Focus areas

Business environment and competition

Remittances from Russia, previously accounting for about 80 per cent of overall remittance inflows, have declined significantly. The construction sector has suffered the most as a consequence and the need for diversification has become more pressing. Anti-competitive practices, particularly in the informal sector, and taxes have been identified as key impediments to the development of small and medium-sized businesses (SMEs).

Infrastructure – Energy

The opening of the Iran-Armenia gas pipeline has marked the significant progress achieved in expanding and diversifying Armenia’s energy infrastructure.It has also been agreed for Armenia to export electricity to Turkey in the future.

Infrastructure – Irrigation network
With funding from the Millennium Challenge Account and the World Bank, a large-scale reconstruction project of Armenia’s canal network has started in September 2008. Many rural farmers nevertheless remain without access to an efficient irrigation system.

Financial sector

Economic uncertainty following the financial crisis resulted in reduced landing to private sector. 2009 saw significant decreases in credit growth, new consumer loans and mortgage lending. To stabilise the market, the government established a state mortgage fund for commercial banks for consumer on-lending.

The switch to a free-floating exchange rate regime in March 2009 went relatively smoothly and did not adversely affect banking sector stability.

Social sector

The sharp slow-down in economic growth has put pressure on the government’s expenditure plans. The government has ensured, however, that funding is available to further the progress in poverty alleviation and capital investment, particularly in housing and road rehabilitation.

Last updated 22 April 2010