JOINT STAFF WORKING DOCUMENT Implementation of the European Neighbourhood Policy in Armenia Progress in 2011 and recommendations for action Accompanying the document JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Delivering on a new European Neighbourhood Policy
Date: 2012-05-15
Institutions: European Commission, High Representative of the Union
Subjects: Armenia, European neighbourhood policy, administrative reform, cooperation in the field of education, corruption, democratisation, economic reform, environmental cooperation, freedom of expression, institutional reform, job creation, judicial cooperation, judicial reform, nuclear power station, trade cooperation

EUROPEAN COMMISSION 

HIGH REPRESENTATIVE OF THE
EUROPEAN UNION FOR 
FOREIGN AFFAIRS AND 
SECURITY POLICY

Brussels, 15.5.2012  
SWD(2012) 110 final 

JOINT STAFF WORKING DOCUMENT 

Implementation of the European Neighbourhood Policy in Armenia 
Progress in 2011 and recommendations for action 

Accompanying the document 

JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, 
THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE 
COMMITTEE OF THE REGIONS 

Delivering on a new European Neighbourhood Policy 

{JOIN(2012) 14 final} 
{SWD(2012) 111 final} 
{SWD(2012) 112 final} 
{SWD(2012) 113 final} 
{SWD(2012) 114 final} 
{SWD(2012) 115 final} 
{SWD(2012) 116 final} 
{SWD(2012) 117 final} 
{SWD(2012) 118 final} 
{SWD(2012) 119 final} 
{SWD(2012) 120 final} 
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{SWD(2012) 123 final} 
{SWD(2012) 124 final} 

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1. 

OVERALL ASSESSMENT 

This  document  reports  on  the  progress  made  in  implementation  of  the  EU-Armenia 
ENP Action Plan between 1 January and 31 December 2011, although developments 
outside  this  period  are  taken  into  consideration  when  deemed  relevant.  It  is  not  a 
general review of the political and economic situation in Armenia. For information on 
regional  and  multilateral  sector  processes,  readers  should  also  refer  to  the  Eastern 
Partnership Progress Report. The present ENP Action Plan for Armenia was signed on 
14 November 2006 and covers five years. The Cooperation Council held in November 
2011 agreed on its extension. 

There  was  intense  political  dialogue  with  the  Armenian  government  in  2011,  a 
Political and Security Committee Political Dialogue meeting in June and a number of 
mutual  high  level  visits.  High  Representative  and  Vice-President  C.  Ashton  visited 
Armenia on 16-17 November as part of her visit to the South Caucasus region. 

Negotiations on the Nagorno-Karabakh conflict within the Minsk Group in 2011 have 
demonstrated  the  need  for  further  efforts  by  the  parties  to  the  conflict  to  achieve 
substantial  progress.  Amidst  increasing  tension  along  the  Line  of  Contact  and  the 
Armenian-Azerbaijani border, mediation efforts resulted in marginal progress on the 
mechanism  proposed  by  the  Organisation  for  Security  and  Cooperation  in  Europe 
(OSCE) to investigate incidents along the frontlines. The EU stands ready to provide 
enhanced  support  for  confidence  building  measures,  in  support  of  and  in  full 
complementarity  with  the  Minsk  Group,  with  a  view  to  facilitating  further  steps 
towards the implementation of peace. 

The  EU  continues  to  support  the  normalisation  of  relations  between  Armenia  and 
Turkey without preconditions.  

Within  the  Eastern  Partnership,  the  negotiations  for  an  EU-Armenia  Association 
Agreement  (AA)  progressed  at  a  good  pace.  Armenia  made  substantial  progress  in 
implementing the ‘key recommendations’ for the launching of negotiations on a Deep 
and Comprehensive Free Trade Area (DCFTA).  

to  be  done  especially 

While  there  is  a  serious  effort  to  address  issues  related  to  human  rights  and 
fundamental  freedoms,  further  work  needs 
the 
implementation  of  legislation.  Positive  steps  were  taken  to  prepare  the  country  for 
upcoming elections, with changes in the electoral code and a presidential amnesty for 
the  remaining  persons  detained  for  charges related  to  the  March  2008  events.  There 
are  however  concerns  about  media  freedom  relating  to  the  print  media  affiliation, 
limitations on TV broadcasting and to civil lawsuits for insult and defamation. Despite 
a reform effort, public trust in the judiciary continues to be low, and the perception of 
corruption is still high.  

in 

The  National  Preventive  Mechanism  under  the  Optional  Protocol  to  the  UN 
Convention  against  Torture  should  be  further  strengthened.  Cases  of  torture  and  ill 
treatment among military conscripts, in prison facilities and at police stations are not 
adequately investigated. 

2

 
 
As  the  authorities  maintained  prudent  macro-economic  policies  and  introduced 
several  structural  reforms,  Armenia  showed  encouraging  signs  of  recovery  after  the 
severe  recession  that  resulted  from  the  international  crisis  in  2009.  It  continued  to 
progress  towards  meeting  the  objectives  of  the  Action  Plan  in  the  area  of  macro-
economic  policy,  poverty  reduction  and  social  cohesion.  Further  growth  and 
economic  development  will  depend  to  a  large  extent  on  the  continuation  of  fiscal 
consolidation and improvement of the business environment. 

Directives  for  the  negotiation  between  the  EU  and  Armenia  of  visa  facilitation  and 
readmission  agreements  were  adopted  in  December.  Negotiations  started  on  27-28 
February. In October 2011, the EU-Armenia Mobility Partnership was established. 

Regarding Medzamor Nuclear Power Plant (MNPP), the EU continues to request its 
earliest  possible  closure  as  it  cannot  be  upgraded  to  meet  internationally  recognised 
nuclear safety standards. Armenia has not yet drawn up a detailed decommissioning 
plan for MNPP. Armenia continued the safety upgrading of the plant, which it plans 
to close once replacement capacity is available. Armenia is preparing the construction 
of a new Russian type nuclear power plant on the Medzamor site, although financing 
remains  a  major  problem.  Following  the  Fukushima  nuclear  accident,  Armenia 
expressed  readiness  to  undertake  with  the  EU  a  comprehensive  risk  and  safety 
assessment  (‘nuclear  stress  test’)  of  the  plant  (VVR  type  of  the  first  generation), 
taking  account  of  EU  standards.  Armenia  became  an  observer  of  the  Energy 
Community. 

On the basis of this year’s report and with a view to sustained implementation of the 
ENP Action Plan in 2012, Armenia is invited to:  

•  Ensure  that  the  presidential  elections  scheduled for 2013  are  in  line  with 
international standards by addressing the shortcomings identified by the Office 
for Democratic Institutions and Human Rights (ODIHR) of OSCE concerning 
the May 2012 parliamentary elections.     

•  Step up efforts with Azerbaijan to reach agreement on the Madrid Principles in 
accordance  with  the  commitments  made  by  the  Presidents  of  Armenia  and 
Azerbaijan in the framework of the Minsk Group. 

•  Provide  unconditional  access  for  representatives  of  the  EU  to  Nagorno 

Karabakh and surrounding regions. 

•  Fully  investigate  the  deaths  that  occurred  during  the  clashes  of  March  2008 
and  the  allegations  of  ill-treatment  in  police  custody  and  violation  of  due 
process. 

•  Ensure finalisation and implementation of the National Human Rights Strategy 

and Action Plan. 

•  Adopt amendments to the legislation on broadcasting in compliance with the 
recommendations  of  the  OSCE  and  the  Council  of  Europe,  and  ensure 
pluralism in the broadcasting media. 

•  Finalise  the  draft  law  on  Conscience  and  Religious  Freedoms,  in  line  with 
international standards as well as the legislation on alternative civilian service, 
in conformity with Venice Commission and OSCE recommendations. 

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•  Adopt  comprehensive  anti-discrimination  legislation,  including  further  steps 
leading to the harmonisation of legislation with the EU acquis in the areas of 
gender equality and non-discrimination. 

•  Strengthen enforcement of the Anti-Corruption Strategy and boost capacity for 

combating corruption. 

•  Strengthen  the  implementation  of  the  reform  agenda  presented  by  the 
Armenian authorities, including measures to reform public administration and 
the  judicial  sector  (especially  increase  the  independence  of  the  judiciary, 
improve the training of judges, review the code of criminal procedure, pursue 
the Police Reform Programme). 

•  Continue to advance sectoral reforms and regulatory approximation to the EU 
acquis  in  trade  and  trade-related  areas  based  on  the  key  and  additional 
recommendations identified in the preparation for the DCFTA. 

•  Work  towards  the  earliest  possible  closure  of  the  Medzamor  Nuclear  Power 
Plant  and  adopt  a  detailed  decommissioning  plan  for  this  plant,  taking  into 
account the result of stress tests.  

2. 

POLITICAL DIALOGUE AND REFORM 

Deep and sustainable democracy 

Preparations for the 2012 Parliamentary and 2013 Presidential elections advanced. On 
26 May 2011 the National Assembly approved a presidential amnesty which also led 
to the release of all the opposition supporters detained in connection with the March 
2008 events following presidential elections. However, Armenian authorities have yet 
to fully investigate the deaths that occurred during the clashes and the allegations of 
ill-treatment in police custody and violations of due process of March 2008. In May, 
the National Assembly amended the electoral code to ensure greater independence of 
the  electoral  commissions.  Opposition 
the  changes  as 
insignificant  and  insufficient  to  limit  the  influence  of  the  President  and  his  political 
allies. However, as the Venice Commission and OSCE have long stated, the Electoral 
Code of the Republic of Armenia could provide a good basis for democratic elections, 
if fully implemented. There was extensive exchange of information between the EU 
Delegation and the OSCE during the process of drafting the new amendments to the 
Electoral  Code.  Although  the  new  code  has  the  potential  to  ensure  the  conduct  of 
democratic  elections,  legislation  alone  cannot  guarantee  this.  It  is  the  exercise  of 
political  will  by  all  stakeholders  that  remains  the  key  challenge  for  the  conduct  of 
genuinely democratic elections in Armenia. 

lawmakers  dismissed 

In  April  a  new  law  on  conducting  meetings,  assemblies,  rallies  and  demonstrations 
was  adopted,  which  provides  for  a  number  of  improvements  to  the  freedom  of 
assembly.  However  some  provisions  give  the  authorities  undisputed  discretion  to 
grant  or  deny  permission  for  conducting  meetings  and  rallies.  Reportedly,  the 
government continued systematically to restrict movement on the days of opposition 
rallies by blocking the roads from the regions to the capital. Amendments to the law 
on  Non  Governmental  Organisations  (NGO)  tabled  before  the  parliament  in  2009 
remain a concern as they might restrict freedom of association. 

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The main concerns on freedom of expression and media relate to the lack of media 
independence, the limitations on TV broadcasting and the continuation of lawsuits for 
insult  and  defamation.  Following  the  entry  into  force  of  the  new  law  amending  the 
‘law  on  Television  and  Radio’  in  January  2011,  the  number  of  TV  channels 
broadcasting  in  the  capital  was  reduced  from  22  to  18.  The  printed  media  remains 
subject to the political opinions of the financing  bodies. The online media remained 
more pluralistic, but their outreach is limited to the area covered by internet facilities 
(40% of the population). The broadcasting law, amended several times, continues to 
raise concerns about media pluralism. While the law decriminalises libel and insult, it 
has  resulted  in  high  monetary  fines  for  insult  and  defamation.  Such  fines  can  be 
imposed  upon  media  outlets  following  civil  suits.  On  10  November,  the  OSCE 
Representative  on  Freedom  of  the  Media  called  upon  the  authorities  to  reform  the 
legislation further in order to adequately protect the media in civil defamation cases. 

Despite  an  effort  to  reform  the  judiciary,  public  trust  continues  to  be  low.  Judges 
remain strongly influenced by prosecutors and the executive, thus limiting the right to 
fair  trial.  The  EU  is  providing  substantial  support  in  this  sector,  including  through 
sector budget support (EUR 18 million). 

Corruption remains a serious problem. Transparency International ranks Armenia in 
129th  place  out  of  183  (score  2.6  out  of  10)  in  its  Corruption  Perceptions  Index  for 
2011.  The  authorities  have  regularly  and  publicly  expressed  their  readiness  to  fight 
corruption. However, despite the adoption of certain important legal acts (e.g. the law 
on  Procurement,  and  law  on  Public  Service),  fulfilment  of  obligations  from  the 
Council  of  Europe  Group  of  States  against  Corruption  (GRECO),  OECD  and  other 
international  bodies,  as  well  as  the  increased  number  of  arrests  and  indictments  of 
corrupt officials, there have been no positive changes in the perception of corruption 
by  different  segments  of  the  Armenian  population  and  the  government’s  measures 
have not been sufficient to change it. What is lacking is effective implementation. The 
anti-corruption  coordinating  mechanism  created  in  2004  is  weak.  No  institutional 
support or resources have been allocated to anti-corruption work by the government. 
In  May,  the  National  Assembly  adopted  the  law  on  Public  Service.  Starting  from 
2012,  declarations  on  income  and  property  will  be  submitted  only  by  high-ranking 
public officials, as well as persons related to them. This law has several shortcomings 
regarding  the  capacity  and  powers  of  the  Commission  on  Ethics  of  High-Ranking 
Public Officials.  

The  main  point  of  reference  on  security  sector  reform  is  Armenia’s  Strategic 
Security  Environment,  defined  in  the  National  Security  Strategy  and  in  the  Military 
Doctrine , which has been agreed by the National Security Council of the Republic of 
Armenia and approved by decrees of the President in 2007. Within the framework of 
the defence reforms, the Armenian Defence Ministry initiated a process referred to as 
the Strategic Defence Review (SDR) of the Republic of Armenia. The SDR is focused 
on the identification of existing and potential political and military risks and threats to 
Armenian national security. It envisages a detailed analysis of the Armenian national 
defence  system and its components, with the aim of evaluating the system’s current 
capabilities  and  ensuring  that  they  still  meet  the  identified  risks  and  threats.  The 
review also anticipates both short-term and mid-term developments. 

Civilian control over the security forces is effective. The Minister of Defence is a 
civilian. However impunity for human rights violations committed by members of the 

5

 
 
security forces is a matter of concern. Defence reform, in bringing more transparency, 
is also highlighting the problem of abuse. The armed forces remain one of the most 
closed structures in Armenia with frequent reports of abuse, ill-treatment, hazing and 
non-combat  fatalities.  At  the  same  time  the  Ministry  of  Defence  shows  a  higher 
degree of transparency by publishing information about each incident. In comparison 
with  previous  years,  the  number  of  ill-treatment  cases  is  steadily  declining.  The 
military officials also constantly assure the public about their readiness to follow up 
each incident. 

Conflict prevention and confidence building 

Negotiations within the Minsk Group in 2011 have demonstrated the need for further 
efforts by the parties to the conflict to achieve substantial progress. Amidst increasing 
tension  along  the  Line  of  Contact  and  the  Armenian-Azerbaijani  border,  mediation 
efforts continued on the elaboration of the OSCE-proposed mechanism to investigate 
incidents along the frontlines. The Minsk Group intensified its activities in the region, 
with  regular  crossing  of  the  Line  of  Contact  and  the  Armenian-Azerbaijani  border 
towards  the  end  of  2011.  Despite  the  limited  progress,  Armenia  and  Azerbaijan 
remained  engaged  in  the  process.  The  EU  enhanced  its  support  to  the  negotiation 
process through several political declarations, through the appointment of a new EU 
Special Representative for the South Caucasus and the crisis in Georgia, and through 
the  implementation  of  Confidence  Building  Measures.  The  increasing  number  of 
incidents  along  the  frontlines,  as  well  as  infrastructure  works  in  Nagorno-Karabakh 
(airport and highways), continue to be sources of concern. 

Other human rights and governance-related issues 

There  was  no  significant  progress  on  freedom  of  religion  and  belief.  Although 
freedom of religion is generally respected, the dominant Armenian Apostolic Church 
enjoys  certain  exclusive  privileges,  and  members  of  minority  faiths  sometimes  face 
societal  discrimination.  There  were  reports  of  societal  abuses  and  discrimination 
based  on  religious  affiliation,  belief,  or  practice,  in  particular  of  the  Evangelist  and 
Jehovah’s  Witnesses  minorities  in  Armenia,  which  even  led  to  a  case  before  the 
European Court of Human Rights.  

The  alternative  civilian  service  continues  to  need  improvement  both  in  legislation 
and in practice. The new amendments to the law on Alternative Service were sent for 
the  review  and  attention  of  the  Venice  Commission  and  received  negative  feedback 
stating  that  the  amendments  do  not  resolve  the  main  problems  on  ensuring  a  truly 
alternative  civilian  service.  The  current  alternative  service  is  too  long  (42  months 
compared  to  24  in  military  service)  and  remains  under  military  supervision. As  of 
November 2011, sixty Jehovah’s witnesses had been convicted for refusal of military 
service on religious grounds and one more is in pre-trial detention.   

In May, the government adopted Armenia’s Gender Policy Strategic Action Plan for 
2011-2015  and  the  Gender  Policy  Annual  Action  Plan  for  2011.  In  June  the 
government adopted its first National Action Plan to Combat Gender-Based Violence 
for  2011-2015.  The  draft  law  on  Ensuring  Equal  Rights  and  Equal  Opportunities  of 
Men and Women in Armenia was submitted to the parliament in December 2011 and 
passed first reading. The government is revising the draft law on Domestic Violence 
to bring it into line with the 2011 Council of Europe Convention on preventing and 

6

 
 
combating  violence  against  women  and  domestic  violence  (not  yet  signed  by 
Armenia).   

The government tasked the Ministry of Labour and Social Affairs to produce a draft 
law on gender-based violence by June 2012. This draft will be based on the existing 
draft law on domestic violence which was drawn up on the initiative of the Women's 
Rights Center NGO. The new draft should be prepared also in the light of the Council 
of  Europe  Convention. This  might  mean  that  the  old  draft  will  be  heavily 
reworked. Upon  the  instruction  of  the  Prime  Minister  a  Working  Group  has  been 
established to develop and submit to the National Assembly a draft law on domestic 
violence by June 2012.  

On children’s rights, the government has strengthened its legal framework to combat 
child  trafficking  by  substantially  increasing  penalties  for  this  crime.  However, 
significant  gaps  remain  in  the  legal  framework,  in  its  enforcement,  in  the  policy 
framework  and  in  the  programmes  intended  to  address  the  worst  forms  of  child 
labour. Alternative systems of care such as community-based day-care centres are not 
widely  available  in  Armenia.  Despite  some  steps  forward,  there  was  no  significant 
progress on the implementation of certain components of the National Plan of Action 
on Protection of the Rights of the Child 2004-2015. In particular, there has been no 
progress  on  the  commitment  to  establish  25  community-based  alternative  day-care 
centres. 

There are no major difficulties on National Minorities. In February, the report by the 
European  Commission  against  Racism  and  Intolerance  (ECRI)  of  the  Council  of 
Europe  recorded  considerable  improvements  and  welcomed  the  efforts  made  in  the 
field  of  ethnic-minority  education  and  culture  (such  as  private  broadcasting  stations 
and  kindergartens).  Individuals  wishing  to  complain  about  discrimination  can  now 
turn  to  the  Human  Rights  Defender.  Finally,  there  is  new  legislation  on  asylum  and 
asylum seekers enjoying temporary protection have now been recognised as refugees. 
However, there is no comprehensive civil and administrative legislation against racial 
discrimination  and  there  are  no  provisions  in  the  Criminal  Code  prohibiting 
organisations that promote racism.  

Allegations  of  torture  and  ill  treatment  among  military  conscripts,  in  prison 
facilities  and  at  police  stations  are  numerous  and  not  adequately  investigated.  The 
Ombudsman  has  received  numerous  complaints  about  Armenian  police  officers 
engaging  in  torture,  other  cruel  and  inhuman  treatment  and  extortion  of  statements 
from  the  accused  by  means  of violence  and  threats.  In  the  army,  in  the  period  from 
January  to  November,  35  deaths  were  reported.  Out  of  these,  eleven  cases  were  a 
result of violation of the ceasefire regime, and others were the  result  of violation of 
statutory  regulations  or  security  rules,  accidents,  suicides,  or  health  conditions. 
Although the statistics show a decrease in the number of fatalities within the military, 
the  nature  of  alleged  violations  resulting  in  fatal  outcomes  is  worrying.  Armenia 
ratified  the  Optional  Protocol  to  the  UN  Convention  against  Torture  in  2006 
(OPCAT)  and,  in  2008,  the  Human  Rights  Defender  was  designated  as  the  OPCAT 
National  Preventive  Mechanism  (NPM).  Since  then,  several  unsuccessful  attempts 
have been made to establish the NPM based on the good will of the Ombudsman. In 
2011,  a  new  Ombudsman  was  appointed  and  the  process  of  restructuring  the  NPM 
started anew particularly through an open call for civil society to become part of the 
Expert Council for the Prevention of Torture within the NPM.   

7

 
 
As  regards  civil  society,  non-governmental  organisations  (NGOs)  are  concerned  by 
government  efforts  to  make  them  reveal  their  sources  of  funding.  More  than  3000 
NGOs are registered with the Ministry of Justice. While the constitution provides for 
the right to form and join trade unions, labour organisations are weak and relatively 
inactive  in  practice.  Civil  Society  Organisations  have  difficulties  in  co-operating 
beyond  partisan  and  ideological  lines.  The  Eastern  Partnership  Forum  Steering 
Committee  expressed  concern  over  the  split  in  two  groups  of  its  Armenia  platform. 
This split was overcome at n the beginning of 2012.  

On administrative reform, in September the President signed a decree that officially 
launched  the  regulatory  guillotine  reform,  aiming  at  reviewing  and  streamlining 
thousands  of  legislative  acts,  leading  to  more  efficient  bureaucracy  and  a  clearer, 
more  consumer-friendly  regulatory  framework  in  many  of  the  sectors  directly 
affecting citizens.  

Cooperation on foreign and security policy 

Armenia continued to align with CFSP declarations on a case by case basis. In 2011, 
Armenia  aligned  with  40  out  of  82  CFSP  declarations  to  which  it  was  invited  to 
subscribe.  There  was  intense  political  dialogue  with  the  Armenian  Government  in 
2011,  a  Political  and  Security  Committee  Political  Dialogue  meeting in June and  a 
number  of  mutual  high-level  visits.  High  Representative  and  Vice-President  C. 
Ashton  visited  Armenia  on  16-17  November  during  her  visit  to  the  region  of  South 
Caucasus.  

3. 

ECONOMIC AND SOCIAL REFORM 

 Macroeconomic framework and functioning market economy  

The  current  macroeconomic  situation  has  greatly  improved  compared  to  the  recent 
(2009) crisis. After a modest rebound in 2010 (+2.1%) the GDP growth rate reached 
4.6% in 2011, reflecting improved conditions in mining, manufacturing and services 
as well as a rebound in agriculture. The economy was supported by an IMF financing 
arrangement and exceptional donor assistance, including Macro-Financial Assistance 
from the European Union worth EUR 100 million (a grant of EUR 35 million and a 
medium-term  loan  of  EUR  65  million).  However,  the  recovery  remains  fragile  and 
downside risks are considerable.  

The  average  inflation  rate  in  2011  was  7.8%,  slightly  lower  than  in  2010  (8.2%). 
Headline inflation reached its peak of 11.5% in March 2011 mostly due to the global 
price movements.  

The  central  government  fiscal  deficit  in  2011  (3.6%  of  GDP)  remained  below  the 
initial target of 3.9% of GDP. The tax-to-GDP ratio remains low, at 16.4%, indicating 
high tax evasion and problems in the tax and customs administration. The public debt-
to-GDP ratio increased to 42% in 2011 (from 39.2% in 2010), as a result of counter-
cyclical  measures  and  of  financial  assistance  from  the  international  community 
(loans). The external debt represents around 88% of the total public debt, thus creating 
significant exchange rate vulnerability. 

8

 
 
Driven  by  the  relatively  strong  export  growth  along  with  growth  in  remittances,  the 
current account deficit is expected to narrow to 12.2% of GDP in 2011, from 14.7% 
of GDP in 2010. Foreign direct investment increased to 6.4 % of GDP (6% in 2010); 
it is expected to reach approximately USD 650 million (around EUR 500 million) for 
the  full  year  (a  16%  increase  over  2010).  Foreign  reserves  showed  little  change 
(approximately  EUR  1.4  billion,  somewhat  below  five  months  of  imports).  The 
banking sector appears solid and with no exposure to the EU debt crisis. The capital 
adequacy ratios remained high, around 20%. The credit growth accelerated along with 
the recovery. In 2011 credit grew by 35% compared with 2010, though the credit-to-
GDP  ratio  stayed  low  –  30%.  Dollarisation  remained  high  for  both  credits  and 
deposits.  

The global slowdown is expected to impact on Armenia’s economy through slowing 
growth  in  investments  and  remittances  (mainly  from  Russia),  diminishing  export 
demand,  lower  resource  prices,  diminishing  fiscal  revenues  and  declining  capital 
inflows.  Longer-term  growth  prospects  are  also  very  uncertain  due  to  lack  of 
diversification,  low  competitiveness  and  closed  borders  with  two  out  of  four  of 
Armenia’s  neighbour  countries.  The  policy  priorities  in  the  short  and  medium  term 
include ongoing fiscal consolidation, the development of local capital markets and the 
reduction  of  the  level  of  dollarisation;  on  the  structural  side,  they  include  further 
improvement  of  the  business  climate  and  improvement  of  the  domestic  competition 
level. 

Employment and social policy 

The official unemployment rate in 2011 was 6 %. Women represent almost 71% of 
officially unemployed persons (up from 65% in 2010). According to a survey of the 
International  Labour Organisation  (ILO), the estimated average level of inactivity is 
around  19%.  At  the  end  of  November,  the  National  Statistical  Service  published  a 
report according to which about 36% of the total population of Armenia in 2010 were 
below the poverty line. Poverty is more widespread in rural than in urban areas. The 
governmental  annual  report  on  poverty  highlights  child  poverty  as  one  of  the  main 
challenges.  

The implementation of Armenia’s Sustainable Development Programme on poverty 
reduction  2008-2021  continued  to  be  suspended  in  2011.  As  a  consequence,  the 
adoption  of  the  ‘Sustainable  Development  Strategy  for  the  Labour  and  Social 
Protection System’ was further postponed.  

4. 

TRADE-RELATED ISSUES, MARKET AND REGULATORY REFORM 

Bilateral  trade  continued  to  improve  in  2011  from  the  2009  slowdown  with  an 
18.2% increase year-on-year. EU exports to Armenia increased by 15.7%, while EU 
imports  from  Armenia  increased  by  23.3%.  In  terms  of  commodity  structure, 
however,  EU  imports  from  Armenia  are  still  concentrated  in  a  few  commodities  (in 
particular,  base  metals  formed  49.5%,  mineral  products  18.9%  and  pearls  and 
precious stones 16.9% of EU total imports from Armenia in 2011). 

Armenia  continued  to  benefit  from  preferences  offered  by  the  EU  under  the  special 
incentive  arrangement  for  sustainable  development  and  good  governance  (GSP+) 

9

 
 
within the EU Generalised System of Preferences (GSP). It sustained efforts to ensure 
the  continued  ratification  and  effective  implementation  of  the  relevant  international 
conventions and to raise awareness of the GSP+ among the business community. The 
regulatory  approximation  started 
future  Deep  and 
Comprehensive  Free  Trade  Area  (DCFTA)  negotiations  will  further  enhance 
Armenia’s  benefits  from  the  GSP+  system  as  Armenian  products  will  enjoy  easier 
access to the EU market. 

in  preparation 

the 

for 

Armenia made substantial progress in implementing the key recommendations for the 
launch of negotiations on a Deep and Comprehensive Free Trade Area, in particular 
legislative and institutional reforms in the areas of Technical Barriers to Trade (TBT), 
Sanitary and Phyto-sanitary Standards (SPS) and Intellectual Property Rights (IPR). 

Substantial  EU  assistance  was  provided  on  trade-related  issues.  The  Eastern 
Partnership  Comprehensive  Institution  Building  programme  (EUR  32  million  for 
Armenia  in  2011-2013)  will  help  strengthen  the  key  institutions  involved  in  the 
Association Agreement and DCFTA negotiations in the areas of SPS, TBT and IPR.  
It will be accompanied by a budget support operation of EUR 22 million covering the 
same areas as well as public finance management and public sector transparency.  

In  May,  the  2011-2013  Programme  for  reforming  customs  and  tax  systems  of  the 
State Revenue Committee was launched. Progress was made in applying of the WTO 
compliant  customs  valuation  methods.  Monitoring  of  effective  application  should 
continue  in  this  area  with  particular  attention  to  the  impact  on  the  business 
community. In 2011 Armenia entered into bilateral agreements on mutual assistance 
with  several  member  states.  According  to  economic  operators  no  significant 
reductions of paperwork for customs registration and controls were recorded in 2011. 
In  some  cases  customs  officials  are  directly  involved  in  commercial  customs 
brokerage.  

In  the  area  of  free  movement  of  goods  and  technical  barriers  to  trade  (TBT), 
Armenia  prepared  drafts  of  four  fundamental  laws  on:  technical  regulation, 
standardisation,  accreditation  and  uniformity  of  measurements,  which  were  finally 
adopted in February 2012. It also drafted a Government programme of approximation 
with the EU legislation, identifying priority sectors for approximation, with emphasis 
on the economically most significant ones. 

Regarding sanitary and phyto-sanitary issues, Armenia adopted, in November 2011, 
a food safety strategy and a related action plan, which aim to gradually approximate 
with EU standards. It adopted legislation on: food hygiene, fishery products, technical 
rules  on  food  additives,  hazard  analyses  of  foodstuffs,  veterinary  drugs  and  phyto-
sanitary registration. Armenia strengthened institutions including the state service for 
food  safety.  It  established  a  risk  assessment  centre,  a  network  of  specialised 
laboratories and trained staff (with EU support).  

Twenty-three  laws  were  adopted  between  February  and  April  with  the  aim  of 
improving  the  business  climate  and  to  facilitate  company  establishment.  Armenia 
ranked 55th in the ease of doing business in the World Bank’s ‘Doing Business 2012’ 
annual  report,  six  places  higher  than  last  year  reflecting  a  mixed  performance.  The 
positive  impact  of  establishing  a  one-stop-shop  for  registration  and  dealing  with 
construction  permits  more  efficiently  was  mitigated  by  a  deterioration  in  the 

10

 
 
enforcement of contracts and poor access to electricity. An amendment to the law on 
Joint  Stock  Companies  improving  the  mechanisms  for  detecting conflicts  of  interest 
and  expanding  the  responsibility  of  directors  was  adopted  in  May  2011.  The  Credit 
Bureau law was amended to improve risk assessment by the banks and hence facilitate 
access to credit for Small and Medium Size Enterprises (SMEs). Economic barriers to 
business entry remain high under the oligopolistic structure of the economy.   

Armenia continued to approximate its regulatory framework for financial services by 
introducing mandatory motor third-party liability insurance as of 2011. A prudential 
regulation on provisioning requirements on foreign currency loans increasing the risk 
weighting to 150% entered into force in January 2011. At the beginning of 2011 the 
Central  Bank  introduced  capital  adequacy  requirements  for  credit,  market,  and 
operational  risks  in  order  to  gradually  move  the  basis  of  insurance  regulation  from 
Solvency I to Solvency II over a 3 to 5 year period. From the beginning of 2011, the 
floor  on  total  regulatory  capital  for  liability,  loan  and  guarantee  issuance  insurance 
classes is Armenian Drams (AMD) 1.5 billion (about EUR 3 million). 

Other key areas 

The  new  Value  Added  Tax  (VAT)  law  that  entered  into  force  in  January  2011 
requires  entities  that  have  an  annual  turnover  in  excess  of  AMD  58.35  million  to 
report their VAT electronically, facilitating taxation and compliance. The number of 
e-reporting  companies  reached  6600  in  September  2011.  Armenia  adopted  new 
legislation  in  order  to  remove  the  discriminatory  taxation  between  imported  and 
locally  produced  alcohol  and  tobacco  products.  The  amendments  to  the  law  on 
Organising and Conducting Audits entered into force in August 2011 and introduced a 
system  of  risk-based  tax  audits.  The  auditing  authorities  posted  on  their  website  the 
audit plan for the following year. 

Armenia  prepared  a  number  of  legislative  changes  following  the  United  Nations 
Conference  on  Trade  and  Development  (UNCTAD)  Voluntary  Peer  Review  of 
Competition  Law  and  Policy.  However,  the  new  legislation  is  not  yet  fully  in  line 
with EU standards. Armenia still needs to ensure effective implementation as well as 
to  address  the  need  for  capacity  building  of  the  State  Commission  for  Protection  of 
Economic Competition of the Republic of Armenia (SCPEC)’s staff and the judiciary. 
January 2011 saw the launch of an EU funded twinning project aiming to enable the 
SCPEC to fulfil its role both in the domestic and in the wider European context. No 
legal changes took place in the area of state aid. 

The Government adopted an Intellectual Property Right's Protection (IPR) Strategy 
and Action Plan in June 2011. The Observatory for Counterfeiting and Piracy met for 
the first time in September with participants from the private and public sector. Public 
awareness  and  competence  of  authorities  have  been  developed  through  information 
campaigns,  training  and  creation  of  a  database  on  judicial  acts  in  the  area  of  IPR. 
Further efforts should particularly focus on  making  the  customs  service  an  effective 
actor  in  the  fight  against  IPR  infringements,  building  on  the  November  2011 
amendment to the Customs Code. This allows for enhanced registration of intellectual 
property  in  the  customs  register  and  the  appointment  of  new  IPR  officials.  The 
capacity of the police to act on the protection of IPR should continue to be enhanced. 
Ratification  of  the  International  Convention  for  the  Protection  of  New  Varieties  of 

11

 
 
Plants  remains  and  accession  to  the  Patent  Law  Treaty  and  Trademark  Law  Treaty 
have yet to happen. 

In  February  2011,  the  government  approved  the  paper  on  ‘Regulating  the 
procurement  procedure’,  for  the  enforcement  of  the  law  on  procurement.  In 
November  2011,  the  government  launched  an  electronic  procurement  system. 
Armenia  joined  the  government  Procurement  Agreement  under  the  World  Trade 
Organisation in September. 

The laws on auditing and licensing auditors were modified in May to approximate the 
regulatory  framework  with  that  of  the  EU.  A  draft  reform  strategy  submitted  to  the 
Government covers also revision of accounting rules with the same objective.  

On statistics, the Population and Housing Census was conducted in October 2011 and 
first steps in setting up a quality management system have been completed (setting up 
of a working group, training implemented and workshop on metadata held). Armenia 
needs to implement an agricultural census in 2012 and should ensure the appropriate 
financing for this large scale and important operation. 

Armenia  continued  working  with  the  EU-funded  SIGMA1  programme  on  the 
preparation of the Strategic Development Plan in external audit and developing draft 
laws on financial management and control and financial inspection. In August 2011, 
the  government  approved  the  documents  concerning  the  standards  for  public  sector 
internal audit and rules of conduct for the public sector internal auditors to strengthen 
the public internal financial control. 

On enterprise policy, Armenia approved in December the 2012 SME programme.  

the  Eastern  Partnership  Comprehensive 

Substantial  EU  assistance  was  provided  on  trade  related  issues,  including  in  the 
framework  of 
Institution  Building  
programme (EUR 32 million for Armenia in 2011-2013), which helped to develop an 
Institutional  Reform  Plan  (out  of  3  in  total)  in  support  of  DCFTA  negotiations 
(adopted  by  the  Armenian  government  in  December  2011). Also,  a  budget  support 
operation of EUR 22 million was launched at the end of 2011 in order to accompany 
the  reforms  related  to  DCFTA  as  well  as  to  public  finance  management  and  public 
sector transparency. This was complemented by support provided through Twinning 
and the “EU Advisory Group”.   

5. 

COOPERATION ON JUSTICE, FREEDOM AND SECURITY 

Following adoption of the Border Security and Border Management Strategy 2011-
2015  in  2010,  Armenia  approved  an  implementation  Action  Plan  in  April  2011. 
Cooperation  on  border  management  with  Georgia  progressed  through  an  agreement 
reached in February 2011 on the joint operation of border crossing points. FRONTEX 
and  Armenia  agreed  a  draft  Working  Arrangement,  which  was  signed  in  February 
2012. 

1 SIGMA is a joint initiative of the OECD and the European Union, principally financed by the EU. SIGMA supports European 
Union candidates, potential candidates and European Neighbourhood countries in their public administration reforms. 

12

 
 
                                                 
A  National  Action  Plan  2012-2016  for  the  implementation  of  the  ‘Concept  for  the 
Policy of State Regulation of Migration’ was adopted in November 2011. While there 
were some delays in preparing the introduction of biometric passports, the parliament, 
Armenia adopted related legislation in November 2011. In the fields of migration and 
integrated border management, support continued to be provided via the EU Advisory 
Group.   

Directives for the negotiation between the EU and Armenia of visa facilitation and 
readmission  agreements  were  adopted  by  the  EU  in  December,  and  negotaitions 
were  launched  on  27th  February  2012.  In  October  2011,  the  EU-Armenia  Mobility 
Partnership  was  established,  proposing  cooperation  in  four  major  areas  (mobility, 
legal  migration  and  integration;  migration  and  development;  fight  against  irregular 
immigration;  and  asylum  and  international  protection).  The  Partnership  will  be 
supported by the EU through a core project with a budget of EUR 3 million aimed at 
strengthening  Armenia’s  migration  management  capabilities.  Armenia  indicated  its 
interest in adding further activities related to labour and circular migration, including 
for the highly-skilled. An Institutional Reform Plan was adopted in December 2011, 
as  a  basis  for  providing  support  via  the  Comprehensive  Institution  Building 
programme  to  the  preparations  for  the  future  EU-Armenia  Visa  Facilitation  and 
Readmission Agreement.     

In December 2011, Armenia adopted a National Strategy to improve the effectiveness 
of  the  fight  against  organised  crime,  and  is  also  developing  a  National  Programme 
for  Fighting  against  Terrorism  and  a  police  reform  programme  for  2012-2014. 
Progress was registered in the fight against money laundering with the preparation of 
legislative  amendments  to  support  the  implementation  of  relevant  international 
standards.  In  July  2011,  Armenia  hosted  the  19th  sitting  of  the  Egmont  group  of 
Financial Intelligence Units. The first EU-Armenia Drugs Dialogue took place on 7 
September 2011.   

The Criminal Code was amended in April 2011 in relation to combating trafficking 
in human beings, toughening punishment for trafficking in children and persons with 
mental  health  problems.  Armenia  is  strengthening  police  capacity  to  combat 
trafficking in human beings, including through training for policemen in cooperation 
with international organisations and NGOs, and raising public awareness. The process 
of  ratification  of  the  2007  Council  of  Europe  Convention  on  the  Protection  of 
Children against Sexual Exploitation and Sexual Abuse signed in September 2010 is 
still  ongoing.  An  Anti-Trafficking  Board  was  established  under  the  Ministry  of 
Territorial Administration.  

Armenia  signed  up  to  the  1981  Council  of  Europe  Convention  for  the  Protection  of 
Individuals on Automatic Processing of Personal Data and the Additional Protocol on 
supervisory authorities and trans-border data flows in April 2011. Effective protection 
of  personal  data  forms  a  fundamental  prerequisite  in  promoting  cooperation  with 
EUROJUST, EUROPOL and EU member states. 

On  police  and  judicial  cooperation,  two  important  Hague  Conventions  concerning 
family law, such as the 1980 Hague Convention on the Civil Aspects of International 
Child  Abduction  and  the  1996  Convention  on  Parental  Responsibility  and  the 
Protection of Children were submitted to the parliament for ratification.   

13

 
 
In  the  area  of  asylum  there  were  no  significant  developments  during  the  reporting 
period. While the refugee legislation in force is very close to EU standards, effective 
implementation remains a challenge.   

6. 

TRANSPORT,  ENERGY,  ENVIRONMENT,  THE 
RESEARCH AND DEVELOPMENT 

INFORMATION  SOCIETY, 

Armenia  continued  to  implement  its  2009-2020  transport  strategy.  Substantial 
progress  was  made  on  the  implementation  of  the  Digital  Tachograph  System.  The 
production and issuing of tachograph cards have started. Despite improvements, road 
safety  remains  a  challenge.  In  July  2011,  Armenia  became  a  full  member  of  the 
Organisation  for  International  Carriage  by  Rail.  In  2011  Armenia  strengthened  also 
regional rail cooperation  through  signature of several sectoral agreements. In the air 
sector,  Armenia  has  not  yet  fully  removed  restrictive  commercial  and  regulatory 
measures in order to improve aviation efficiency and connectivity.  

Armenia  started  updating  its  energy  strategy.  The  EU  continues  to  request  earliest 
possible  closure  of  the  Medzamor  Nuclear  Power  Plant  (MNPP),  as  it  cannot  be 
upgraded  to  meet  internationally  recognised  nuclear  safety  standards.  Armenia 
continued  the  safety  upgrading  of  MNPP,  which  it  plans  to  close  once  replacement 
capacity  is  available.  There  is  not  yet  a  detailed  decommissioning  plan.  Armenia 
continued preparations to build in the period 2012-2017/18 a new nuclear power plant 
on the Medzamor site. Following the Fukushima nuclear accident, Armenia expressed 
readiness  to  undertake  with  the  EU  a  comprehensive  risk  and  safety  assessment 
(‘nuclear  stress  test’)  of  MNPP,  taking  account  of  EU  standards.  In  October  2011, 
Armenia  became  an  observer  under  the  Energy  Community  Treaty.  It  increased  the 
use of renewable sources, in particular hydropower. In May 2011, Armenia adopted a 
renewable  energy  roadmap  and  in  September  a  hydro-energy  programme.  More 
efforts  are  needed  on  energy  efficiency.  Armenia  explored  the  possibilities  to  use 
domestic  shale  gas  and  oil  shale  resources.  Armenia  is  planning  a  North–South 
electricity  grid  with  its  neighbours  and  has  done  further  on  interconnections  with 
Georgia  and  Iran.  Armenia  continued  rehabilitating  the  Abovyan  underground  gas 
storage, energy networks and thermal power plants. Armenia and Iran initiated plans 
to construct an oil product pipeline. 

On  climate  change,  the  Government  adopted  a  five-year  action  plan  for  the 
implementation  of  the  UN  Framework  Convention  on  Climate  Change  (UNFCCC). 
No  new  Clean  Development  Mechanism  project  was  registered  at  the  UN  level, 
leaving the total number of registered projects at five. Armenia is encouraged to build 
capacity and engage in the new carbon market mechanism to be developed following 
the  17  Session  of  the  UNFCCC  Conference  of  Parties  (COP  17).  Armenia  is  also 
encouraged  to  fully  implement  the  Cancun  and  Durban  agreement  and  in  particular 
devise a low carbon development strategy including update information on target or 
actions that it will implement. 

Armenia started preparing a new environment action plan post-2012. The parliament 
adopted amendments on environmental impact assessments, partly covering strategic 
environmental  assessments.  These  amendments  limit  the  list  of  activities  subject  to 
environmental  impact  assessment,  reduce  the  time  allowed  for  the  assessment  and 

14

 
 
 
list  of  endangered 

sanitary  cleaning.  A 

limit public participation. Armenia also amended the air management law, inter alia to 
include  the  best  available  techniques  concept  as  well  as  a  law  on  solid  waste 
management  and 
species  was 
compiled. Armenia prepared  draft  laws  on  chemicals  and  clean  production.  The 
Fourth Meeting of the Parties to the Aarhus Convention decided that Armenia failed 
to  comply  with  the  Convention’s  requirements  on  public  participation  in  decision-
making regarding the Teghut copper mine exploitation, and made recommendations to 
the  Government  to  strengthen  and  clarify  procedures  for  public  participation.  The 
Government  adopted  a  Decision  on  measures  to  fulfill  its  commitments  under 
international  environmental  conventions,  including  the  Aarhus  Convention.  There 
were  no  significant  developments  on  Armenia’s  ratification of,  or  accession  to, 
relevant Conventions and Protocols of the United Nations Economic Commission for 
Europe.  

The  Regional  Environmental  Centre  (REC)  for  the  Caucasus  continued  its 
activities in 2011 inter alia in the fields of information and public participation. The 
REC founders agreed in October 2011 that they want to see it enhance its role in the 
South  Caucasus  Region  in  the  years  to  come.  They  tried  to  find  a  solution  to  the 
REC’s debt problem and agreed that it could be beneficial to convert the REC into an 
inter-governmental regional organisation. 

In the field of civil protection, Armenia intensified the cooperation with the countries 
from the region and the exchange of best practices with the EU in the field of disaster 
prevention, preparedness and response through its participation in the EU Programme 
for Prevention of, Preparedness for, and Response to natural and man-made disasters. 

Progress on regulatory reform in the Information Society area remained modest. The 
Public  Services  Regulatory  Commission  (PSRC)  plans  to  introduce  mobile  number 
portability in 2012, but the operators are not yet technically ready. In May 2011, the 
fixed  telephony  market  was  opened  up  to  competition.  In  June,  the  PSRC  allowed 
VivaCell-MTS to use radio frequencies for wireless broadband internet services. 

Investment in research and innovation in Armenia continues to remain at relatively 
modest  levels.  Armenia  continued  to  increase  the  number  of  applications  to  the  7th 
Framework  Programme  for  Research  and  Technological  Development  (FP7).  24 
Armenian research organisations are involved in 22 FP7 projects, receiving over EUR 
1.27  million  of  EU  funding.  The  most  successful  projects  are  in  the  Marie  Curie 
Fellowship  actions,  research  infrastructures,  international  cooperation  actions  and 
Information and Communication Technology research. Armenia strengthened its FP7 
Contact  Point  network.  Nomination  of  additional  FP7  contacts,  particularly  for  the 
Cooperation Programme sector themes would be welcome. 

As  regards  regional development, focus  of  future  Pilot  Regional  Development 
Programmes is  being  discussed  with  the  government,  on  the  basis  of  its  regional 
development  strategy. Greater  attention  to  regional  policy  dialogue with  the  EU  will 
help Armenia maximize the benefits of these programmes.  

7.  

PEOPLE-TO-PEOPLE CONTACTS, EDUCATION AND HEALTH 

A  National  Education  Development  Strategy  for  2011-2015  was  presented  to  the 
parliament.  In  May  2011,  Armenia  adopted  legislation  with,  inter  alia,  the  aim  of 

15

 
 
bringing  licensing  and  certification  in  line  with  the  international  framework  and  the 
principles  of  the  Bologna  Process.  In  June  2011,  Armenia  approved  a  Strategy 
ensuring financing for Higher Education and a corresponding Action Plan.   

Higher  education  reform  continued  to  benefit  from  EU-Armenia  cooperation  in  this 
field  through  the  Tempus  IV  programme  support,  with  two  additional  projects 
selected covering the development of university-enterprise partnerships and migration 
and skills. Armenia also continued its active participation in academic exchanges and 
cooperation through the Erasmus Mundus programme in the academic year 2011-12 
with the award of a total of 49 scholarships and mobility grants. Seven institutions and 
six  individual  researchers  from  Armenia  are  currently  participating  in  Marie  Curie 
actions  supporting  researchers’  training,  mobility  and  career  development.  For  the 
second  time,  in  2011  a  Jean  Monnet  module  was  awarded  to  Yerevan  State 
University  to  increase  understanding  of  European  integration,  language,  culture  and 
identity.   

The reform of vocational education and training (VET) continued with substantial 
EU  assistance  (EUR  15  million)  through  a  Sector  Support  Programme.  Armenia 
further  consolidated  reforms  in  the  areas  of  teacher  training  and  refurbishment  of 
vocational  training  colleges,  quality  assurance,  strengthening  business-education 
relationship,  introduction  of  life-long  learning  principles  and  improvement  of  legal-
normative environment for continued education. In June, the government adopted the 
National  Qualification  Framework,  with  eight  levels  of  qualifications  and  related 
descriptors.  The  related  Training  Fund  established  by  the  end  of  2011  is  still 
understaffed and operationally weak.  

Preparations  began for the participation of Armenia  in the eTwinning  component of 
the Comenius programme, the EU programme for interconnecting schools, foreseen 
for  2012,  with  the  selection  of  the  partner  support  agency  and  an  assessment  of 
potential beneficiaries/schools.  

Armenian  cultural  organisations  participated  in  seven  annual  cooperation  projects 
financed under  two calls by the Culture Programme in 2009 and 2010 dedicated to 
the ENP-countries who have ratified the 2005 UNESCO Convention on the Protection 
and  Promotion  of  the  Diversity  of  Cultural  Expressions.  The  Eastern  Partnership 
Culture Programme’s Regional Monitoring and Capacity-Building Unit carried out a 
first visit to Armenia in November 2011. 

The  Youth  Parliament  of  the  Armenian  National  Assembly  started  its  work  in  May 
2011,  with  support  from  the  EU  Advisory  Group.  Armenian  youth  and  youth 
organisations  continued  benefiting  from  the  exchange  opportunities  offered  by  the 
Youth in Action programme, involving about 380 Armenian young people and youth 
workers in 2011.  

Health  reform  in  Armenia  continued  with  a  view  to  improving,  within  the  limited 
available financial means, access to (in particular for the rural population), availability 
of  and  quality  of  healthcare  services.  The  country  has  introduced  co-payment 
financing  mechanisms 
in  health  care.  State  child  health  voucher/certificate 
programme  has  been  introduced  assuring  free-of-charge  hospital  care  for  children 
under  seven.  Out-of-pocket  payments  remained  significant.  Armenia  launched  the 

16

 
 
development  of  a  health  strategy.  Armenia  continued,  after  a  World  Health 
Organisation review, to address the burden of tuberculosis.  

17