What kind of assistance is Armenia offering citizens to help mitigate the coronavirus crisis?
The Armenian government has approved 21 programmes to neutralize the economic consequences of coronavirus, namely social assistance to the population and economic measures to promote business.
Other programmes are being considered as well, such as incentives to stimulate the jobs sector, reimbursing student tuition fees, and other innovative solutions to overcome the coronavirus crisis.
As of early June, 51,800 companies and more than 1,100,000 people had benefited from the anti-crisis measures, PM Nikol Pashinyan says.
More details below on who is eligible to receive aid and what kind of aid is being offered, why the wealthy are taking advantage of the stimulus measures and the poor are not, and plans to overcome abject poverty and protect the rights of workers.
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The state announced its priorities for providing assistance: it will primarily be given to those who have suffered significant material damage from the coronavirus, as well as poor families with small children.
- The first program is designed for those who have children under the age of 14, and who have lost their jobs in March 2020 after the quarantine was introduced. Families will receive 100 thousand drams (approximately $210) for each child.
Moreover, their parents do not even need to fill out any documentation. Based on tax reports received from employers, the State Revenue Committee draws up a list of those who need assistance, and the Ministry of Labor and Social Affairs hands out payments.
- The second programme is designed for citizens employed in the private sector who have lost their jobs in March 2020. The state will provide minimum wage salaries 68,000 drams ($142) to 7925 people.
- The third programme is for pregnant women whose husbands do not work or have lost their jobs in March. Data provided by the Ministry of Health shows that there are about 10 thousand pregnant women in Armenia who are single and unemployed, or married to someone who is unemployed. Each of them will receive 100,000 drams (approximately $210).
- The fourth program is for those who work in industries that were most heavily affected by coronavirus – food, tourism, preschool education, beauty salons, and gyms. Under this program, almost 96,000 people will receive assistance.
- The most large-scale program is for unemployed parents of minor children, for each of which families will receive 26,500 drams ($55). This plan will affect the families of 154,000 children.
Other programs provide partial compensation of utility costs of citizens. They will be used by about 1,000,000 people.
Millionaires receiving help while others remain in the shadows
“It’s terrible that in today’s Armenia, during a crisis, someone who has 50,000,000 in the bank is seeking financial assistance…It’s even worse that they hope for leniency, banks say okay, and they continue to receive it. But it’s not okay. They should return every last cent,” Prime Minister Nikol Pashinyan recently stated.
The government discovered that under their support program, 50 people received 26,500 drams of assistance who had more than 20,000,000 drams (over $40,000) in their accounts, as well as 70 people whose funds exceed 1,000,000,000 (more than $2,000,000).
Law enforcement officers were also able to receive assistance, although it was designed exclusively for the unemployed and for families in the most vulnerable situations.
How could this happen? The fact is that the personal data of those employed by law enforcement agencies are classified and they are not listed among the taxpayers, so their information cannot be found on the lists of employed citizens.
Then the prime minister made another shocking statement:
“87,000 workers came out of the shadows.”
After the state of emergency was introduced, unregistered workers began to declared themselves. Until now, it was simply impossible to imagine the size of a real Armenian shadow economy. And these people are now in the most vulnerable positions, since neither their employers nor the state bears any responsibility for them.
Why some are unable to receive assistance
55,000 applications for assistance were rejected, as they contained errors in the personal data, i.e. name, surname, patronymic.
Social assistance is handed out exclusively through online platforms. Citizens’ data are compared in the databases of several government agencies. The State Revenue Committee checks whether a citizen is a taxpayer, the National Security Service checks whether they are in Armenia, the registry office verifies the validity of their birth certificate, the Ministry of Health sees whether a woman has registered as pregnant, the population registry verifies that their valid registration. Digitization of data for all departments is a relatively new phenomenon, and this verification process sometimes lasts weeks.
Unregistered personal information
It also turned out that many residents of Armenia are in no hurry to officially register their marital status or address, and often do not even have identifying documents.
During the state of emergency, violations of the rights of workers by employers became apparent. In particular, the current labor code did not contain any provisions for ensuring employee rights during a pandemic.
Current legislation allowed employers to formalize the situation as force majeure and free themselves from all responsibility.
Immediately after the state of emergency was declared, the Ministry of Labor and Social Affairs proposed amending the legislation. The National Assembly approved these amendments.
Now, the legislation includes sections on:
- an understanding of “remote work”
- offering to pay salaries in full if it is possible to have employees work remotely
- circumstances in which the employer has the right not to pay employees in case of involuntary downtime
- a mandatory requirement for employers to provide an employee with unused vacation time if it is not possible to continue work.
Aid for businesses
The total budget for economic programs to neutralizing the consequences of coronavirus amounted to 150,000,000,000 drams (approximately $310,000,000).
The first economic stimulus program in the business sector is designed for companies with a spotless credit history.
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The state has offered to co-finance 50% of companies seeking help for:
- paying employee salaries or taxes,
- buying raw materials to manufacture products in Armenia,
- importing food products,
- importing equipment, devices and agricultural products if they will be used for manufacturing or expanding production,
- importing fertilizer, seeds and saplings
- paying for electricity, water and gas.
“We offer anti-crisis loan portfolios, the essence of which is as follows: 50% of financing is provided by commercial banks and credit organizations, and up to 50% is provided by the state. State financing is provided without interest, and the interest of banks and credit organizations is subsidized by the government. That is, a commercial company receives credit without interest,” the prime minister explained.
Assistance is also provided to small and mid-sized businesses in sectors most affected by coronavirus. They will receive a loan of 10% of their total turnover for 2019. Loan repayments will not be required for the first six months, and interest will be waived for the first two years. When, in the third year, the companies start paying interest, it will be at a rate of 12%.
Under another program, the government is ready to support novice entrepreneurs with interesting and promising ideas. The state will back bank loans up to 10,000,000 drams ($20,000).
Grant programs have also been approved. For example, one-time cash assistance will be given to organizations with 2 to 50 employees. The goal is to encourage entrepreneurs to save jobs. Almost 12,000 companies will receive this assistance, the total budget of the program is 1,800,000,000 drams ($ 3,700,000).
Assistance is also planned for microbusinesses – 10% of the turnover for the first quarter of 2020.
The government has already paid out 60% of the total applications received. 40% will not receive assistance, since applications did not meet the requirements announced by the government.
Reputable international rating agencies compare the impact of the coronavirus pandemic on the global economy with the 2008 global financial crisis.
The World Bank forecast predicts that the COVID-19 pandemic crisis will lead to a 2.8% fall in the Armenian economy in 2020. At the same time, experts are optimistic that the country’s economy will be able to improve these growth indicators in 2021, raising the GDP about 4.9%.
The accuracy of these forecasts and the effectiveness of government measures can only assessed months after the fact. Local experts believe that ending the year with no net losses or gains will be an achievement.
Despite all the pessimistic forecasts, the government expects to eliminate extreme poverty in the country by 2023:
“If we manage to maintain the current pace, this will be entirely possible. In any case, before the pandemic, we had reached the lowest poverty rate in the country’s history,” the Prime Minister stated.