As a result of the blockade, Artsakh’s financial and economic losses amount to at least 1.9 million US dollars per day: Report

The blockade of Artsakh by Azerbaijan causes great damage to the economy of the Republic of Artsakh. Total financial and economic losses amount to at least 753 million drams (1.9 million US dollars) per day.

This is stated in the “Evaluation Report on the Economic Loss of Artsakh Due to Blockade,” which was prepared free of charge by a group of professional economists headed by international consultant on public finance management Vardan Aramyan, at the request of the Government of the Republic of Artsakh and former State Minister Ruben Vardanyan.

Aramyan, head of the professional group at Stepanakert’s “Our Mountains” center, and Grigory Martirosyan, head of the “We Are Our Mountains” territorial development agency’s projects in Artsakh, presented the report to the professional community.

The document professionally analyzes and evaluates the areas in which and extent to which Artsakh suffers losses as a result of the blockade, using internationally accepted methodology. The report was also translated into English and Russian in order to demonstrate the severe consequences of Azerbaijan’s actions on Artsakh’s economy to the international community and other interested structures and organizations.

“The estimates of GDP losses, additional social costs, and budget tax losses allow us to form a comprehensive understanding of the socio-economic consequences of the blockade and the financial losses in the conditions of the created crisis. Artsakh’s losses are estimated to be at least 753 million drams (1.9 million US dollars) per day. Moreover, the longer the blockade lasts, the more the indicated indicators will increase, because each additional day of the blockade causes greater damage to the economic potential of Artsakh, and therefore, the costs of restoring the GDP potential are added to the estimated costs and their multiplier effects,” states the report.

The team of economists made their assessments using four approaches, each drawing on different tools. Apart from the assessment of economic costs, an attempt was made to assess the burden of additional social costs, which will inevitably arise as a result of the collapse of economic structures due to unemployment and individuals’ loss of income.

The figures reflected in the report do not include the depreciation of factors of production and the creation of buffers as a result of unfulfilled necessary expenses. However, it is recorded that these two factors will create considerable financial costs for Artsakh’s economy in the future, which may even reach hundreds of millions of dollars.

In order to avoid similar shocks in the future, the report emphasizes the creation of buffers. “Today, it is necessary to form buffers, which in similar cases will make it possible to minimize the social and economic costs to Artsakh’s society. The directions of such expenses can be the creation of additional, alternative sources of energy; the formation of essential food supplies and the construction of warehouses necessary for their storage; the formation of fuel reserves and the creation of new infrastructures for their storage; the formation of essential medical supplies and the necessary warehouses for their safe storage, creation, and so on,” the document states.