Transition   Privatization   

Privatization Progress in Armenia

by Melissa Barcic

Armenian 1999 Estimates GDP - US$1.98 billion GDP per capita - US$600 Population - 3.3 million GDP growth - 5.0 % Inflation - 1 % Currency - Armenian Dram Exchange rate - 520 Arm Dram / $1.00

Armenia's switch from Communism to privatization has lasted over a decade. "Last year was marked a turning point in the privatisation process in the Republic of Armenia (RoA). Several large and significant enterprises were sold to foreign strategic investors, including a majority stake in the national telecommunications company Armentel. Total privatisation receipts were in excess of US$76 million in 1998.These transactions raised the profile of privatisation and brought many important privatisation-related issues to the forefront of the national agenda. 

By the end of the mass privatisation programme in December 1998, the RoA had transferred ownership in more than 1,400 medium and large enterprises and more than 6,000 small businesses. Cash and investment privatisation is now the focus, a priority for the government, with ongoing efforts directed toward creating a competitive privatisation process and attracting quality investors" (www.privatization.am) However, the Government is using the trial and error method to correctly implement this program. Armenia's privatization program has been a complicated process. "Armenia's voucher privatization program came to an end in December 1998, and a more comprehensive cash privatization strategy has been slow to develop. Parliamentary elections in May 1999 further complicated matters, resulting in shifts within both the Parliament and the Government. 

Nevertheless, the new Government has shown a willingness to continue case-by-case privatization of large entrepreneurial and infrastructure companies, and to complete sales of other non-strategic enterprises, albeit with renewed caution. The new Government has the authority and ability to meet these challenges, and promises to continue along the economic reform path" (www.privatization.am). This reform has already led to major improvements in the economy. "A commitment to privatization and an overall balanced economic development policy have resulted in consistent economic growth since Armenia's low point in the early 1990s. In 1998 real GDP growth was 7.2 %, while 1999 estimates call for a 5.0% increase" (www.privatization.am). This growth period has occurred with the aid of the Government as well as some international enterprises.

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