Poverty Reduction Strategy Paper.

The Poverty Reduction Strategy Paper (PRSP) is a multi-sectoral national strategic document of the Republic of Armenia covering the period from 2003 to 2015. Its main objective is ensuring sustainable and high economic growth and the implementation of efficient social protection policies.The PRSP among others is concerned with agricultural development. It notes that in 2003-2015, the growth of agricultural production will continue to be the main factor for the reduction of rural poverty. According to macroeconomic projections of the PRSP, the average annual growth of value-added in the agricultural sector will be 2.2 %, or a total increase of 33.1 % throughout the period. The share of commercial agricultural production will increase notably from the present 40% up to 70 % in 2015. This will provide for a substantial increase in the volume of financial resources available to agriculture and will allow a large number of farms to overcome their subsistence economy. In addition to agriculture, the document also addresses the issue of environment emphasizing these four main areas: (1) managing forest resources efficiently; (2) preventing land degradation, reducing anthropogenic factors leading to desertification; (3) managing and using water resources efficiently; and (4) dealing with the issues of municipal and hazardous industrial waste.In the area of mitigating rural poverty and inequality, the priorities are to accelerate growth in incomes from sales of agricultural produce, introducing insurance schemes (co-financed by the government and agricultural firms) against natural and climatic risks, increasing access to financial and credit resources, creating an effective land market, introducing micro-credit facilities for the development of cooperatives, self-employment opportunities, irrigation, water use, land use, yields, share of commercial production, sales markets and institutions as well as the provision of wider possibilities for non-farm activities. Further, the document promotes the enlargement of farms for enhancing productivity. It notes that in 2004-2005 all the conditions necessary to establish a land market will be created. In particular, mechanisms for determining the market value of land and the transfer of ownership will be in place. Since land resources are scarce, limits will be introduced for farm sizes, which will vary according to province. In order to include unused land areas in economic activities, an inventory of arable land and perennial plots will be set up. A large-scale road construction program will be implemented in order to ensure reliable and effective communications with the principal agricultural markets and to enhance the mobility of the rural population.Additionally, the document provides for measures regarding water management noting that following measures will be taken: (1) an inventory of the use of the country’s water resources will be set up; (2) irrigation norms and volumes of water used for irrigation will be defined; (3) the management structure of the system will be improved, including measures for increasing the effectiveness of the activities of water-users groups; (4) the technical conditions of networks will be improved through public investment programs, and water losses in public networks will be substantially reduced.The document also provides for fiscal measures where it indicates that a number of crucial issues need to be resolved. Among them, the first is the problem of assessing and accounting tax liabilities. Running the tax accounts for small agricultural farms by the tax authorities could be considered a possible solution. In this case, the accounting would be similar to that applied to the land tax: the main tax paid by farms. At the same time, an alternative taxation procedure could exist for those who export their own produce or sell it to the processing industry, in order to preclude a decline in the competitiveness of the produce of small agricultural farms.National, regional and local governments will be responsible for the implementation of the activities planned in the PRSP, with the active participation and support of civil society organizations, donor community, the Armenian Apostolic Church and its sister churches, and Diaspora organizations. The overall responsibility of its implementation will however rest with the Government of Armenia, represented by the Ministry of Finance and Economy that manages and coordinates the implementation process of the PRSP.