1. Republic of Armenia declared its independence in 1991 stepping into a period of radical and fundamental reforms in political, social and economic systems. Nevertheless, since the very early days of independence Armenia found itself in an extremely difficult situation. In addition to the problems related to break-down of the USSR and structural reforms as well as lack of preparedness of the country's institutions to act in market environment - factors inherent to all other newly independent states - the Government of Armenia had to find solutions for sheltering hundreds of thousands refugees from Azerbaijan, eradication of the Spitak devastating earthquake in 1988, rehabilitation of bordering areas suffered from shelling by Azerbaijan because of the Artsakh conflict, etc. The situation was further aggravated in view of transportation blockade, complete disruption of former economic ties, suspension of activities and liquidation of many industrial enterprises, as well as other destructive factors.

2. These and other negative developments resulted in deep economic and social crisis in the 1990s, one of the most devastating consequences of which was widespread impoverishment of the population, income inequality and polarization of the society of appalling level.

3. The existing poverty and inequality situation gives rise to a number of hazards and threats, which may lead to the following consequences:

(i) Persistence of social polarization in the country may deepen the rupture between various social layers, which in turn jeopardizes socio-economic development of the country and establishment of a strong state, since the perception of national and social interests will gradually fade away;

(ii) High poverty rates hamper establishment of civil society and harmony, hence establishment of a country with domination of rule of law and democracy;

(iii) The multi-thousand group of poor people continues to lag behind general human development regularities, which will result in a degradation of human capital;

(iv) Widespread poverty restricts self-establishment and realization potential due to which the most active part is forced to migrate. Demographic, social and economic consequences of the latter are eye-striking already today;

(v) Persisting impoverishment enhances passiveness, psychological depression, nihilism and pessimism amongst the vast majority of population, as a consequence of which motivation, initiative and participation of the population in social, economic and socio-cultural life of the country reduces to a minimum.

4. All these undoubtedly undermine the foundations of national security. The urgency to address these problems on the part of the society and government has necessitated elaboration and implementation of the Poverty Reduction Strategy Paper.

5. With the objective to prevent the inherent threats and get the vast majority of population out of the existing situation, the PRSP pursues the objective to reduce poverty as a hindrance to economic, social and human development and progress of our country.