Armenian authorities 'aware of shadow businesses' - economist
Armenia's economy loses annually an estimated $2 billion due to the informal entrapreneurial activity of many companies here, according to an economist.
In an interview with Tert.am, Vahagn Khachatryan highlighted especially the chain effect of the phenomenon, noting that the authorities are very often aware of the shadow economy in most major enterprises.
“Having a shadow economy higher than 15% is really troublesome, so it is important for such countries to take the necessary efforts to reduce it. Otherwise it becomes a serious tool for realizing different political objectives,” he said, citing recently published analyses estimating the share of shadow close to 40% in Armenia.
Admitting that the available estimates are very rough, the economist also agreed that the figure is not unrealistic.
In his words, the shadow is easily governed by the authorities in Armenia. “An important question here is to what extent that shadow is really shadow in the classical sense of the word. A classic example is when companies simply try not to make their entrepreneurial activity visible, evading taxes and working in the shadow without any agreement with the authorities. And there is also the second scenario, i.e. - when that shadow exists with the authorities’ knowledge; that’s not shadow in essence. So what we have here is the latter option, when the authorities are practically aware of the shadow. Any evaluation would reveal that big businesses operate largely in the shadow here. That becomes more visible when we look upon the past couple of years’ statistics – addressing both the imports and the domestic industries, i.e. – when we see no figures at all behind the increased volumes of beer or mineral water production. The problem here deals with the resources and tax collection, as that would bring many companies out of the shadow. Hence the process is governable by the authorities,” Khachatryan noted.
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