Statements and messages of the Prime Minister of RA

The Prime Minister's speech at the discussions of the state budget 2022 annual report in the National Assembly


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Honorable President of the National Assembly,

Dear members of the National Assembly,

Dear Cabinet members,

Dear attendees,

We are starting the discussions of the annual report on the implementation of the state budget for 2022.

In my speech, I will refer to both economic, financial and social indicators, I will also try to provide information on the activities carried out in the field of foreign policy, in particular, the progress of regional affairs, the negotiation process.

Thus, in 2022, we recorded 12.6 percent economic growth in the Republic of Armenia, which is an unprecedentedly high indicator for the last 15 years. Accordingly, the tax revenues of the 2022 state budget amounted to 1 trillion 926 billion AMD, which is 82 billion AMD or 4% more than the initially predicted. In other words, when in December 2021, if I am not mistaken, the National Assembly adopted the state budget for 2022, the revenue part was predicted to be by 82 billion AMD less. In other words, we have also implemented adjustments and overachieved the initial plan by 82 billion AMD.

But I also want to emphasize that with all this, the budget indicators of 2022, compared to 2021, in terms of tax revenues are by 339 billion AMD or 21.4 percent more. In other words, we have a very significant increase in budget indicators compared to the previous year. Compared to 2017, the tax revenues of the 2022 budget are more by 2 billion 20 million AMD or 66.3 percent, and compared to 2018 - by 670 billion AMD or 1 billion 820 million USD or 53 percent.

What is behind this increase in budget revenues? Basically, I can name 3 main factors. The first is the indicators of economic growth, the second is the reduction of the shadow and the third is the reforms implemented by the Government of the Republic of Armenia. I can give several examples for this.

Of course, dear colleagues, I have had the opportunity to publish many of the data that I will present now, but this format forces us to record the budget indicators in detail again.

Look, one such example of reform and shadow reduction and economic growth. despite the continuous reduction of the income tax rate - you remember that together we significantly reduced the income tax in the Republic of Armenia, and the reduction continues - in 2021 it was 22 percent, in 2022 - 21 percent, in 2022, compared to the previous year, 63.5 billion AMD more income tax was collected (in total, 522 billion AMD), and compared to 2018, when a three-level tax rate of 26-36 percent was in effect, we collected 181.2 billion AMD more or 53 percent more income tax. In other words, we lowered taxes, but income tax collections increased by 53 percent.

Another such example, in 2021-2022, as you know, the Government acquired a 21.8 percent share in the Zangezur Copper-Molybdenum Combine, and due to this fact, the Government has been participating in the management of the Combine since 2021. Of course, the Combine has always been in the top ten list of the largest taxpayers of the Republic of Armenia, but in 2022, the Zangezur Copper-Molybdenum Combine paid historically record-high taxes: 145 billion 636 million AMD. In order for you to imagine what this indicator is, let me say the following. The taxes paid in 2022 are about 7 billion AMD more than all the taxes paid by ZCMC in 2012, 2013, 2014, 2015, 2016, 2017 combined. In other words, the entire amount in 2012, the entire amount in 2013, the entire amount in 2014, the entire amount in 2015, the entire amount in 2016, the entire amount in 2017 is by 7 billion AMD less than the taxes paid in 2022 alone. I think this is a very telling indicator.

In this sense, the data of the profit tax paid in April 2023 are also very impressive. As you know, April is the deadline for paying the income tax and the income tax of the previous year is paid. In other words, it is not paid just in April, but the deadline is in April and the cycle ends with that. In April 2023, which is the final stage of the 2022 profit tax payment, 160.5 billion AMD of profit tax was paid, which is also a historical record. In April 2022, taxpayers paid 98.4 billion AMD in profit tax. This was paid in 2022, from the profit tax of 2021, and in April 2018, 36.7 billion AMD profit tax was paid.

I would say that the lion's share of income tax is generally paid in April, because people do not want to withdraw their working capital early and pay in the last month. Accordingly, the profit tax index for April 2023 is 62.1 billion AMD or 63.1 percent more than the April 2022 profit tax index, and by 123.8 billion AMD or 337.3 percent more than the April 2018 profit tax index. In other words, this means two things: our business made by approximately 330 percent more profit and/or paid more profit tax in 2022. In this case, I think both have a place. I think that if we talk to the representatives of our economy, business, they will say that indeed, the profits of 2022 are unprecedented, but on the other hand, of course, the reduction of the shadow and also the institutional reforms that have contributed to this process are also important.

Since I referred to the indicators of April of this year, of course, these data are interrelated, I must say that in April 2023, in general, 296.8 billion AMD tax revenue was collected, which is a record indicator for all months in the history of Armenia, including April of the past years. In the Republic of Armenia, so much tax revenue has never been collected in one month. For example, we collected 231.3 billion AMD in April 2022, and 126 billion AMD in April 2018. The April 2023 figure is 65.5 billion AMD or 28.3 percent higher than April of the previous year, and 170 billion AMD or 134.6 percent more than the 2018 figure. That is, in April 2023, tax revenues more than doubled compared to April 2018.

Tax revenues for the first 4 months of 2023 also reveal a very interesting picture. In the first 4 months of this year, more tax revenue was collected than in the entire years of 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010. That is, not all together, that is, with our data of 4 months, the annual budget of these years was less than the tax revenues of 4 months of this year. These figures do not need to be further detailed, but it can be imagined that the data of the 4 months of this year have a great advantage over the annual budget of 2000. I say these numbers to show again that the reforms, reduction of the shadow, economic activity give synergistic energy together.

I also want to emphasize that, in my opinion, the tax policy towards large taxpayers has also changed significantly. To show the dynamics, in the January-March 2023 period, compared to the same period in 2018, 113.4 percent more tax was collected from the top 1,000 large taxpayers. In other words, compared to the first 3 months of 2018, large taxpayers paid more than twice as much tax. This is important so that we see that we are not only bringing small business owners into the tax field, but also large ones.

In the January-March period of 2023, compared to the same period in 2018, 91.6 percent more tax was collected from the first large taxpayers. Along with 1000 big taxpayers, there are the biggest, the biggest ones, and in their case, the taxes they paid almost doubled. And in the same period, the total amount of taxes collected from the 100 largest taxpayers was 55.7 percent of the total amount collected from the first 1000 largest taxpayers. In other words, 100 gave more than half of 1000. This is important for showing that the smaller the taxpayer, even among large ones, his share of tax collection is significantly lightened, certainly in the legal sense of the word.

Dear colleagues,

I am also happy to record that in the first quarter, a high economic growth was registered in the Republic of Armenia, because we have a 12.1 percent GDP growth. This is not the indicator of economic activity, this is the already calculated GDP growth, which is 12.1 percent. And the indicator of economic activity in April was 12.1 percent, which is another important indicator, and inflation was 3.2 percent. We are seeing some stabilization of inflation. As of April, inflation has returned to the rates predicted in the budget, and we expect this dynamic to continue.

Returning to the indicators of 2022, I would like to emphasize that unemployment decreased last year and amounted to 13 percent, against 15.5 percent in 2021, that is, unemployment decreased by 2.5 percentage points within 1 year, and compared to 2018, it has already decreased by 6 percentage points, because unemployment in 2018 was 19 percent. Moreover, in the 3rd quarter of 2022, the unemployment rate in Armenia was 11.6 percent, which is the lowest rate in the last 14 years.

In December, an absolute record of jobs was registered in the history of Armenia: 704,000 registered jobs. But I'm also happy to report that this number is no longer relevant. Why? Because both March and April 2023 saw new job records of 706,294 and 710,150 respectively. This figure is also important, because usually the job peaks are recorded in September and December of each year. Basically, they grow throughout the year, the peak is recorded in September and December. There is usually some decline again from January to September, and a new peak is recorded again in September, if it is to be recorded. This is a new trend in our economy that we have job growth in March and April compared to December last year, which has never been recorded before. Perhaps something like that was recorded only in 2022. Thus, we must record that since May 2018, according to the most recent data, 162,161 jobs have been created in Armenia, which exceeds the figure of May 2018 by 29.6 percent.

In 2022, the average monthly nominal salary increased by 15.5 percent compared to the previous year. This is a very important indicator in the context of inflation because, you remember, both Covid and then the famous processes of 2022 started, one of the biggest fears was inflation, to what extent it would have a negative social impact. But we see that with our policies for a working person we were able not only to compensate for inflation, but also to provide an increase in salaries. According to the information provided by the Ministry of Finance, real salaries increased by 6.3 percent. What does this mean? This means that if we zero out the effect of inflation, put it aside and look at what has happened to salaries, that is the real increase in salaries. In other words, apart from inflation, when people spend 8.6 percent more money due to inflation for their usual expenses, in addition to this, there was another 6.3 percent increase in salaries in 2022, which is a very important indicator.

This is also one of the important components of our social policy, because, you know, when we say social policy, we usually understand benefits, pensions, which is, of course, important, but I think an important component of social policy is also how the life of a working person is improving. If you remember, we adopted a policy in 2018 that we present as a motto: "Defeat poverty with work." In other words, our formula for overcoming social problems is work. Of course, this does not apply or partially applies to pensioners. And, in general, our policies in the social sphere will be as follows, will be reformed with the following logic: if a person is able to work and there is a job in the market, why should the state pay him social benefits, especially as we see, of course, there are not many of those cases, but those cases exist, for example, in Armenia we can have a case where a person has an apartment, which at today's market value can be worth 300,000 USD, 500,000 USD, but he receives an allowance from the state. This doesn't make any sense. I once asked if there is a person in the Republic of Armenia who owns an apartment on Mashtots Avenue in Yerevan, who receives social benefits, and it turned out that there is.

And this is certainly an issue that we need to address. Or are there people who receive an allowance of 26,000 AMD or 30,000 AMD, and let's say they pay a loan of 400,000 AMD per month, they pay 200,000, 400,000 to the banks every month, we have a case of 700,000 AMD, but ask the state to provide them with 30,000 AMD support and other social support. I mean, our ideas in terms of social policy must change to some extent, and by social policy we must not mean only pensions and benefits, although we will talk about pensions now.

It is a very important point that in 2022, 36.5 billion AMD of income tax was returned to citizens in the sidelines of the mortgage loan interest program, which exceeds the figure of 2018 by 31.8 billion AMD or 680 percent. Dear colleagues, there is a very important nuance here that we must take into account. We also provide monthly income tax refunds to citizens for mortgage loans and several other expenses. We do not count these amounts as state budget revenue. In other words, when I present the revenues, this number is subtracted, we return that number, what remains below, we consider that as state budget revenue.

The number of mortgage loan beneficiaries in 2022 was 29,197 people, which exceeded the figure of 2018 by 25,176 people or 626 percent. This means that after 2018, about 25,176 families acquired a new apartment in a newly constructed building. Why don't we look at these indicators, so to speak, on a yearly basis, because, you know, the process of acquiring an apartment is a process of many years, depending on the terms of the mortgage loan, but this dynamic, I think, says a lot. And I have to record again that today in the Republic of Armenia there are 55,000 apartments in various stages of construction: one is in the design phase, another is in the construction phase, and the other is already undergoing the final finishing works to be delivered to the owners. I think this is a very important social, economic, and even political indicator, because I had the opportunity to say during the discussion of the Government's report, this means that people have faith and optimism for the future of Armenia, otherwise the investment of so many billions in the field of housing construction has no other explanation.

Dear Colleagues,

The issue of national debt is always a very important and sensitive topic in the Republic of Armenia, because you know that from time to time there are very big alarms that Armenia's national debt has increased, and what will be our end? I want to say that we had and have a debt management strategy, and with the Government's plan we also recorded that we will be satisfied if the debt-GDP ratio is below 60 percent by 2026. But, as a matter of fact, we consider that we have implemented this indicator in a progressive manner, because according to the results of 2022, the debt-GDP ratio is 46.7 percent, that is, we have a debt of 46.7 percent of our GDP, both domestic and foreign. we are talking about the state debt, in 2017, this indicator was 58.9 percent.

And I want to record that in terms of debt valuation, yes, nominal debt has increased and, moreover, it has also increased for obvious reasons, inevitably, because, for example, we have loan programs, the s North-South and so on, which from the beginning was planned to be implemented at the expense of external resources. Also, Covid management has taken a lot of resources from the Republic of Armenia, and the external debt has also increased at that time, but let me also say the following: saying debt, we mean the loan burden. But let's look at the issue from the opposite logic: if the welfare of a family increases, for example, they start receiving more income, does their debt burden increase or decrease? Today, it usually increases in large part because when opportunities increase, people choose to increase their level of well-being even further. In this regard, I think it is very important to record that, in fact, long ago in the Republic of Armenia, if I am not mistaken, we still have this practice, we spend the debt only for capital purposes. For example, we do not borrow to carry out current expenses, let's say, for example, we do not borrow to increase salary, we do not borrow to increase pension. Why, because, look, those current costs are, once you've spent it, it's gone forever, it's usually going to increase, because going to decrease means we're going to make the social situation a little worse.

And here, apart from the debts aside, remember that we don't borrow money to raise salaries, that is, we only use our own income. I must note that 2022 was a year of strategic salary increases, and I want to emphasize that from January 1, 2022, scientists' salaries increased. Of course, our partners, both the Ministry of Finance and experts in the financial sector in general, do not consider this a capital expenditure, but this is a capital investment in the development of the Republic of Armenia, because with this, first of all, we promote the development of science and also the attractiveness of the science sector.

I want to present indicators, for example, in the field of science in 2022, the salaries of all employees of all state-owned scientific institutions who have passed certification have increased. This is a very important fact. We have decided to abandon the policy of automatic salary increase, because every time the salary is increased, we, the state, the Government, must make sure of the qualification of the specialist, otherwise we will have costs and no results. And here in the field of science, in particular, the salary of a laboratory assistant increased by 52 percent, the salary of a senior laboratory assistant increased by 45 percent, the salary of a junior researcher increased by 40 percent, the salary of a researcher - 66 percent, the salary of a senior researcher - 102 percent, the salary of a leading researcher - 119 percent, the salary of the chief researcher - 166 percent, the salary of the head of the scientific group - 78 percent, the salary of the head of the scientific department - 148 percent. Moreover, I want to emphasize that with the already adopted budget program, this process will continue until 2025, and the minimum salary increase in the field of science that we will have in 2025 will be 105 percent, that is, at least the salary of scientists will be doubled, and a maximum will be 300 percent. Let's say, for example, the salary of the chief researcher, which has already increased by 166 percent this year, in 2025 compared to 2021, the increase will be 300 percent. I think this will increase the salary by 4 times.

The next strategic investment, which is very important in the development of our country, is the increase in teachers' salaries through voluntary certification. This is also a strategic direction. I want to share our experience. here, in 2019, we raised the salaries of all teachers by 10 percent. But then we saw that, yes, we spend, but the result is not visible and tangible for us. That is the reason why we decided to increase teachers' salaries through a voluntary certification program, and we say the following: now the Government has taken its step, and teachers themselves decide whether their salaries should increase or not, and if so, how much.

I want to remind that the salary rate of teachers who have passed voluntary certification is already nearly doubled, those who pass voluntary certification receive a salary of more than 200,000 AMD instead of 120,000. But now I want to record with joy and pride that today there are 30 teachers in Armenia who receive a salary of more than 400,000 AMD. In other words, these people used to receive 170-180,000 AMD, and their salary has more than doubled. There are 120 teachers who receive a salary of more than 350,000 AMD, and 288 teachers who receive a salary of more than 300,000 AMD. In total, we have 1,565 voluntarily certified and highly paid teachers, 28 percent of whom receive more than AMD 300,000. Why do the rest of the voluntary certifiers get paid less? Because they decided so, because they can decide, by the way, to get a higher salary in the next rounds. By the way, I want to say that the 1,565 teachers who passed voluntary certification are 5.5 percent of the total number of our teachers, that is, 94.5 percent of our teachers are not yet certified. But this is also normal, people have fears, this is a process that goes on, and we will continue every year, giving that opportunity.

But we also need to record that from some point, I don't know when precisely, teachers who have not passed certification will no longer have the opportunity to work in schools. I also want to say that this voluntary certification process significantly increases the interest of youth in the profession of pedagogue. Because if in the past a person decided to become a teacher, knowing that the salary of 150-200,000 AMD was the maximum he could get, that is a different situation, now they know that they can get a salary of 400,000 AMD and more. This a different situation. Moreover, we believe that this process should be continuous in the Republic of Armenia. After completing this phase, we will decide that once every 5 years the teacher should pass voluntary re-certification and reconfirm the professional qualification and raise the salary, we will definitely do it.

I would like to emphasize with pleasure that we have started this program in the field of extracurricular education as well, and in the field of art, for example, we have also started a process of voluntary certification of teachers of piano and music theory. Also in the field of sports, we carry out voluntary certification of freestyle Greco-Roman wrestling, judo and sambo coaches. Our problem here was as follows. you know that these institutions are mostly under the authority of local governments and they pay the salaries. We adopted the following model: we simply invite these teachers for voluntary certification, and depending on the results of the certification, we will simply pay them a fixed bonus. Those who pass the certification with a score of 90-100% will receive an additional salary of 100,000 AMD per month. I say additional because the salaries are different in different communities, that is, it is not fixed, and in case of 80-89% results, they will receive a net bonusof 80 000 AMD, and in the case of 70-79 percent - AMD 60,000 bonus.

Since we touched on the field of sports, I want to remind you that 2022 was also exceptional in terms of sports, because in the European and world adult and youth championships, athletes from 19 sports won 307 medals, including 104 gold, 74 silver and 133 bronze, which is historically the best result. By the way, the previous best indicator, which was recorded in 2019, was exceeded by 30 percent. What does this have to do with the state budget performance report? And the link is direct, because you know that we have also adopted a new policy in the field of sports and all those athletes who are having success, the Government accompanies them and provides them with various support under various provisions. Of course, we all know the indicators of this year, they brought great joy to all of us, without personalizing the data, I want to present the indicators of well-known athletes who have recorded success. two of them receive a monthly bonus of 1 million AMD from the Government, 46 athletes receive a monthly bonus from 500,000 AMD to 1 million AMD, that is, support from the Government, 152 athletes - from 200,000 AMD to 500 AMD a month 000 AMD bonus or support, and 134 athletes - up to 200,000 AMD support. That is, if an athlete, for example, becomes a junior world champion or an award winner, from that moment the Government supports them so that they can really focus on sports in a professional way.

I also want to say that it is very important that relevant decisions were made during 2022, decisions were made also before, regarding the creation of sports infrastructure. You know that the construction of the gymnastics school named after Hrant Shahinyan, the construction of the gymnastics school named after Albert Azaryan in Yerevan, the construction of the sports school named after Arthur Aleksanyan in Gyumri, the construction of the boxing school named after Arthur Abraham in Yerevan are in process, the football school named after Khoren Hovhannisyan has been built, which is ready and the opening of which will take place in the near future.

I also want to say that recently I gave an instruction to build a wrestling school named after Roman and Malkhas Amoyans in Alagyaz, the largest Yazidi community in Armenia. But I also want to emphasize what we record during regional visits: look, for example, I understand that our agendas are so heavy and diverse that we do not notice simple things. For example, in 70 percent of already enlarged communities in Armenia, there is no swimming pool where children can practice swimming. And I have already given an instruction to start building sports centers in regions, designed not only for children, but also for adults, for fitness and sports. Such a specific instruction has already been given regarding Yeghegnadzor enlarged community, Berd enlarged community, and we will continue this process continuously.

I want to remind you that we also allocated money to the Football Federation to build football academies in Martuni, Yerevan, Ijevan and Artashat. These topics, in my understanding, are not only related to physical culture and sports. These are about everything, these are about the efficiency of the economy, because, after all, a workforce is formed, and there is a workforce in the Republic of Armenia, whose productivity also depends on its physical condition, physical health. This is also a matter of external security, because after all, these gyms train, or if these gyms do not exist, our future soldiers, who will be in mandatory or contract military service, do not train.

In general, it is not customary to talk much about these topics, but those who deal with the topic, it is a confidential topic, of course, know that when we see what percentage of our conscripts subject to temporary conscription have health problems, it is simply unimaginable. Of course, it is clear that here there is some share of corruption, where some people appear in that number, but it has no effect on the general picture, because really people have serious health problems. Those health problems come as a result of not practicing physical culture and sports, not getting hot food in schools. I am happy to record that we are now implementing the "Hot Meals for Schoolchildren" program in schools of all regions, except for Yerevan, which is implemented in junior school and which is also very important in this regard.

Dear colleagues,

Our program on "300 schools, 500 kindergartens" is underway, and of course, large-scale works are underway now. I want to inform that the works are coordinated by Deputy Prime Minister Tigran Khachatryan. Recently, we had a working discussion with him on this topic, and we already have an idea and a concrete plan on how we will implement this program until 2026. Of course, I must say that not everything related to the program is simple and smooth, because, for example, we said that we have to build, reconstruct, overhaul 300 schools. There are nuances here, for example, there is a nuance that, let's say, the school in the area where it operates is completely renovated, furnished, but, for example, does not have a gymnasium, normal sports infrastructure or laboratories, etc. We are constantly faced with the choice of whether to include such schools in this 300 or not.

But it is a technical, organizational issue. One of our biggest concerns is to what extent the private sector will be able to implement this project, because the Government, so to speak, provides the idea and the money, and the private sector does the rest. We have to implement it through tenders and we are afraid that the construction companies working in Armenia, taking into account that a very large construction process is also taking place in the private sector, will be unable to implement this project. But we need to encourage the field to make new investments as well, and we're encouraging that new investment through our programs amied at raising production capacity, particularly our popular leasing program, which is about the following: if companies, for example, buy construction equipment or various equipment, the state lowers their interest rate to zero, that is, they take a loan from the bank, purchase construction equipment, production, industrial equipment, with a condition that it must be new, absolutely unused. Under these conditions, the Government brings the bank’s interest to zero: the interest is paid by the Government, the principal amount is paid by the respective company.

Dear colleagues, I would also like to record that during 2022, capital expenditures have also increased significantly. In 2022, compared to 2017, capital expenditures were 150 billion AMD or 163 percent higher, that is, we implemented about 3 times more capital expenditures compared to 2017. What is capital expenditure? Capital expenditure is roads, for example, and in 2022 we carried out medium or major repair of nearly 500 km roads. Capital expenditures are schools, irrigation infrastructures, medical centers, like in the case of the "300 schools, 500 kindergartens" program, we also have a plan to build 50 medical institutions in the health sector, and it is in progress.

I also want to say the following, which is a very important indicator. in general, with both subsidy and non-subsidy programs, in 2022 we invested 145 billion AMD, that is, about 335 million USD, in the regions of the Republic of Armenia. And this is within a year. This is very important from the point of view of balanced territorial development, and the Government has invested 561 billion AMD or 1.2 billion USD in the regions in 2018-2022. This is an extremely important indicator for us to ensure balanced territorial development. Moreover, I think it is opportune to publish these indicators. Of course, there is some imbalance, but I think it's important nonetheless. For example, among the regions, we have made the largest investments in Syunik Province: from 2018 to now, we have invested 103 billion 590 million AMD.

What are these investments about? they are roads, schools, kindergartens, irrigation infrastructure and so on. Next comes Ararat Province: we have invested 76 billion AMD, in Lori Province we have invested 71 billion AMD, in Armavir Province - 29 billion AMD, remember that Armavir Province is the largest by population, but it is the smallest by area, Gegharkunik Province - AMD 65 billion, Kotayk Province - AMD 35 billion, Shirak Province: AMD 51 billion, Vayots Dzor Province - AMD 32 billion, Vayots Dzor is also the least populated region, if I'm not mistaken, Tavush Province - AMD 29 billion.

But it is also important to record that we, working with the regions, did not forget about the capital city either, and in the years 2018-2022, we made a capital investment of 78 billion 647 million AMD in the capital city of Yerevan. And I am very happy that this investment is also significantly visible: for example, the new means of transport, buses that serve our citizens in the capital every day, roads, lighting and so on.

Dear colleagues,

Continuing the topic of salary increase. in fact, it is true that it should be implemented in practice now, but the decisions were made in 2022 and the process of raising the salary of the military begins, again based on voluntary certification. We propose that the salary should at least be doubled. But, nevertheless, also talking with our military, we implemented certain reforms, made changes in this plan. At that time, we set a threshold, we said that whoever passes this threshold with voluntary certification, including combat training, tactical training, etc., that is, it is a program, whoever passes that program, the salary is doubled at least, and either passes or does not pass. Our esteemed military officers expressed concern that the percentage of non-passers may be high, and this may have a certain frustration effect. We decided to have a three-level system: in one case, the salary will increase, it will be doubled, if they pass the certification with an indicator of 70 percent, their salary will increase by approximately 50-70 percent if their evaluation is satisfactory, it will increase again, but in a more modest amount. But in the next round, they can have a better performance and the salary will increase.

Also, since it's being discussed a lot, I'd like to say that for at least the next few years, non-certifiers will simply continue to serve receiving their previous salary, and their service contracts will not be terminated for that fact. But in the future, in the medium term, we will have to record that only military personnel meeting these quality standards should serve in our Armed Forces, our army. Approximately the same process will take place in the National Security Service, the Police, the State Security Service, that is, we will essentially solve this issue in our law-enforcment structures.

Dear colleagues,

The process of army reforms has started and is underway, which, I am sure, is being closely discussed with the parliamentary colleagues as well. Police reforms, I think, are visible to everyone. This year we will complete the full introduction of the Patrol Police. I hope that this year we will also fully complete the work of the coastal service, or, as we say, the Water Police, patrolling in Sevan. And, of course, you know that the Ministry of Internal Affairs was formed, which includes both the Rescue Service and the Police. By the way, let me say that we will start the process of voluntary certification also for the Rescue Service, for the Penitentiary Service, in order to register at least a doubling of salaries for officers in law-enforcment system. I say again, taking those gradations into account. From the beginning, our intention was as follows: either the salary is doubled or it is not increased based on the results of voluntary certification. But now we also added two new scales, so that we can strengthen these increases, the motivation system, and I think this is an important process.

Of course, if we consider the employees of investigative bodies and prosecutors in the officer service, you know that the salaries of the prosecutor's system have already increased significantly, the salaries of the Investigative Committee have increased significantly, and the salaries of the Anti-Corruption Committee have been high since the day of its establishment. By the way, when the Anti-Corruption Committee was being created, there was a lot of criticism, they said, so to speak, you are creating a privileged class in the investigative sector. But what were we saying? We were saying, on the contrary, we are now taking this step in order to create motivation for ourselves, so that the salaries of others are at least comparable to the Anti-Corruption Committee, and this process is in force. Also, the judges' salaries have been increased and continue to increase. This is also very important.

I want to address this in the following sense: why do we raise the salaries of this sector? Because I am convinced that the economic indicators we have are also conditioned by the legal system. I discuss with our colleagues from the economic bloc, unfortunately we do not have a methodology to calculate, for example, what contribution the independent judicial system, effective law enforcement system has to economic growth. We don't have the method. But I am definitely convinced that, for example, if the investor knows that there is a judicial system in Armenia where he will be able to defend his rights, even in the event of a conflict with the government, the chances for making the investment increases greatly. And I am very happy to record that in the near future we will also create a very strong arbitration court, which is very essential and important for the investment environment. How will it promote investments? For example, the investor may find himself in certain situations, and say that he wants the disputes related to his investment to be examined, for example, under English law. We create such an opportunity in the arbitration court, which is, in fact, if not unprecedented, but institutionally a very important indicator. For example, many investors in recent years, when they applied for investments, and said: what if, for example, in the case of disputes, can we settle those disputes with the legislation of not the Republic of Armenia, and we did not have that mechanism. But I say again, this should not suddenly be perceived as the Republic of Armenia having surrendered its sovereignty in any way. This is accepted in the world, in the countries that are considered attractive for investment and investment haven, in all those countries this mechanism exists, all without exception, and this is considered the most important component of the modern investment environment.

Dear colleagues,

I'll try to present the rest faster. I want to address the issue of pensions. As a result of the decisions made during 2022, pensions increased twice, in January and September, and the average pension became 46,200 AMD instead of 43,500 AMD, and the minimum pension became 31,600 AMD instead of 26,500 AMD. The amount of benefits for elderly, disabled persons and families having lost the breadwinner has become 31,600 AMD instead of 26,500 AMD. Due to the increases, the ratio of the minimum pension to the price of the food basket increased to 76 percent, up from 66 percent in 2018.

I want to remind that from July 1, 2023 we will have another pension increase in the Republic of Armenia. Also, in this regard, I consider the cashback system for pensioners in case of cashless trade to be no less important. This is the program when pensioners carry out cashless transactions with a bank card and receive a certain percentage of cashback. I want to say that as of April, the cashback given to one citizen was AMD 3140 on average. We raised the pension by about that much on average, now we will raise it by about that much, as a result of which the cashback will increase a little, and as a result we will have a fairly tangible pension increase.

Of course, our policy in this regard will continue. Of course, we are not satisfied with the amount of pension increase, but when we talk about current and capital expenses, we must note that pensioners are one of the largest social groups of our country today. We have 560,000 pensioners, and even after so many increases, only 710,000 people are employed in the Republic of Armenia. That is, this is very important, we must understand this ratio, because the outcome created by these 710,000 workers depends on how much pension the pensioners receive. Not to mention, about 90,000 families are beneficiaries. In those 90,000 families, there are obviously people who are able to work, but maybe because of our wrong policies, they don't work or don't want to work. I must say that during visits to different regions, also being at construction sites, or interacting with different companies, today there is clearly a shortage of labor force in Armenia. We must record this, and dear colleagues, I also expect the support of the parliament in the way of reforming our social policies, so that we can have a social system as fair as possible, because I think that our goal and destination, both tactical and strategic, should be that the citizen should live well in the Republic of Armenia, and his level of well-being should continuously increase. The only way to do this is through work.

Among the noteworthy data of 2022, I also want to remind you that we launched a satellite into space in May 2022. This is a very important, symbolic and historical event. Now we are working to transfer the complete management infrastructure of these satellites to the Republic of Armenia. That process, if I understand correctly, is going according to plan, there may be small delays, but by and large everything is going according to plan.

I also want to emphasize the fact of the liberalization of the electricity market, which is also an important institutional reform. Today, any consumer can buy electricity from any producer. This was not the case before: electricity could only be purchased from the Electric Networks of Armenia, at a fixed price and there was no alternative. Now the producers can go and agree with the hydroelectric power plant, both price and long-term strategic partnership, in the supply of electricity. This is very important. Also, the autonomous stations are growing at a very high rate, they are investments made in the private sector. This is also a very important institutional reform.

The biggest problem of our economy is in agriculture, because in 2022 we recorded a decline of 0.7 percent in the agricultural sector. I want to say the following: we have one option to stop the decline of agriculture and enter the development path. intensive agriculture should develop. Now traditional agriculture, I want to say again, has no future, because the prospect of irrigating orchards with rivulets and small rivers is limited, because in the conditions of global warming, there will not be as much water as before. Therefore, we have to switch to intensive horticulture, where we can irrigate 10 times more areas with the same amount of water through drip irrigation, sprinkler irrigation and other methods. I also want to address the culture of animal husbandry in that sense. Of course, now there is a lot of talk about the price of milk, but our observations show that milk produced by modern technologies in the smart farms does not have big problems with procurement, because after all, the price is also related to the quality of the milk, because there are internationally accepted standards that the milk should arrive at the factory, for example, at a temperature of +4 degrees, and the milk should not have any contact with a person during milking, that is, it is done by special tools.

We have about 13 development projects in the field of agriculture in all these directions. But I also have good news. Do you remember that with our pre-election program we committed to establish 1000 hectares of intensive gardens anually in the Republic of Armenia, that is, to support them. As of 2022, agreements on establishing 2,450 hectares of intensive orchards were signed in 2022, and these orchards will be established this year. The vision for agriculture is this. With an old tree, an old orchard, an old irrigation, we will get less and less harvest. Let's record this, because the water will not be enough, the quality will not be the same, the cost price will be higher than the possible profitability. I also expect the support of our colleagues in parliament, so that we can have a effective conversation with our citizens about this.

Dear colleagues,

I also want to touch on our regional situation. You know that the year 2022 was notorious for the September aggression against the Republic of Armenia. I must say that the military-political situation in our region continues to be quite tense. Moreover, it is not only related to the complex relations we have, it is also related to global processes, to what is happening in the relations between Russia and Ukraine. Now we are receiving very alarming news from the events taking place on the border of the Islamic Republic of Iran and Afghanistan and so on. Our task is as follows. you know that we have adopted a peace agenda and a peace strategy and we are doing our best to implement that agenda.

You are aware that just last week in Moscow, another round of negotiations in the trilateral format of Armenia-Azerbaijan-Russia took place. I must inform you that one of the topics of discussion was the humanitarian situation in Nagorno-Karabakh and the illegal closing of the Lachin Corridor. We have discussed this topic with our Russian colleagues, and I cannot say that the results of that discussion are satisfactory. We have to record that this is a very sad situation. I also had an opportunity to publicly say that the closure of the Lachin Corridor took place, in fact, in full view and in the presence of Russian peacekeepers, which is of course quite worrying. We will continue our discussions, including with our Russian partners, in the direction of settling this situation.

I also want to say that one of the topics of the Moscow discussions was the opening of regional communications, and we have said that we, as before, are ready for the opening of regional communications. Our perception is that this is about the communications mentioned by the trilateral declaration of November 9, 2020. We are ready for swift reopening of those communications under the sovereignty and jurisdiction of the countries. We have emphasized this. We are now trying to work on the opening of railway infrastructure. But I also want to say that we are willing and interested in opening regional communications. Moreover, here too, within the framework of the principle I mentioned, we show quite a lot of flexibility. The principle I am talking about is the opening of communications under the sovereignty and jurisdiction of the countries of the region. I think we have quite a flexible and constructive position there and are ready to really go for the opening of those communications. And I am sure that when this happens, it will be another additional incentive for the economic development of Armenia. I say again, unfortunately, the solution of that issue does not depend only on us, that is, if it depended only on us, it would have been solved a long time ago.

I have publicly informed about the Brussels negotiations. You are aware that the Republic of Armenia and Azerbaijan, and the European Union has announced this, have agreed to mutually recognize each other's territorial integrity of 29,800 square kilometers and 86,600 square kilometers. I think I have talked about this publicly enough recently. I must also emphasize that, frankly speaking, a number of statements made by the President of Azerbaijan yesterday are not understandable at least in this regard. I think that here both Azerbaijan and international partners should at least clarify whether this means renouncing the agreements reached in Brussels. And, I think, Mr. Mirzoyan, we really need to get an answer to this question from our colleagues, because if it means renouncing, that is, the text that was sounded is very close to it, but I don't want to make a comment. I think we need to make additional adjustments here in order to plan our future actions as well.

You also know that in the near future a five-sided meeting will take place in Chișinău, the capital of Moldova, with the participation of the President of the European Council Charles Michel, French President Emmanuel Macron and German Chancellor Olaf Scholz, as well as myself and the President of Azerbaijan. There was a discussion there about whether it is possible to sign a peace treaty on June 1, I must say that we have not yet received the comments of Azerbaijan regarding the proposals conveyed to them before Washington meeting. In other words, it is already the 4th edition of the peace treaty, and we have transferred our fourth edition to the Azerbaijani side and as of now we have not received their comments. Therefore, as of now, I can say that there is no agreed draft that could be signed.

Dear colleagues,

In terms of foreign policy, I also want to inform you that the summit of the Council of Europe countries took place in Reykjavík, in which I participated, and leaders of a number of Council of Europe countries also participated. What can I say about that meeting? I can say that the international community, in fact, recognizes the democratic achievements of Armenia and emphasizes the conviction of the commitment of the government of the Republic of Armenia to democratic reforms. This is very important, very important in terms of our foreign policy, international relations, but it is also our practical task to make use of this factor for a higher level of well-being, higher level of security for the citizens of the Republic of Armenia and, in general, security, welfare and happiness of the Republic of Armenia.

Also, our relations with the Islamic Republic of Iran and Georgia are developing normally. We are in very close interaction, which does not mean that all the potential has been realized, we are continuously working in that direction. We hope that after the presidential elections in Turkey, the election cycle is already over, we will be able to continue the normalization process of our relations with Turkey. This is also one of the most important issues on our agenda.

I think our relations with the Russian Federation, the European Union, the United States, India and other partners are also developing normally. But, of course, we must understand that we are living in unusual times, not only regionally, but also globally.

For us, starting from those present and ending with the citizens of the Republic of Armenia, the most important problem is the foreign policy and security-related uncertainties, and this must be admitted. But today it should be emphasized with greater regret that there are few or no countries in the world that do not live with this feeling of uncertainty, of course to a greater or lesser extent, but uncertainty is today the number one feature and definition of international politics. Because even if you ask the leaders or elites of the most powerful countries in the world what they think the world will be like in 1, 2 or 5 months, you will hear rather vague answers from them. I want to assure that I had the opportunity to ask this question to our colleagues and I was also convinced of the truth of this thesis.

We have to build our policies with the logic that, unfortunately, the world is changing at a very fast pace, and I have to record again with pain that the change of the world started with the 44-day war of September 2020. We cannot and should not consider what happened to us, what happened around us and what is happening outside of the context of global processes, and this is extremely important to understand deep processes. Of course, threats are visible, and our biggest task is to manage these threats.

I have to also emphasize my conviction that as for external security, the only thing that guarantees external security is peace. Anything else does not guarantee external security, because today we see that there are countries that have the most powerful armies, but this does not ensure their external security, because there is no peace. I say this again, one should not be separated from the other. We must continuously increase and develop our resilience and capabilities, in all aspects, economically, because we usually mean the army when we say security. But let's look at it this way: in 2023, our defense budget exceeds 1 billion USD. Where did that money come from? From the economy. If the economy is not able to supply these funds, there will be no spending. We are talking about raising salaries․ From where? From the taxes paid by the citizens of the Republic of Armenia. The tax indicators that I presented are really impressive, but they are not the achievement of the government of the Republic of Armenia. It is the achievement of the citizens of the Republic of Armenia.

I want to thank again and again all those citizens, entrepreneurs, businessmen, companies, individual entrepreneurs who dutifully and regularly pay the taxes of the Republic of Armenia. Of course, I also want to thank our bodies, which are able to effectively identify cases of tax evasion and, therefore, transfer money belonging to the people and the state to the state budget. Those indicators are also important, and this is also the reason why I say that I am sure that the increase in the salaries of the law enforcement and judicial system will also bring economic results and economic indicators.

Dear colleagues,

Let me finish my speech with the most important and most optimistic indicator: in the first 4 months of 2023, 11,926 children were born in Armenia, which is by 1,401 more than in 2022, 523 more than in 2021, 1,469 more than in 2020, 1415 more than in 2019 and 1180 more than in 2018. It is our duty to properly ensure the safety, well-being and happiness of these children in the Republic of Armenia.

Thank you.

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