Honorable President of the National Assembly,

Dear members of the National Assembly,

Dear Cabinet members,

Dear attendees,

Speaking on the occasion of the 2023 state budget draft, I would like to address a wider range of issues: related to the economy, partially related to the economy, and not related to the economy.

I would like to start my speech by noting that today the economy of the Republic of Armenia is actually experiencing a boom. You are aware that according to January-September data, the economic activity index was 14.1 percent. This is, of course, an extremely important indicator, and it is important to note that this pace gives us the opportunity that by the results of 2022 we consider the purely economic difficulties caused by the pandemic and war in 2020 overcome, and restore the pace of our economic development, which is extremely important. In other words, in fact, we have the opportunity this year to return to the pace of 2019 purely in terms of the economy, and we will use that opportunity.

It is also very important to evaluate this economic indicator, this economic dynamics, because I had the opportunity to say that, of course, some for political reasons, some for non-political reasons, but still they ask what the Government has to do with this economic growth and with this economic success. This is an important question and it needs to be addressed. In general, I believe that the greatest role of governments is to make the country maximally prepared to face economic difficulties, and secondly, grasp any opportunity for economic growth that may emerge.

Conceptually, since 2018 our approach to the economy has been that the government should interfere as little as possible in economic affairs, but be more concerned with creating economic opportunities and overcoming economic problems. In this sense, I think that today we are reaping the fruits of our policy of overcoming monopolies, of eliminating oligarchy, of ensuring equality of all before the law, and of overcoming systemic corruption. In fact, this is exactly what the government has been doing and what it has declared to do. We have understood that these political pillars, these foundations should be placed at the basis of economic growth, which, in our opinion, have started to give results.

I should also note that this year a very important event took place in terms of Armenia's economic image, reputation, because Armenia ranked 11th among 100 countries in the Index of Economic Freedom, improving its situation several times. I want to make a very important emphasis in this regard. When this figure was published, many of our opponents were smiling and sniggering mysteriously, to say the least. Why did they act like that? Because they said that Armenia ranks 11th in the world and has progressed only because, in fact, the indicators of economic freedom of many countries have simply sharply declined under the conditions of bad management of Covid. So, it turns out that countries much more developed than we are have managed the Covid pandemic so badly that their economic ranking, their economic environment has either collapsed or declined.

This fact that we have made such great progress in indicators of economic freedom, because the economic environment in countries that are much more developed and have better economic environment than us has worsened due to Covid, is a more important fact than ranking 11th, because this means that we have managed the Covid pandemic so well that, unlike many developed countries, our results have not fallen, but on the contrary, we have made serious progress in terms of economic development or management. In general, I think we all remember that it was in 2020 that many, many people called us on the carpet because of alleged poor management of Covid and the bad management in general. They were divided into two parts, one part said that the Covid pandemic is so poorly managed and the quality of management in general is so low, they even gave catastrophic assessments. But I think that with this story, this topic is also closed, and it was addressed and received its assessment.

The next key point that I want to emphasize in this context is the following: I have already had the occasion to say that we have a new record of registered jobs in Armenia as of October, and there are 691 thousand registered and paid jobs in the Republic of Armenia. We are talking about registered jobs, because we know by name and surname that specific people work, receive salary and, most importantly, pay income tax. And if we record this indicator, we must say that compared to May 2018 - that is the month of the Non-violent, velvet, people's revolution that took place in Armenia - the number of jobs in October 2022 is by 143 thousand more, and compared to September 2018, the number of jobs is by 108 thousand more.

Now the same question. Has the government done anything to create these new jobs? We have to record that, yes, and it is the economic policy that I have already mentioned about: the creation of opportunities, including the fight against the shadow, and of course the income tax reforms that we all know. It is true that in most cases we avoid such wording, we are also modest in some places, but in all countries of the world, in any country, they say about this situation as follows, that is, if we did not make some reservations, so to speak, under normal circumstances in any country, the question would be formulated, or the situation would be described as follows: in 4 years and 4 months, the government created 143,000 new jobs. We keep saying that the methodology is not known, we don't know how much has been created, we don't know how much has come out of the shadows, but even if it has come out of the shadows, that job had not existed. In other words, that job had never been created, because a job means something that operates within the limits and logic of our legislation. And therefore, we must record that the government has created 143,000 new jobs in the Republic of Armenia within 4 years and 4 months. It simply has no other name, and that's what they say in all normal, civilized countries. I must also say that the exceptional changes that have taken place in government-economy relations are also of crucial importance.

I talked about income tax reform. Moreover, I consider that it is one of the key reforms of our government, which also had a very important psychological impact. But I also want to say that we not only collect these taxes, we also return them to the citizens of the Republic of Armenia. In this regard, I think the income tax refund rate that we have today is impressive. In 2018, the government returned 4.7 billion drams of income tax to the citizens, of course, you know, this return takes place in line with a number of directions, the most important of which is mortgage loan financing. In other words, people are buying apartments in the Republic of Armenia, and this number should be perceived as such. I have had the chance to say that the number of beneficiaries of this program is close to 25 thousand, if not even more. So in 2018, 4.7 billion drams of income tax was returned, in 2021- 32.7 billion drams, the increase is 595 percent. In terms of these income tax changes, I also consider the social impact to be very important, because the rule before was the following: In many cases, people got, so to speak, a black job, a black salary, which did not give them the opportunity to enjoy the social advantages and opportunities that exist in general. And in 10 months of 2022, we have already returned 41.1 billion drams of income tax. Compared to 2018, we recorded a 10-fold increase.

Of course, there are certain reservations here that, in fact, an expense arises for the budget, which is uncontrollable. But, on the other hand, I want to emphasize that we do not have the methodology to calculate the expense, how much economic benefit and how much economic growth it brings, because today, look, we have a 14 percent growth in the construction sector. Moreover, compared to 2021, if we compare this indicator with 2018, the growth can be significantly higher. In other words, we have to calculate that this returned money returns to the economy anyway. Also, speaking about these reforms, I remember that I stop on this topic every time during the discussion of the draft budget, and I consider it important to record it, despite the fact that in 2018, the income tax, which at that time had 3 levels - 36 percent, 28 percent and 23 percent, we first made it flat. In 2021, that tax was 22 percent, in 2019 it was 23, then it became 22, in 2022 it is 21 percent, and from 2023 it will be 20 percent. Although in 2018 we had an income tax of 23, 28, even 36 percent, in 2021 we collected by 124.5 billion drams more income tax than in 2018. This is also a very important indicator psychologically, to show how to collect more taxes by lowering the tax rate. This is a very important example of dialogue and work with the public.

In this regard, I consider the value added tax refund indicators and the system we have created to be essential. This system has existed in the Republic of Armenia for a very long time, but we have introduced significant changes in the sense that we first paid off the old debts of the value added tax, and unlike before, we made the system practically self-propelled. In other words, not much depends on the will of the officials here. Next, unlike in 2018, when refundable value added tax was calculated every 6 months, we changed it to 3 months, and now it is done on a monthly basis. And let's see what results we have. In 2018, 88 billion drams of value added tax were returned to businessmen, in 2021 - 148 billion drams, and in 10 months of 2022 - 171 billion drams. The figure for this not complete year, meaning the year is not yet over, is almost double that of 2018. This is also one of the factors that undoubtedly has a role in economic growth and activity, because it is also a very important indicator for investors that they will receive value added tax after investing, working or they will not get it at all, because I want to remind you that in 2019 we returned the value added tax to people, which they should have received in, say, 2013, 2008, 2001. It is a very important indicator for any businessman, whether he will get back the value added tax or not, and if he gets it back, how soon, because it is his money, which, as a result of transactions, comes under the control of the government, essentially temporarily. Now people know that they can get that tax back within a month, without bureaucratic hassles. Now that system is practically automatic.

I also want to emphasize that we made some very important memorable and principled promises during the revolution. We promised, I personally, that we will increase budget revenues by 35-40 percent within 1-2 years. Of course, this promise has been fully fulfilled in this way, but I want to return to the situation and see what is happening to the state budget in this regard in 2022 and what we are planning in 2023. Accordingly, by the results of 2022, we expect the tax revenue of the budget to exceed the income tax rate of 2018 by 662 billion drams, or if in dollar equivalent, by 1.6 billion dollars, and this will exceed the same rate of 2018 by 52.6 percent. In other words, we have already increased the revenue part by 52 percent in 2022 compared to 2018. And in 2023, tax revenues are predicted to be 2 trillion 203.7 billion drams, which is by 946 billion drams or 75.1 percent more than the tax revenues of the 2018 state budget. In other words, we can record that 4 years after the revolution, we will increase the budget revenues by 75 percent. It is what is planned that we have to implement. And we expect that the current year's budget will be overperformed by approximately 80 billion drams, which is also a very important indicator.

I want to aslo talk about an important non-financial promise or commitment, which, in my opinion, also has an important political and economic significance. We had promised that we will create conditions for the revival and rebirth of Armenian aviation. To be honest, I wanted to talk about this, because in recent days I have been constantly visiting foreign countries, and it is visible. For example, I remember the years 2018-19 when I landed at Zvartnots airport, witnessing absolute emptiness. In general, very often there was not a single aircraft at our airport, and if there were any, they were foreign aircrafts. I am pleased to note that we record the presence of Armenian aircraft at our airport both when departing and returning, and we see that the number is growing. What role did the government play here? At the moment we announced our intention to create an airline with a joint investment with a private investor, it arose interest in the private sector, and private investments have also been made. I am happy to note that today we are seeing some activity in the field of air cargo. This is not an accurate statistic that approximately 30 percent of flights are carried out by Armenian airlines, that is, airlines of Armenian origin. Of course, we have well-known problems in the field of aviation, the blacklist, etc., but I am sure that we will overcome these problems institutionally. Institutional, in terms of changes that have a significant impact on both budget revenues and the economy as a whole. I want to emphasize once again that I consider the cash reduction policy extremely important. I have to note again and ask our parliamentary colleagues to continue consistent work in this direction, because in this case we have 3 parallel results, 3 parallel effects. The first effect – and this is not in order of importance, but simply a enumaration - I should emphasize, for example, the anti-corruption effect, because if the fight against corruption is really our sincere policy, this is the simplest indicator. If a government says that I am fighting corruption, for example, it is a very important indicator for me of what that government is doing in the area of cash reduction. If it consistently moves in that direction, it is clear that the government is sincere in its efforts, because reducing the circulation of cash first of all reduces the opportunities for corruption. Next are the fiscal opportunities, which, I must say, the transparency of money circulation also creates an opportunity for more revenues to be collected in the budget. It is also a fiscal effect. Fiscal effect in turn brings financial and economic stability, macroeconomic stability, reduction of cash. Next is a tool that we have yet to learn, we are learning and we have still to apply it. it's the social effect. I consider very important the introduction of the system that we implement in relations with pensioners. You are aware that we have introduced a system that pensioners receive their pensions cashless with their bank cards, and a certain percentage of cashless trade is returned to them as a refund. You know that we increased pensions from September 2022. We will make a similar decision in 2023. But this policy, which fits within the framework of cash reduction, is at the same time pension increase. In practice, in 2022-2023, we will actually increase pensions in 3 stages: the 2 are directly under the name of pension increase, and the other is already through the circulation of non-cash trade, because, say, a pensioner who receives 50,000 AMD, whose pension we have already raised by approximately 5,000 drams, it is possible to get another 5,000 drams of additional income through cashless trade, and this is a very important component and indicator. I am happy to report that cashless trade among pensioners is starting to grow. This is very important because, after all, we are doing it for individuals; when a person responds to it, we understand that our policy has reached the addressee. In this regard, I must also note the importance that we should consistently continue the same policy in the social benefits payment system, that is, among recipients of family benefit. Here I want to emphasize the additional effect of this, which is related to effective management and conducting more targeted social policies. What do I mean? I have already set a task before our structures, so that we can analyze the consumer behavior of our pensioners and family benefit recipients with the use of artificial intelligence, naturally without declassifying personal data. It is important in term of making our social policy more targeted, because if we see that there are more sensitive and more important groups of goods for our pensioners or beneficiaries – yes, we can now guess, evaluate, but it is not yet a fact that our guesses exactly coincide with reality - we should conduct a more targeted policy in those directions or, in the conditions of the emergence of certain social complications, we should know more precisely how we should help the socially vulnerable classes. During the Covid period, for example, we wanted to help people, but since our resources were limited, the resources of all countries, even the richest countries, it is very important to know exactly what to spend on, to have the most favorable impact on the social condition of an individual. In this regard, of course, we should continue the cash reduction policy, which is actually interrelated with a number of other policies.

I want to specifically emphasize and also thank our parliamentary colleagues for their support for the policy on advertising of betting or gambling, and the government's policy in that direction in general, because this is also of great social importance. I believe that sometimes we do not fully realize the scale and extent of the crisis. I remember in 2018, when I had just assumed the post of the Prime Minister of the Republic of Armenia, and in the months of June and July, respectively, 9.5 and 10.8 percent economic activity indicators were recorded in Armenia. I was interested in how, why and at the expense of what this indicator was recorded. And I was horrified to know that a huge part of these economic activity indicators is related to the fottball World Cup. What does the footabll World Cup have to do with it? And it turned out that our fans are betting at a very high rate. It is everyone's right and freedom, there is no doubt here, but betting in the Republic of Armenia, in fact, has become the leading branch of the economy, and this sentence says it all. I am happy that we are taking consistent steps in this direction, but we should not stop at simply banning this advertising process. Of course, the government is also working on creating new, more efficient tax systems for gambling games. But coming back to social policy, I want to say the following that we also note with horror that, for example, many citizens with social or family benefits spend their social benefits on gambling. We need to take active steps to stop this, because if a citizen can consistently waste 90 percent of his allowance on gambling during the year, the question is why is the government, the Republic of Armenia paying them? I think you will agree that it is a very strange logic: to support a citizen, to pay a citizen so that he, in turn, pays to participate in gambling games. In this regard, I think that we really need to continue the policy consistently, and we are already implementing it in practice. The goal is that we will only allow betting from bank cards and accounts, which means identifying the person who placed any bet. We have to develop the policy without revealing the personal details of a person's life and even the privacy of habits. You know that in the past or maybe until now there was a system of electronic wallets, that is, it was not identificated, we definitely need to stop this system from existing. Of course, in terms of reducing cash, I think that our biggest challenge today is to create opportunities for cashless payments in the most remote villages of the country. The Central Bank, the government and the State Revenue Committee should pay very serious attention to this issue so that this opportunity being created should not be available only to pensioners or beneficiaries of the capital or large settlements, but throughout the country.

You know, I was talking about all this and I will touch on some more important issues about budget expenditure in general later. I really want and hope that it is so, that the attitude towards paying taxes and the state budget in the Republic of Armenia will undergo significant and deep socio-psychological changes, because in the Republic of Armenia, people have income, so to speak, a pocket, and I want us, all the citizens of the Republic of Armenia, that if they keep their money in their right pocket, let's say, consider the state budget of the Republic of Armenia as their own left pocket and correspondingly, if they keep it in the left, although what I said contradicts the logic of reducing cash. It is very important that our citizens change their attitude, and I hope that this attitude towards the taxes and the state budget is undergoing changes, because it is the common pocket of all of us, and these funds are spent on ensuring the well-being and development of our country, our citizens. In this regard, I should again expect the support of our public and the parliament for the most important reform, which the government is going to submit to the National Assembly in the near future. I am talking about the implementation of the universal declaration system in the Republic of Armenia. What is this system about? It is about that all citizens of the Republic of Armenia, without exception, must submit an income declaration, and one should not be afraid of this wording, because at least initially 90 percent of the work will be done by the State Revenue Committee. The citizen will receive his declaration, essentially completely filled out, all he or she will have to do is either confirm that everything is written correctly, or if something is written incorrectly, correct it, raise the need to correct it. In other words, this system will come into full force on January 1, 2024. Of course, there are nuances here. You know that we have already once tried to introduce the universal declaration system. Many questions were raised at that time, particularly regarding the incomes of our compatriots going to work abroad. We can report that we have found a legal solution to this issue, and our universal declaration system will not cause any additional tax liability for our compatriots working abroad. The Ministry of Finance will have an opportunity to say why and how. I mean, we did not achieve this by deforming the law or the legal system, but we got the full solution of the issue within the framework of existing legislation and contracts.

Dear colleagues,

You are aware of how much attention and importance the government attaches to the policy being implemented in the field of education. I have had chances to say why, I don't want to repeat it. I just want to record that the 2023 budget envisages increase in education funding of about 70 percent or 90.6 billion drams compared to 2018. I also want to record that the percenatge is calculated in AMD, and the dram's appreciation has nothing to do with these increases. And in 2022, we managed to increase the financing of the education sector by 59 percent or 71.4 billion drams.

An extremely important revolutionary process is taking place in the field of public education. We have created a mechanism, which we have already talked about a lot, and which is worth talking about again and again, as a result of which teachers themselves can decide to double and sometimes even triple their salaries. I am talking about the system of voluntary certification of teachers. And I am happy that there are hundreds of teachers in the Republic of Armenia who receive doubled or tripled salary. I am sad that there are still thousands of teachers in the Republic of Armenia who have not yet taken advantage of this opportunity. But we will continue to encourage our beloved teachers to move in that direction.

Also, for the year 2023, I set a task for the Ministry of Education, Science, Culture and Sports to implement this system of teacher’s certification and corresponding salary increases in music schools, art schools, sports schools and kindergartens for educators. Why were they not included in the system from the beginning? Because some of these schools and educational institutions were under the local government system, and there are purely financial and management issues here. Those issues need to be resolved, but it is clear that the certification system justifies itself and we should continue to go this way. Moreover, our political message is that this is not a one-time operation, and in general, the scope of the system of voluntary certification of teachers will be expanded to other structures in the future, of course, taking into account their specificities. And it should be a regular process, that is, teachers and other beneficiaries of that system should regularly - it's a matter of political decision, we will discuss it, decide - once every 3 or 5 years should pass certification, which will solve two issues. First, the state, the public will be sure that the work has been entrusted to properly qualified people, and they, the workers, will know that by confirming and reconfirming their qualifications, they also receive additional social security in the form of salaries.

Yes, we are very happy today that there is an opportunity for a teacher to receive a salary of 400,000, 450,000 drams in Armenia today, but our goal is for a teacher to receive a salary of 800,000, 900,000, 1,200,000 drams in Armenia. And this is by no means an utopian goal. This certification system will give us that opportunity. But I also want to say, because it is a very important and sometimes speculative topic, that in a number of cases, particularly in the case of schools with up to 100 pupils, which are mainly schools in rural areas, and in the case of science teachers in 2023 we will raise salaries without even certification. What does this mean? This means that teachers who work in schools with up to 100 students and their salary is less than one rate, i.e. approximately 120,000 AMD - and why is it less, because you know that schools are funded according to the number of students, and teacher salaries are correlated with that, but there is an objective reality that there are schools, or rather classrooms, where objectively there are not enough students to ensure one full teacher's rate.

What problem are we solving now? As a result of this, today there are teachers in the Republic of Armenia who, despite the fact that the rate is approximately 120,000 drams, receive a salary of 30,000, 40,000, 50,000. We will increase the salary of teachers who receive less than the rate for these objective reasons without certification. This means that, figuratively speaking, there will be no teacher in Armenia receiving a salary less than 90,000 drams. But if these teachers voluntarily participate in certification, this rate will increase accordingly. First, the rate will be doubled: if it was 120,000 drams before, it will become 200,000 or more as a result of the certification, to which will be added the extra payment resulting from the percentage of the teacher's certification, from 30 to 50 percent.

Under this first part, the number of teacher beneficiaries is 4418 and 8135 teachers of science subjects will get extra pay, that is, for teaching science subject, an additional coefficient will also be added to the average rate and they will get additional payments. This has nothing to do with the certification, but if that teacher passes the certification, all the coefficients will already be calculated on the added one, and the principle of operation of combined classes will be revised. What is this? You know we unfortunately have classes where there is a 4th, 6th, 8th grader in the same class and the teacher is now doing the same lesson with everyone. We will make it as follows: if there are 2 students in the class, the teacher will do a lesson with those 2 students according to the curriculum, and that lesson will be paid as a full lesson, that is, there will not be these mixed classes, except for 2 subjects, it is about physical education and art, which, I think makes sense. But even in this case, to be fair to the teachers, physical education and art teachers will get a 50-75 percent bonus, which I think is important.

We have announced and planned and are implementing the plan of building 300 schools and 500 kindergartens in Armenia by 2026. Within the framework of this program, by the end of 2022, we will have 24 commissioned schools, 53 kindergartens, by the end of 2023, we will have 64 schools, 141 kindergartens, and in 2023, the construction, reconstruction or overhaul of 85 schools and 130 kindergartens will begin. And it is very important that we all understand that with this program we are not only creating a new physical infrastructure of schools, but also that a new standard should be formed as a result of them, that is, by saying school, we should close the page when it is tolerated that a school may have a physical infrastructure of below even average quality. Everything must be of a new standard: color, interior decoration, design and so on. Of course, we will not achieve it in one step, but this is our goal, which we must achieve.

Dear colleagues,

According to the 2023 budget, science funding will increase by 154 percent compared to 2018, and instead of 14.2 billion drams in 2018, science will be financed by 36.2 billion drams in 2023, an increase of more than 2.5 times. You are aware that by 2022 we had already managed to double the funding of science compared to 2018, and from January 1 of this year the salary increase of researchers entered into force. We have talked about it a lot, I will give one example. for example, the head of the laboratory already receives 350,000 AMD instead of the previous 140,000 AMD, that is, it has more than doubled, which, increasing every year, will become 477,000 AMD in 2025. And in this regard, we will continue to conduct the policy consistently, and in all cases, dear colleagues, talking about education, later about healthcare and other areas, I want to say that these decisions contribute to economic growth. Because, for example, despite such a huge, large number of jobs, despite the fact that in 2021, compared to 2018, we significantly reduced unemployment, by about 4.7 percent, we have a fairly high unemployment rate so far.

But we also have an obvious and well-known fact: the labor force problem, and where does this problem come from? It goes and reaches the education sector. By the way, when I say education, I want to urge all of us that when we say education, we should not understand only higher education, because vocational education and training are also extremely important. And we practically have a serious problem in those systems, and we also have serious problems in all areas, from pre-primary to higher education, and we must consistently go this way. But I also want to say that the most important investment for the perspective of economic development is the investment for human capital, first of all, education, healthcare, etc. And I must record that the increase in healthcare funding in 2022 compared to 2018 was already 54 percent, and in 2023 this increase will reach about 87 percent, that is, in fact, we will be able to reach the doubling rate. I am happy to report that a tangible increase in salaries in the primary healthcare sector is also planned. We believe that this is almost in the same logic that we have the problem of transitioning to more effective management in health care. I mean that we have to change, by the way, this is in some sense both a public perception and it has become a state perception that, unfortunately, in many cases we allow the disease to develop to the point that we just have no chance not to react to it. We must reverse this policy and do everything we can to detect disease early or, if possible, prevent it.

In this regard, I consider extremely important the related policies that we conduct, in particular, the fight against smoking. I am sorry to say, and in case anyone thinks I don't know, I do know that, unfortunately, the ban on smoking in cafes does not work in a satisfactory way and to a sufficient extent. I have put a task before the Police that we have to be consistent in this issue and this is extremely important.

I also consider it very important, you know that it was in 2021, if I am not mistaken, that we had certain problems in the healthcare sector in connection with the financing of the state order, but now we are drawing conclusions. By the way, the question is also the following: we must understand that as we increase the opportunities in the healthcare sector, naturally, the list and range of users of these opportunities increases with greater progression, again due to the same logic. Moreover, it concerns all of us. Unfortunately, we have a culture when we go to the doctor when it is no longer possible to tolerate, and in many cases people, also due to social difficulties, simply postpone it for an indefinite period of time. When they see that the government is creating an opportunity, those forecasts also change, the actual number of beneficiaries also changes, because people start to be inclined not to apply as late as possible, but to apply as soon as possible, and that's where the problems occur. But it is also very important to note that we made a decision, and the family members of our soldiers who sacrificed their lives for the sake of the motherland can use the state order without a queue, that is, there is no need for them to queue up.

The next thing I would like to talk about is that from January 1, 2023, only certified health workers will be able to work in the health care system. This is another very important manifestation of the Armenian government's policy of setting standards. I have had the opportunity to talk about it, but I have to record once again that having standards in all areas is a crucially important factor for development. And we will continue this policy in all possible areas and first of all those related to the security of the state. Saying standard we mean the quality standards that we set in front of our employees. In the near future, a voluntary certification system will be launched in the Police, the National Security Service, and the State Protection Service, as a result of which, yes, another doubling of salaries will take place. I reiterate, the process will be voluntary. Those who feel they are ready will pass that certification as soon as possible starting from 2023. Those who will not pass the certification will continue to work at their previous salaries, but it will not be endless. I don't know, maybe a period of 3 years will be set, and with the results of the 3 years, just as it is now from January 1, a person without certification cannot work in the health sector, the same will happen in our other services.

I consider the indicators and goals that we have in the field of defense to be very important. Defense sector expenses in 2023, compared to 2018, will increase by 113 percent or 270 billion drams. In 2023, defense spendings will amount to 509 billion drams or 1.2 billion dollars. You are aware that we have undertaken the process of army reforms, a number of legislative amendments have already been submitted to the National Assembly, and I hope they will be adopted in the near future. Their purpose is again the same: first, to set a standard, and second, to set a salary in line with the standard. The purpose and meaning of this entire process is the transition to a professional army, and of course, to the increase of the defense capabilities of the Republic of Armenia. I must emphasize that the significant increase in defense spending and reforms, our goal of transitioning to a professional army do not in any way contradict the peace agenda adopted by the government of Armenia. The army is one of the most important institutions of the state, and we have a task to have an army with high standards, on the other hand, it does not in any way contradict the peace agenda.

The Republic of Armenia will consistently push forward the declared peace agenda and, taking into account the understandably great interest, I would also like to refer to the trilateral meeting that took place in Sochi on October 31, with the mediation of the Russian President, or rather, the meeting between me and the President of Azerbaijan. Based on the results of that meeting, can I record that a step was taken towards the implementation of the peace agenda? I can say yes, definitely, and it was a very useful and important meeting. Of course, the meeting had both a public part and a behind-doors part, and many important issues were raised. It was also important, and you are aware that before that meeting, there were some discussions in Armenia about whether the Republic of Armenia has taken the path of the most optimal option in the the normalization of Armenia-Azerbaijan relations and the settlement of the Nagorno-Karabakh problem. And there was a question about the extent to which the policy pursued by the government, or more precisely, the policy pursued by the officials involved in the negotiations, corresponds to the interests of the Republic of Armenia and Nagorno Karabakh. I think one of the key points of the Sochi meeting was the answer to this question. It’s not so that the answer to that question didn't exist before Sochi meeting, it's just that the discussions on this issue became maximally public, and now we can publicly see and compare how much our policy corresponds to the vision and framework that is under the conditions of today's realities being voiced and proposed, including by the opposition. This is a very important factor, and since it has been discussed, you know, you are aware that there is such a discussion: there is a Russian proposal or a Russian concept, and there is a non-Russian concept, and an attempt is made to create the impression that the Armenian government's steps are in contradiction, conditionally speaking, with the Russian concept. It’s certainly not the case, and I can now explain why it isn't. Because public statements have been made, while I myself could not have made them public before, because in some sense it would be a breach of ethics. But since the authors of the concepts themselves have somewhat revealed some nuances, I can already address the issue from that point of view.

You are aware that our Russian partners have stated that, in their opinion, the correct approach would be to postpone the issue of the status of Nagorno Karabakh for an indefinite period. This is justified by the fact that at the moment there is objectively no possibility to find a status that will be mutually acceptable. Moreover, it must be admitted that it is not a new situation, that is, the meaning is to postpone the issue of status. To what extent does the policy of the government of the Republic of Armenia correspond with this vision? I have to say that it corresponds completely and by 100 percent, and this is the reason, and we've been criticized for it, we just haven't been able to reveal why we're doing it that way until now, and we're continuing to raise it from the perspective that there are 3 components of the issue: security, rights and status of Nagorno Karabakh Armenians. You have noticed that later on, we tried to put aside the word "status" as an issue for today’s solution. Why? It is because of this vision, because we have agreed, we have agreed with our Russian partners, that it is not worth going and trying to solve this issue now, because it will lead to an inevitable crisis, and this is where I am happy, I can say this now.

Moreover, people criticized us for this approach at that time, and they criticize us today for not having this approach. Moreover, as I publicly promised during the trilateral negotiations, I also proposed, we did everything, insisted and the Armenian side, the Foreign Minister worked on that text, and worked as a team, to make a reference in the trilateral statement of Sochi. The headline is already known, and the content partially corresponds to the Russian proposals. But in fact, in some sense, we have tried to be more flexible at the request of our Russian partners in order not to turn the situation into a dealock. The next issue, which I said publicly and I want to say in retrospect, we also proposed that in Sochi, on the spot, a decision be made to extend the mandate of the Russian peacekeepers stationed in Nagorno Karabakh for an indefinite period of time, for 20 years, 15 years, 5 years, etc.

I must say that, as it is already obvious to all of you, that proposal was not accepted, but I must also record that, in my understanding, the issue came to the agenda, even though the issue is on the agenda one way or another. I want to draw the attention of all of us to the following fact that the trilateral statement of November 9 stipulates the term of the peacekeepers in Nagorno Karabakh is automatically extended, that is, it can not be extended only if one of the parties submits an objection 6 months before the expiration of the term.

So what’s new about it? The new thing is the following: to extend the mandate of the peacekeepers, to fix that even the institution of this objection is not necessary or it is possible to overcome it from now on and have the presence of peacekeepers in the long term. Our proposal was not accepted at this stage, but in my impression, it is an issue that in some sense comes to the agenda and I fully agree and I think it is obvious that the most important factor in guaranteeing the rights and security of the Armenians of Nagorno Karabakh is the presence of peacekeepers there, unless reliable mechanisms and guarantees of security and rights are established.

I want to say the following, which is very important. I say again, because the issue has many layers and a wrong impression may be created, I want to say that our policy before Sochi and after Sochi has not undergone any, not even the slightest change, because our policy was that and I am very happy that the agreements reached in Prague were essentially reaffirmed in Sochi, that is, I reaffirmed from my side, but from the other side there was no denial or exclusion of those agreements, at least as recorded in the document, and we will continue our vigorous activities for the implementation of the peace agenda. I don't want to touch on many details now, I think that we have covered the aggression of September 13 and the aggression of May 12 of last year sufficiently and expressed our positions publicly, and I don't think that we should repeat the same thing again now, especially given that our position has been expressed on the highest international platforms. I don't want to repeat that.

I want to draw our attention to an important fact related to pushing forward the peace agenda and our regional relations. I have not verified statistically whether such a statistic has ever been recorded before or not, but at least this is not an ordinary statistic and I think it deserves to be recorded that the year 2022 is exceptional in that the leader of Armenia had direct contacts with the leaders of all neighboring countries without exception. telephone conversations, meetings, of course, with some of them more actively.

For example, I think yesterday I had a very important working visit to the Islamic Republic of Iran and there we recorded with the honorable President of the Islamic Republic of Iran that we have had 4 bilateral meetings since August last year. Our contacts with Georgia are straightforward, you know about our contacts with Azerbaijan and I consider it very important that this year I had a telephone conversation and a meeting with the head of Turkey. This is extremely important.

And I want to say that, for example, if you ask, very well, the meeting is a meeting, but do we have any change in the situation or not? I think that we have a very important change in the situation, which in itself is not a deep and very practical and objective result, but also analyzing the situation, I realized that, for example, in August-October, our communication complexes and complications in relations with Turkey have been overcome. This may seem like a very weak and unimportant thing, but I assure you, I think that always and in all cases there was that question in the past: to meet or not to meet, to talk or not to talk, which had a very great practical significance. Today, that factor, that complexity has essentially been eliminated and not only at the level of the government, but also at the level of the public, which is very significant, because the government always operates in the context of certain public perceptions, and this is by and large not a very tangible, but important and significant change and we will consistently continue to move forward in the direction of the realization of the peace agenda.

In terms of recent events, I consider it very important that we succeeded and succeed to confirm on the international platforms the position we have, in 2020 we recorded that there is a border between the Republic of Armenia and Azerbaijan and that border was recorded by the Alma-Ata Declaration of 1991 and related documents. This is an extremely important nuance, because if there is no border, it can be said that there is no fact of aggression, and the presence of a border was recorded in both Sochi and Prague, thereby the fact of aggression was recorded in the resulting international reactions. For example, according to the results of Prague, sending the mission of EU observers to Armenia became possible only after the 1991 border was recorded. If there was no such border, a question would arise among the Europeans, what are we going to monitor, if we don't have the basic data, how are we going to determine who is standing where, to what extent he is standing in the right or wrong place? In this regard, I also want to thank our public, because it is obvious that we are now on the same channel with our public regarding where we are moving, what task we have set before us and what steps we should take to implement that task.

Dear colleagues,

Continuing the topic of institutional reforms, I must say that in 2023, we are expecting two important structural institutional changes, the first is the creation of the Ministry of Internal Affairs and the second is the creation of the Foreign Intelligence Service. Both legislative packages will soon be adopted by the government and will be submitted to the National Assembly. I hope and expect support.

Of course, I consider the creation of the Foreign Intelligence Service extremely important, but I also want to say that as a result of our many discussions, we have come to the following conclusion that the activity of the Foreign Intelligence Service should not be in the standard logic of the activities of our state administrative institutions, otherwise it will lose its meaning. And here the elements of secrecy may seem more and it is done only for the purpose of the accomplishment of the institute and I also ask for your understanding and support for this approach.

Of course, the issue of the creation of the Ministry of Internal Affairs has been publicly discussed many times, if I am not mistaken there were also hearings on the issue in the National Assembly, and we are convinced that we are implementing a very important reform. Of course, in parallel, the introduction of the Patrol Police is taking place in Armenia, which is the first step in setting a new standard for the Police Service. I also want to say that our demands for the quality of the work of the same Patrol Police should be continuously increased, because yes, we created, we saw, we recorded positive changes with satisfaction. But we have to understand that it is a life process and the quality of the patrol's work, for example, is acceptable in 2021, it may not be acceptable in 2024, because we can record a higher quality work.

Dear colleagues,

In conclusion, I want to address the challenges as well, because it is very good that we will surely conclude this year with a double-digit economic growth and overcome the high growth gap that we had after 2020. This is only part of the story because we also aim to achieve at least 7 percent economic growth in 2023, but this is more difficult because that 7 percent growth has to be achieved on top of the 14 percent growth and that is the main problem, but I consider it a solvable problem.

By the way, again the greatest role of the government should be the following: not to hinder the economy so that it provides growth. This theoretical thesis is constantly being realized in practice, since 2018, I have not been more attentive before, maybe it was like that before, if you pay attention, for example, the real growth has always been more, maybe 2020 was an exception, than our government agencies predicted. Even the forecasts of international organizations were exceeded in 2019, 2020, 2021, and 2022. What is the reason for this? I repeat, the position of our government has never been that we must ensure growth, growth must be ensured by the private sector, we must simply create all the conditions for it.

Here, I want to emphasize that we have problems in this area, in particular, I must first record that in the 2023 budget we have an unprecedented number of capital expenditures: 558 billion drams, which has quadrupled compared to 2018. Of course, there are certain peculiarities here. But I also want to say that today we already see that the private sector is overloaded and we have problems in the private sector. We are afraid that we may encounter problems in the construction of roads, schools, kindergartens and other state projects, because the construction companies may not be able to fulfill the state orders.

Moreover, we are now facing very deep institutional problems, because it turns out that a 14 percent construction growth is enough to cause a deficit in our country, for example, in cement, stone and other building materials. There is also an institutional problem here, because I remember our debates about, for example, the field of cement production, certain privileges should be established, opportunities should be given, etc. But then it turned out, recently I found out in a very surprising way for me, that the companies, or some of them, which we once helped, we created opportunities, we created privileges for them to live, to develop, they continued to live their ordinary life during this period of cement shortage, when they expect that the government should again help them, in the conditions when the market clearly has a demand for cement.

Here I want to say that we should be very careful when giving privileges, of course it should be analyzed, I don't want to draw final conclusions, but I say again that we should support recovery and development. One should not, so to speak, conduct a palliative policy in the economy, which, in my opinion, is a terrible thing that only brings harm. In other words, helping the companies so that they just go to work and do not provide the necessary results for the economy, this is a policy that we should abandon.

There are several other similar problems, when we want to increase the use of locally produced stones in state projects, which solves both quality and economic issues, it turns out that there are no stones in Armenia, the land of stones. This is already an absurd situation, and the reason is the same again, when we had situations when mines were divided, they were privatized without proper formalities, no economic formula was put on the basis. In short, the well-known economic problems that I mentioned in the first part of my speech that we have largely overcome, but these problems still exist today, and we must conduct our policy consistently to solve these problems.

I see the problem in the following way. In 2023, we must go that way and ensure 7 percent economic growth, ensure stability around the Republic of Armenia, the highest possible level of security and continuity of the state's institutional development. One of our most important problems, with which we have a lot to do, is our policy in the demographic sphere. Of course, we are making decisions in that direction and we hope that these decisions will bring concrete results and Armenia will overcome dangerous demographic thresholds. You know that in the case of the birth of the third and every subsequent child, the support program is becomes applicabale, there are programs for the purchase of an apartment, etc. And we must provide conditions so that every family, especially young families, should be predisposed to a peaceful, prosperous life in the Republic of Armenia and their family planning should coincide with the strategic planning and perspective of the state in the sense that we are all sure that we will have a peaceful, free, happy and developed Armenia.