STATE SUPPORT FOR INEFFICIENT ENTERPRISES A BURDEN FOR SOCIE

[MosJan]

STATE SUPPORT FOR INEFFICIENT ENTERPRISES A BURDEN FOR SOCIETY, AEPLAC REPORT SAYS

YEREVAN, AUGUST 27, ARMENPRESS: The indirect subsidization of inefficient enterprises by the state is too expensive for the society. According to a report, released by Armenian-European Policy and Legal Advice Center (AEPLAC), a large number of enterprises in Armenia accumulate debts on taxes and social transfers as well as on strategic supplies like water or electricity.

Because no serious sanctions are applied to non-payers, the state in fact indirectly subsidizes them, creating an additional heavy burden on public finance. The experience of the recent years has shown that, as a result, the government cannot execute in full the planned budget expenditures for social protection of population, science and culture.

The AEPLAC study suggests that this problem should be solved by a strict application of sanctions to non-payers, irrespective of their form of ownership or size.

The enforcement of bankruptcy law in Armenia may be an efficient device to put an end to the indirect subsidization. It should force the indebted enterprises to either meet their obligations in full or exit the market. The report concludes that the business community and the public should be aware of the heavy social costs of keeping nonviable enterprises alive. A public support for the application of bankruptcy law to force such companies exit the market is thus essential