Yerevan’s real potential: what political powers are fighting for

As the pre-election campaign for Yerevan city council is going on, the 7 participating political powers are presenting their platforms and promising that they can give the best to the city. The only party that differs with its campaign strategy is the RPA, which is trying to prove that during their management in the municipality the city has become more beautiful and those years were successful for the capital city of Armenia. Opposition powers claim that what the ruling power did was cosmetic change and instead of that they can offer real and sustainable growth.

However, the question is how they are going to do it. They need money for that. How are they going to raise more funds?

There was time when ex-president Robert Kocharyan used to ask the mayor of that time Albert Bazeyan if he wanted money while he was sitting on money.

In fact Yerevan is the center where money and finance are concentrated. 80% of the country’s financial potential is concentrated in Yerevan. However, the institution that manages that financial potential is not the municipality but the government, which allows the municipality to use some of those funds. They give limited resources, and if the money is not enough, they allocate a little more as dotation to the city.

In other words, the government has allocated limited sources of income for the municipality such as taxes for land, property and several other things. Most of tax payments go to the budget, including those taxes paid by residents of Yerevan. The explanation is the policy of keeping balance between the capital city and regions. If they did not do this, there would be too high concentration of finances in Yerevan, and the regions would lack financial resources.

In other words, the municipality is not sitting on money but next to money. Below is some data about money inflow and potential Yerevan municipality has.

Yerevan’s budget for 2012 was adopted at AMD 63.77 bln (which is equal to USD 160 million). 16.7 billion out of 63.77 was provided by the state budget as dotation. The expense part of the budget as a little increased in 2013, but the overall amount has not changed. In the meantime, out of this amount that the municipality receives only 13.1 is generated from the income sources assigned to the municipality.

For comparing, as a matter of fact, 2012 budget of Kiev was 2 billion dollars, 45% out of which was paid as income tax. In Armenia Yerevan municipality has nothing to do with income tax. The population of Kiev is 2,8 million. In fact the population of Kiev is more than that of Yerevan by 2.5 times, however the budget is more by 12 times. Kiev annual budget per resident is 692 dollars, and in Yerevan it is 140 dollars.

These simple numbers show that with such financial spending Yerevan cannot be so developed as other cities. The chart herein shows the financial potential of a number of other cities of comparison purposes.

The budget of Moscow is 52 billion dollars and is considered to be one of the largest budgets in the world. However, the budget of Yerevan is smaller than the budgets of the capital cities of neighboring countries. The budget of Tbilisi is approximately 440 million. The budget of Minsk is 1.9 billion. This is the reason why there are more evident changes and sustainable development in these cities.

What can 66 billion drams do? Most of this amount is paid as salaries to employees. Another large part of this amount is paid as amortization and maintenance fees for facilities and other properties, as well as spent on social, healthcare, culture and education system costs. These are the necessary minimum costs. However, after paying these expenses nothing remains, thus they cannot take on new global projects or works. The city has a poor budget, thus a poor potential too. This is the reason why we have to enjoy and be happy about the temporary monuments, painted walls and flower designs, otherwise if they pay for sustainable items and works, they will not be able to take care of garbage collection and other works.

How are the political powers that are running for community council going to improve Yerevan in such condition? To be honest, they have no idea.

Even if they cut down the inefficient expenses, it won’t help. For example, if they buy benches for cheaper prices, it will not have significant impact on the budget as the budget is poor with or without it. If they make a decision to increase the tax collection through increasing property and other taxes, the results may be unexpected.

In other words, the tax policy is the same and tax collection does not grow. The municipality is squeezing as much as possible from that amount.

It is worth mentioning that former mayor Karen Karapetyan understood this fact best, Being a businessman, he understood that it was impossible to implement sustainable and effective projects with poor budget, this he was trying to fill in that gap through cooperation with the private sector. What he was trying to do was raising the money from private companies, and offering ideas, support and advertisement by the municipality.

Such initiative can be successful only when good conditions are created for businesses and they trust the government. The administrative system of Yerevan is a part of the entire government system and its budget is a big part of the entire country’s economy. If there are problems in the country and there is outflow of businesses, certainly the capital city cannot stay impartial and it is affected by the tendency too.

In other words, in order to have better and changed Yerevan, there must be a better statehood with better political, economic, judicial and moral components.

The most important factor is the factor of Yerevan’s people. Unless people of Yerevan trust their government and have the feeling that they are a part of it and the city is their city, they cannot be filled with positive energy toward their city and environment. Indeed, people are ignored today.

In conclusion, in fact the role of city council elections is exaggerated as they don’t have that much power in politics. Problems should be addressed at global political level in the country; in that case it will be easier to solve local problems in Yerevan.

By Sargis Ghazaryan

P.S. The pre-election campaign headquarter of Taron Margaryan can use the information above to justify his action, or it will be better to say his inaction. However, till young republicans would fill their facebook pages with justifications and policy actions, we have to admit that during his office Taron Margaryan used even those scarce resources with no efficiency, so he’d be better to adopt the “Worse Yerevan” slogan for his campaign.