Artsakh Faces Acute Economic Crisis: MediaHub

In 2022, Artsakh concluded its year under blockade. Since December 12, the only road connecting Artsakh to mainland Armenia, the Lachin corridor, has been continuously blocked by the enemy, causing both humanitarian and economic issues in the second Armenian state. We have repeatedly discussed the humanitarian problems arising from the closure of Artsakh's "lifeline" by the enemy. MediaHub.am attempted to understand what economic problems have emerged from the Ministry of Finance and Economy of Artsakh.

Below is an excerpt from the media outlet's interview:

“- Considering the closure of the Lachin corridor, what economic problems has Artsakh faced, and will this affect the economic growth in 2023?

- The Lachin corridor, blocked since December 3 by Azerbaijan and continuing from the 12th to this day, is the only road connecting us to the outside world. It ensured the uninterrupted supply of food, medicines, essential goods, the transportation of severely ill patients to healthcare facilities in the Republic of Armenia, and the unhindered movement of the population. The blockage of this sole route is causing enormous damage to both the everyday life of the residents and the functioning of organizations and healthcare institutions within the republic. Currently, all organizations operating in the Republic of Artsakh are facing significant challenges related to the import of raw materials and materials, the importation of goods, exporting products, and cash flow (due to the lack of necessary equipment in trade points), which could lead to an indefinite cessation of their activities. Regarding the impact this situation will have on the economic growth of 2023, it is still too early to provide any precise assessment of how it will change, how long it will last, and what kind of impact it will have on economic development. If the situation continues, the country will find itself in a serious economic crisis, unable to meet even the needs of the population of the Republic of Artsakh.

- How will the closure of the Kashen mine affect Artsakh's economy?

- “Base Metals” is one of the largest production companies in the industrial sector of the Republic of Artsakh, playing a significant role in ensuring added value creation and economic growth in Artsakh. It has successfully implemented various programs that contribute to the socio-economic development of the country across several sectors. Additionally, the company, being the largest taxpayer in the republic, provides a significant portion of the tax revenues to the state budget. Thus, we can state that the cessation of the operation of the Kashen mine will significantly reduce tax revenues to the state budget, creating serious difficulties both financially and in securing necessary funding for crucial socio-economic projects. One negative consequence of the cessation of activities is the reduction of jobs, which will lead to an increase in the level of unemployment and create additional social tension.

- Has the current situation prompted changes in the 2023 budget proposal?

- On December 29, the National Assembly adopted the draft law on the "State Budget of the Republic of Artsakh for 2023," which did not undergo changes due to the situation. Emergency expenses arising from the extraordinary situation will be implemented from the state budget reserve fund.”