Marukyan Appeals to Prime Minister and Central Bank President

The head of the Bright Armenia faction of the National Assembly, Edmon Marukyan, has appealed to Prime Minister Nikol Pashinyan and Central Bank President Arthur Javadyan.

Dear Sirs,

The anti-crisis measures proposed by the government of the Republic of Armenia are not adequate to the depth and duration of the crisis. Western governments are responding to the pandemic with economic stimulus packages that reach 5-10% of GDP. The fiscal weight of the government's anti-crisis package is at least ten times inadequate.

The government’s five-point action package mainly consists of loans, while the actual budgetary expenditures (grants, benefits, interest subsidies) are a negligible figure that does not even amount to 1% of GDP.

Currently, we note with satisfaction that the government of the Republic of Armenia is facing the crisis with around 350 billion AMD (5% of GDP) in budget savings accumulated over the last three years, while the Central Bank of Armenia has more than 2 billion USD in reserves. This allows the initiation of large-scale anti-crisis spending without the risk of inflation and financial instability.

The economy of Armenia is based on private consumption, which has received the most severe blow. The majority of labor market participants are de facto unprotected.

No matter how much we avoid the term “hourly wage worker,” there is a fact that tens of thousands of citizens have lost their only source of income. Today is not the best time to demand explanations from those who belong to this group of our people regarding why their employment relationships with the employer are not formalized properly. This can be addressed in the future. Today, people are in unbearable difficulty, and direct state assistance is essential.

Even businesses that have properly registered their employees are clearly having difficulty paying the salaries of their “sent home” staff. In this case, the government must consider either immediate cash allocations to workers or compensating these businesses for salary expenditures at least 50-70%.

For small and medium enterprises, it is also necessary to discuss the possibility of targeted tax holidays. Tax penalties and fines for non-payments are designed for standard situations and are excessively punitive and inapplicable under these conditions.

Let us remember the migrant workers, as our compatriots who have been working mainly in the Russian Federation for two decades or more have ensured annual foreign currency inflows of 1-1.5 billion USD into the country. For years, they have been the actual number one “currency bringers” for the country. In this instance, the state can stand by those households for once, as long as the entry of those workers who have never asked anything from the state into the Russian and other labor markets is closed.

The country needs an unprecedented amount of cash allocations from the state budget for households (that is, families) and small businesses, which will compensate at least 50% of their lost incomes for the upcoming 2-3 months.

We propose that the Ministry of Finance and the Ministry of Economy jointly assess the lost incomes of households (families) and small businesses and the budgetary possibilities for partially compensating them.

We call on the Central Bank of Armenia to return to its mandate and provide the government with public proposals regarding the possible extent and directions of the budget deficit and stimulus measures instead of engaging in futile remote discussions with borrowers, as is the practice of our Central Bank's Western counterparts.

We hope that the Central Bank recognizes that budgetary restraint on the part of the government poses as great a risk to the banking system and financial stability as does the behavior of borrowers.

In conclusion, let us once again emphasize that to ensure the smooth flow of loan repayments, utility payments, and tax revenues, appropriate budgetary expenditures that correspond to the drama of the situation are essential.

Thank you for your cooperation.

Respectfully,
EDMON MARUKYAN