsible for 

paying the tax, not the estate. The key difference between estate tax and inheritance tax lies in who is responsible for paying it. An estate tax is levied on the total value of a deceased person’s money and property and is paid out of the decedent’s assets before any distribution to beneficiaries. Once the executor of the estate has divided up the assets and distributed them to the beneficiaries, the inheritance tax comes into play. The tax amount is calculated separately for each individual beneficiary, and the beneficiary must pay the tax.

Basic needs

Unsupported by health-care units, the health cards in Pakistan are another hoax. Merging civil and military outfits, the government should evolve a universal health-care, education and housing system.  To begin with defence-paid military and civilians should be equally entitled at military health facilities.

India has a vision of US$5 trillion economy, with $100 million FDI to provide basic needs to its people_ tapped water supply, closeted toilet, bank account to receive aid, enhanced scholarships, creating world’s best universities, health cover, shelters and ,minimum taxes on self-built houses. Regrettably, focused on bail-outs, Pak planners have no Weltanschanschauung (world view), though it cost nothing. 

Mr. Amjed Jaaved has been contributing free-lance for over five decades. His contributions stand published in the leading dailies at home and abroad (Nepal. Bangladesh, et. al.). He is author of seven e-books including Terrorism, Jihad, Nukes and other Issues in Focus (ISBN: 9781301505944). He holds degrees in economics, business administration, and law.

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Economy

Scaling up support for sustainable development: Mongolia on the rise

Armida Salsiah Alisjahbana

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Mongolia’s economic rebound in recent years reveals a country rising up to the challenges borne from adverse economic shocks. The country’s economic resilience comes as no surprise. Mongolia has responded well to near-term economic challenges and chartered its long-term path towards sustainable development despite its inherent constraints as a small and landlocked economy that is also highly dependent on natural resources. Mongolia prides itself as being one of the first countries to adopt the Sustainable Development Goals (SDGs), with Mongolia’s Sustainable Development Vision 2030 receiving parliament approval in 2016 just six months after the adoption of the SDGs globally.

In particular, Mongolia’s policy experiences in areas of economic diversification, good governance and regional cooperation were well-exemplified by the Action Program of the Government of Mongolia for 2016-2020. So, Mongolia has utilized these policy tools to carve for itself strategic positions to weigh in on issues significant to the country’s national development outcomes. For example, Mongolia leads the global agenda of the needs and challenges faced by landlocked developing countries (LLDCs). The presence of the International Think Tank for LLDCs in Ulaanbaatar further highlights the key role of Mongolia as a credible broker of the LLDCs development agenda.

Mongolia has been active in implementing intergovernmental initiatives facilitated by UN ESCAP including the distinct but interrelated intergovernmental agreements on the Asian Highway Network, the Trans-Asian Railway Network, and Dry Ports. We welcome the recent development on the entry into force of the Intergovernmental Agreement on International Road Transport along the Asian Highway Network among China, Mongolia and the Russian Federation, supporting trilateral economic cooperation.

Currently, Mongolia has substantively engaged on trade facilitation initiatives including the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific. There is great potential for Mongolia to strengthen its role in the related area of transport facilitation, given its position as a transit point between big economies like China and the Russian Federation. Also, we are pleased that Mongolia is soon to become the seventh member of the Asia-Pacific Trade Agreement, a preferential regional trade agreement, open to all developing member States in Asia and the Pacific.

Mongolia has also been a key driving force to advance cooperation for clean energy, especially towards a North-East Asia power interconnection, leveraging from the country’s abundant renewable (solar and wind) energy resources. Energy cooperation finds strong resonance in relation to climate action and air pollution, given the North-East Asia subregion emits over one-third of global greenhouse gases and faces heavy impacts of air pollution.

With inherent constraints due to its fragile economic structure and environmental condition, Mongolia constantly needs to find balance between providing prompt policy responses in the face of volatile and unpredictable external shocks in the short-run and pursuing structural changes to address long-term socioeconomic issues. Under these circumstances, pursuing an integrated approach becomes an imperative for Mongolia to advance its national socioeconomic agenda, regional connectivity agenda and global sustainable development agenda, bolstering Mongolia’s resilience towards adverse economic, social and environmental shocks. To this end, I welcome Mongolia’s emphasis on the “whole of government” plus a “whole of society” approach.

Through the years, we have seen how Mongolia continues to be a steadfast partner of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in promoting regional trade, connectivity and development across its various interrelated dimensions. Mongolia has also provided leadership in advancing regional cooperation agenda in the Asia-Pacific region by chairing the seventy-fifth session of UN ESCAP in May 2019.

Equipped with lessons learned from past development challenges and mindful of new directions and approaches to nurture future opportunities, Mongolia’s regional position and potential are on the rise. I am looking forward to partnering with Mongolia’s leadership to strengthen regional cooperation and achieve sustainable development by 2030 with the United Nations family.

Originally published in Montsame-Mongolia

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Economy

The Election Agenda

Naseem Javed

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Akin to the last Big Collapse, currently, the gatekeepers of the world economy are in deep silence as the new date of the next global financial collapse is being figured out. The Brexit, the EU, any new pending war, the US Elections or some new unknown issues are all single push buttons for a global crisis. However, some smart nations are awakening; the silent majority is slowly talking, and here assisting them expediently are the attempts on the global-age skills and lifelong learning to enable them to build their own respectable future. The other options for the world are to simply wait for an unfathomable chaos while listening to the restless citizenry. It’s time to vote, it’s time for asking the difficult questions.

Why Stop Trade-Wars Start Skills Wars?

Trade-wars are proof of poor quality exportability, poor skills and poor policies, but skills-wars are about creating highly skilled citizenry creating superior edge of exportability and blossoming local grassroots prosperity. Nations should avoid blaming, screaming and declaring trade-wars on other countries and rather first look inside and declare internal skills-wars on their own working-citizenry to improve their performance and capability to stand up to global age trading challenges. In the race of exportability performance, no nation can escape internal skills-wars, to face the challenges of creating local grassroots prosperity no national leadership can escape the ballot boxes, its simple win with skilled citizens and change the tune to build own nation. So, what are the new challenges and what’s holding back?

Why Discover The Art of Incompetency?

In a hyper-accelerated supercharged world, understanding and measuring incompetency of working masses is a brand new art; identification of this critical void with right contents to fix the crisis of exportability is a new science, the mobilization of working-citizenry to regain new skills is courageous deployment and bold national debates to openly face these challenges is global-age example of successful political leadership. This reality is also about those hidden but well-trodden crossroads; where universities of the world failed the students, ask millions of indebted MBAs, this is where government bureaucracies failed the citizenry, ask billions of SME taxpayers, and this is where conflict-centric agenda stripped naked the global populace of any intelligent dialogue and this is also where divisive politics and populist thinking are finding fertile grounds. Every minute of the day, around the clock, on the main-streets of the world streaming live to billions such failed procedures and outdated incompetency laced business processes or political rhetoric are now openly visible, what the working citizenry needs are revival of new global-age skills before turning them into restless mobs.

During ‘ The Print-Society’ of early last century, when printed word was power and when only the literate had access to knowledge while any meaningful transformation took decades, today the literate and illiterate of the world combined in billions, with earth shattering communication devices in their hands are advancing and asking questions. The global mindshare is now the world’s most powerful battlefield. Therefore, today, the internal wars to tackle incompetency of citizenry are far more important issues than any other types of outside wars. Such declarations of internal wars are positive starts backed with world-class thought leadership, regimented and disciplined national agenda to transform citizenry with global-age-skills for the new world of global commerce.

Systematically abandoned, the small-midsize-enterprises of the world, the elimination of lifelong learning to keep pace with technology and future job-securities of the working masses of the world only resulted in insecurity, fear and lack of confidence and finally brought the rejection of globalization.

The global exportability performance is more about global-age-skilled-nations with distinct superiority of entrepreneurial performance over seek-and-destroy-soldiered-nations. Today, laborious and routine-works are being replaced by smart-work; smart-work is being replaced by smarter-machines. The Masters of Robots will be the smart unlearners, while the Slaves of Robots will be the deniers of change. In global search for collaborative synthesizim, Expothon Worldwide is seeking alliances to downstream high quality debates and discussion with top leadership within a nation and inviting experts in various business growth fields to join the platform already aligned with this global exportability driven metamorphosis. The recent move last month by Worldbank to adopt this very format with their launch of Econothon a global project is also a very good step forward. Expect some major and positive events in this arena to bring global thinking forward.

The world is undergoing mega changes.
Nations are already flooded with massive innovations but lack massive commercialization. They have an overabundance certifications and degrees but seriously lack entrepreneurial direction. Nations have empty incubators and exhausted accelerators looking for real estate tenants. Nations have economic development programs but often without reality punch. Nations have trade groups like Chambers and Trade associations bodies that are stuck in the last century’s models and are collapsing in this new global age. Nations have unlimited resources and technologies but lack execution and understanding. It’s all there, but trapped in old cycles and old methodologies.

Why Answering Global-Age Demands?

At the dawn of E-commerce; switching from industrialization to computerization were not new-funding dependent issues; it demanded clear understanding and memorization of what was once called ‘hardware’ and what was ‘software’ the rest was all about on job-learning to adopt and swim in deep new technologies…most were almost free. We are at the same junction today and in desperate need to mobilize hidden entrepreneurial talents of the citizenry and bring them closer to existing SME base.

Three steps to advance on grassroots prosperity

1-Identify 1000 to 10,000 or 1,000,000 small and midsize entrepreneurs within a nation, and create a national agenda to quadruple their performance on innovative excellence and exportability. Caution; this is not to be confused with old out-dated-dysfunctional-government-data rather assembly of ultra-modern-digital and current-profiles of midsize enterprises within a nation. These are advance level mobilization and deployments laced with Artificial Intelligence, Virtual Reality, Augmented Reality and Block Chain and freely available technologies to smart enterprises and agile nations of the world.

2-Deploy massive digitization of top national trade associations and chambers of commerce to upgrade to world-class digital platforms so that their entire membership can skate nationally and globally showcasing their goods and services. Caution; this is not to be confused with already broken and disconnected websites from last decade, this is more like LinkedIn format colorful and highly interactive platforms

3-Engage the national entrepreneurial talent, 1000-10,000- or 1,000,000 small and midsize businesses in ongoing discussions and high quality entrepreneurial debates and create global bounce. Caution; this is not to be confused with a single plastic award night, this is about the remaining 364 days of the year filled with active and daily engagements.

Why the critical lack of knowledge?

Fact: The world can easily absorb unlimited exportable ideas in unlimited vertical markets.
Fact: The well-designed innovative ideas are worthy of such quadrupled volumes.
Fact: The entrepreneurial and dormant talents of a nation are capable of such tasks.
Fact: The new global age skills, knowledge and execution are now the missing links


Some 10,000 Chambers of Commerce of the world are sorting out trade wars and trade disputes but not the new global age demands of global marketplace for their own memberships while some 100,000 National Trade Associations of the world are mostly stuck in last century when it comes to advanced level digital platforms and are afraid about their future roles and return on investment on membership fees. They all will shine under new flags of creating new global bounce and prosperity.

Public Sectors of the world are mostly grossly under-optimized on their own hidden talents, seriously afraid of entrepreneurialism and without global-age skills or innovative ideas how to tame an elephant. They will become confident, highly optimized and fearless, and will contribute freely to new ideas and prosper.

The small and mid-size enterprises all over the new and old world, though in critical need of global age expertise, are already in boiling pot and do not have the time, finances or the luxury to intellectualize such issues. They have already lost faith in their local support but will rejuvenate with joy and become the number one source of new job creation within a nation.

Blaming other countries, the political gatekeepers of the world are mostly busy showing off their latest Teleprompters so will they get public attention, votes and most needed respect or they need brand bold direction. The overflow of free technologies, progressive local, national and global solutions are grossly misunderstood and least optimized areas. This is an ocean in need swimmers and scuba-divers. 

Why it’s time to re-think?

Most nations already have extraordinary wealth in hidden assets;
Natural resources; mostly unearthed, and underutilized.
Human resources; untapped and abandoned,
Cultural and historic features; caught in divisive conflicts
National intelligencia and knowledge; developed over millennia now isolated or outcast
All these tossed around under the dead weight of populace politics and massive incompetence.
The lack of collaborative synthesizim is already destroying half of the world’s talents.

It’s all about global age skills of the citizenry and not the armies; as armies cannot feed the citizenry.
It’s about special thinking to figure out how to uplift national skills under entrepreneurialism

Firstly, create an authoritative discussion on these topic, escalate it to top national leadership,
Secondly, create a forum focused on new blueprints and clearly put aside the funding issues,
Thirdly, concentrate on the sleepy and dormant talents and venues collecting dust within the nation.
Final results; national mobilization of entrepreneurialism under a formal agenda

What’s your recommendation and how can you help your nation?

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Economy

New economic strategy of Armenia: What it offers and misses

Orkhan Baghirov

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Karabakh clan or Kocharyan and Sargsyan governments were able to protect itself from domestic pressure using victory in war in Nagorno-Karabakh and control over it as a  source of legitimization. With this strategy they were able to eliminate people’s discontent on economic and social problems.

According to 2016 data Armenia’s annual emigration rate was 4-5% of the whole population which were the highest in the world. Average monthly pension at the time was $90 and 20% of children under five years had health problems because of undernourishment (Opendemocracy, 2016). Along with these problems illegalities and high level of corruption made economic condition in the country even worst.

However, after the “Four-Day War” in 2016 in which Azerbaijan was able to return some strategic heights along the front, legitimacy of Sargsyan government came under the question. According to Armenian side during the war their military’s casualties reached 64 military servicemen, 13 reservists and more than 120 wounded (civilnet.am, 2 April). The  obvious superiority of  Azerbaijan army in the war de-stabilized political situation in Armenia forming base for “Velvet revolution” of 2018 that lead to change in government.

With the existence of escalated security concerns and constitutional change in 2015, that had to allow Sargsyan to serve as Prime Minister in the new system, population did not tolerated socio-economic problems any more and went to streets to carry out the coup ( hir.harvard.edu, 2018).

Despite good economic development indicators in 2017 (7.5% growth of GDP) Armenia still had high unemployment and undernourishment rates which was the result of high inequality (hkdepo.am, 2018). Along with political issues these significant social-economic problems also played important role in “Velvet revolution”.

After coming to power in order to solve economic problems Pashinyan’s new government introduced “revolutionary economic program” and adopted by Parliament in February of 2019without support of two opposition parties. Armenian government plans to eliminate extreme poverty by 2023, to increase exports to 43-45% of GDP by 2024 and achieve  economic growth at a rate of at least 5% annually(jam-news.net, February 15).

One of the provisions of the document was dedicated to formation of fair, transparent and free business environment. It this provision it was mentioned that one of the key factors impeding economic development is the existence of unfairness and impunity of a privileged class.

Program also puts high responsibility on Armenian citizens as the in discussions of the program  Pashinyan declared that effectiveness of this program will depend on how citizens will respond to our call and how many will take advantage of new of opportunities that  the revolutionary program proposes (eurasianet.org, February 15).

Despite purpose of revolutionize the economy addressing main economic problems document faced high criticism from different Armenian experts, politicians and activists. Most people criticize the document for not having concrete structure and steps and not outlining mechanisms and sufficient timelines to achieve proposed targets. During the parliament discussions some opposition politicians said that “Abstract concepts do not make an economic revolution” and citizens expect concrete actions which require political will, resistance, and knowledge (oc-media.org, March 2).

Another important criticism is about the approach of the government to put responsibility on citizens. It seems controversial that the people that fought for and elected new government will be responsible if the economic plan will not succeed. In the society where for many years responsibility of economic development and social security was mainly on the hands of government it is difficult to quickly adapt to new call of government. It is hard to imagine that without taking intermediate steps for making society and economic players ready for taking this responsibility the new economic plan will succeed.

New economic strategy also fails to address some of the main obstacles that businesses face in the country. First of all, high taxes prevents small businesses to operate efficiently and to compete with big businesses. Not coincidentally, during the parliament discussions of new economic strategy prime minister of Armenia asked businesses to print cash receipts in order to prevent formation of shadow economy (Arka.am, June 6). If all cash receipts will be printed then it will left most of small businesses without substantial earnings damaging business environment. It is better to decrease taxes before asking and expecting businesses to print receipts for all transactions.

Second unaddressed obstacle for businesses in Armenia is high interest rates of loans that play important role in financing businesses. Without providing necessary financial availability for small businesses it is meaningless to discuss any favorable business environment.

Taking in account that big businesses mostly belonged to Armenian oligarchs which have the opportunity to easily avoid high tax payments using their political power and are capable to pay loans with high interest rates new economic strategy mostly favors them (azatutyun.am, 2018). And within the existence of political problems in the country that threatens power of new government it is not realistic that government will go against these big businesses at least in short term.

Therefore, targets and directions determined in new “revolutionary economic program” are exaggerated and mostly serves for maintaining political stability in short term. If it will not meet expectations and determined targets in medium term it will create social discontent increasing pressure on new government. As the economic problems were one of the main drivers of “Velvet revolution” the effectiveness of new economic plan will play important role in securing political power of new government.

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