Friday, February 7 2014

The specialized forum on the Armenian capital market development, which is taking place in the resort town of Tsaghkadzor, Armenia, has become a convenient platform for magniloquent statements of economic authorities. A high-class hotel is hosting extensive discussions on global and local economic changes with participation of international and local experts. The participants are adducing arguments in favor of the pension reform, which, however, will become the only mechanism for the authorities to take the national economy out of the system crisis, according to independent experts who spoke on condition of anonymity. But even this scenario, experts believe, will be temporary and will only prolong the inevitable fiasco of the public administration system.  

The economic authorities' opening speeches were not impartial this time either. They restricted their speeches to commonly accepted phrases saying that the development of the stock market in Armenia is becoming even more topical amid the ongoing pension reforms, which are of not only social but also economic importance. The development of the institutional and market infrastructures remains the key goal of the economic authorities for the years to come.  

Officials say that Armenia is one of the few states in the post-Soviet area that is promising to register a serious economic growth in the future. They are convinced that the country is economically prepared when entering the year 2014 and has all prerequisites to gain economic activity and macroeconomic stability this year. Officials remember the year 2013 due to the growth in the industrial and agrarian sectors, as well as rise in exports. 

Meanwhile, bank experts and economists do not rule out economic downturn at the yearend 2014. Moreover, they consider it quite probable and even inevitable. If the voice recorder is switched off, they confess that they see progress in not a single more or less cost-efficient sector of Armenian economy. As regards the pension reform, they consider it to be the only tool to attract long-term money and do not rule out improper use of the retirement savings by the authorities (i.e. the use of the funds to their own advantage).

Nevertheless, the experts do not yet forecast any serious perturbations in the economy. They believe that the country will keep dragging on a wretched existence under cover of new reforms. 

While the Tsaghkadzor forum participants are demonstrating logorrhea  and discussing the advantages of the new system and while the young  activists (i.e. the future pensioners), together with non-power  factions, are holding rallies, the accumulative pension system, which  has made a stir and still remains unclear for the demonstrators  themselves, is coming into its own "legal" right. In the meantime,  the country remains in prolonged recession and is coming closer and closer to the seemingly inevitable collapse. It is already unimportant who is the godfather of the pension reform and who is going to initiate the future revolutionary upheavals, for the pleasures of the mighty are the tears of the poor.  

The authorities' decision to impose the pension reform has completely and entirely undermined the almost lacking public confidence in the authorities. The citizens of our small country have one firm belief today - they are unlikely to get their retirement savings in some 30-40 years. There are several scenarios of full and irretrievable loss of the pension assets, ranging from purely hypothetic to economically substantiated ones. Among the latter experts point out 
possible perturbations in the economy such as default or hyperinflation. Experts think that the citizens' concerns are explained by the long-term effect of the pension reform. 

To note, the development of Armenian capital markets is the focus of the ongoing forum in Tsakhkadzor, Armenia. The forum was jointly organized by the European Bank for Reconstruction and Development (EBRD) and NASDAQ OMX Armenia, with the support of the Central Bank of Armenia. The program includes three sessions with participation of the economic authorities, as well as international and local experts. One of the sessions familiarizes the participants with Georgia's experience in capital market development. The other two sessions cover global macroeconomic indices and the current condition of Armenia's stock market.