Originally posted by Mher
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Re: Armenia's Economic Pulse
A few years back Armenian scientists showed their potential to build solar cells in Armenia with domestic resources. A $5bln NPP deal is of no use for us. A $1bln sollar deal could pretty much revolutionize Armenia. -
Re: Armenia's Economic Pulse
I agree with your conclusions regarding the nuclear plant but a new plant would open up opportunities to export much more energy. Not sure about the cost effectiveness there but it could also substitute hydro power allowing us to conserve our water resources.
As for the overall economy I would say it seems rather resilient given all turmoil that has occurred.Leave a comment:
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Re: Armenia's Economic Pulse
World Bank Sticks To 2016 Growth Outlook For Armenia
Tatevik Danielian
Հրապարակված է՝ 28.04.2016
The World Bank said on Thursday that it has not revised downwards its economic growth forecast for Armenia following this month’s flare-up of violence in the Nagorno-Karabakh conflict zone.
Laura Bailey, the head of the bank’s office in Yerevan, said it continues to expect that the Armenian economy will grow by 2 percent this year.
According to official statistics, the Armenian economy grew by around 3 percent last year despite a drop in domestic consumption resulting from falling remittances from Armenian migrant workers in Russia.
Government data indicates that Gross Domestic Product increased more rapidly in the first quarter of this year on the back of strong performances of the manufacturing and non-trade services sectors. The National Statistical Service (NSS) also recorded a 26 percent surge in first-quarter Armenian exports.
The reported faster growth came was followed by the April 2 outbreak of worst fighting between Armenian and Azerbaijani forces in Nagorno-Karabakh since 1994. Despite being largely stopped on April 5, the hostilities increased the risk of a full-blown Armenian-Azerbaijani war.
Bailey said that long periods of armed conflict usually undermine economic activity by scaring away foreign investors from countries affected by it. “We are not seeing any of those kinds of impact [on Armenia] yet,” she told a news conference.
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Re: Armenia's Economic Pulse
That plant is about 50th in urgency on the list of things our country needs to address. Armenia's soviet apartment buildings that house hundreds of thousands in Yerevan alone were in theory designed for a 6.0 earthquake (on the US scale). They thought the seismic risk of the region was much lower before the Spitak earthquake. In reality, they were built for about a 5.0-5.5 considering the corruption and all.Originally posted by Haykakan View Post
It would take something much larger than that to threaten that plant. So if it was a ever a question of that plant failing, tens if not hundreds of thousands will already be dead. I would love to worry about that plant if Armenia was Sweden. Unfortunately that's not the case, and we have much bigger issuesLast edited by Mher; 04-28-2016, 08:36 PM.Leave a comment:
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Re: Armenia's Economic Pulse
Russian- Armenian philanthropist plans to rehabilitate a settlement near Hadrut
POLITICS 17:43 28/04/2016 NKR
Artsakh Prime Minister received Russian Saint Petersburg resident,
philanthropist Maxim Atayants of Karabakh origin, press department of
the Artsakh Republic government reports.
According to the statement, Atayants has arrived in Artsakh to discuss
the implementation of the rehabilitation program of a settlement near
Araqel community of Hadrut region.
Prime Minister Arayik Harutyunyan welcomed the guest’s initiative to
continue the program during these difficult days for Artsakh. Prime
Minister then expressed confidence Mr. Atayant’s program would give a
new life to the community and positively impact on its development.
The philanthropist informed that two apartments have been built within
the program with number of others to come. The new apartments are to
be allocated to families with many children.
Aside from the houses, infrastructure restoration works and a workshop
are expected to create employment opportunities for the local
resident.
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Re: Armenia's Economic Pulse
Some of this reads like a job application. I guess they are looking for a manager of the fund.Originally posted by Zeytun View PostMetsamor is of course not the safest Nuclear plant, But it has been heavily monitored and updated. We need to build a new one, but disaster can happen, look at Japan one of the most advanced countries and they had to deal with nuclear plant failure.
If someone is interested, this is the Asian Development bank fact sheet for Armenia ( April 2016):
EBRD proposed a new project for 30 million $:
EIB supports the upgrade of M6 INTERSTATE ROAD: From Vanadzor to Bagratashen:
As well as building a new bridge at the border crossing in Bagratashen.Leave a comment:
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Re: Armenia's Economic Pulse
Metsamor is of course not the safest Nuclear plant, But it has been heavily monitored and updated. We need to build a new one, but disaster can happen, look at Japan one of the most advanced countries and they had to deal with nuclear plant failure.
If someone is interested, this is the Asian Development bank fact sheet for Armenia ( April 2016):
EBRD proposed a new project for 30 million $:
EIB supports the upgrade of M6 INTERSTATE ROAD: From Vanadzor to Bagratashen:
As well as building a new bridge at the border crossing in Bagratashen.Leave a comment:
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Re: Armenia's Economic Pulse
Armenia Continues to Gamble on Aging Nuclear Plant in a Quake-Prone Area
04/27/2016 12:36 pm ET | Updated 19 hours ago
Armine Sahakyan
Human rights activist based in Armenia, Columnist with the Kyiv Post
2016-04-27-1461774433-7320367-Metsamor_aerien.jpg
Image: Armenia’s Metsamor nuclear power plant. Photo by Bouarf (CC BY-SA 3.0/Wikipedia)
Armenia was supposed to have a new nuclear power plant this year that would replace one that National Geographic suggested a few years ago was the most dangerous in the world.
The new plant was to have twice the electrical-generating capacity of the current one, allowing Armenia not only to meet its own power needs but to export electricity to neighboring counties.
We’re well in to 2016, and not only is the new plant not operational — work on it hasn’t even begun.
The problem is the $5-billion cost, a staggering amount for Armenia, one of the poorest countries in the former Soviet Union. The price tag equates to double the country’s budget in 2009, the year the government committed to the second plant.
Countries in the South Caucasus and beyond worry about a failure of the current nuclear facility at Metsamor, which became operational in 1976.
It was supposed to have a life span of 30 years, until 2006. Recent upgrades mean the plant can run through 2026, the government has said.
Without money for a new facility, Armenia has no choice but to continue using the old one. It contends that $200 million it has spent to upgrade the facility has made it safe.
Some nuclear experts agree, but some don’t.
Even Armenians who worry about the plant’s safety don’t want to return to the days between 1989 and 1995 when it was shut down after a 1988 earthquake in Gyumri, 48 miles from Metsamor. The quake devastated Armenia’s second-largest city, killing 25,000 and leaving half a million homeless.
Although the plant came through the 1988 quake without a hitch, it is located in an active seismic zone — and many Armenian nuclear officials feared a catastrophe if the next temblor involved a direct hit on Metsamor.
At the time they recommended closing it, Armenia was able to obtain oil and gas from Russia and Turkmenistan for its thermal power plants. The government decided to increase its purchase of those supplies to produce additional power from thermal plants to cover the loss of electricity from the nuclear plant.
The war between ethnic Armenians and Azerbaijan over the Nagorno-Karabakh enclave, which had long been Azerbaijani territory, dashed the thermal-plant plans, however.
That’s because the oil and gas that Russia and Turkmenistan were sending to Armenia came through Azerbaijan, which refused to transport the fuel once the conflict started.
With the nuclear plant shut down and thermal plants unable to be ramped up, Armenians went through the Dark Ages for several years.
Power was available only one hour a day, bringing industry to a standstill and making life at home miserable. “You can imagine—it was as cold in the apartment as it was in the street” in winter, journalist Ara Tadevosyan recalled.
Although a truce in the war was negotiated in 1994, Armenia was still unable to get oil and gas from Russia and Turkmenistan. Azerbaijan demanded nothing less than the return of Nagorno-Karabakh.
Desperate for electricity, Armenia reopened the Metsamor plant — the first time in history that a shuttered nuclear facility had been restarted.
Russia, which had designed and built the plant, helped Armenia refurbish it to prolong its life.
Even so, it was supposed to be decommissioned this year, at the same time that the new plant was to come on line.
The government committed to the new plant in 2009, and began casting about for financing.
At one point, Russia agreed to finance half the $5 billion cost. Talks also were held with the French, who have one of the world’s biggest nuclear-power industries.
But the global financial meltdown that struck in 2008 made it difficult to obtain financing from countries besides Russia, many of whose economies were in the doldrums for years after the crisis.
Armenia had hoped to obtain financing after donor countries got back on their feet, but that hasn’t happened, either.
Even Russia’s help would be problematic at the moment, given plunges in the price of oil, which sustains Russia’s economy, and the ruble since 2014.
So Armenia continues to make due with the Metsamor plant.
The International Atomic Energy Agency has inspected the facility, and declared it safe. But other experts are skeptical.
The big worry is that the plant has no containment building — a steel or concrete shell that would prevent radiation from escaping during an accident.
If a rupture developed in the reactor’s skin, radiation would have to be vented into the air to prevent a build-up of pressure that could trigger a meltdown or explosion.
The longer a nuclear plant operates, the thinner its reactor skin becomes, experts say — and thinner skins are subject to rupture.
A rupture would mean “an open reactor building, a core with no water in it (to cool the reactor) and accident progression with no mitigation at all,” said Antonia Wenisch of the Vienna-based Austrian Institute of Applied Ecology in Vienna.
The stakes in Armenia’s nuclear gamble are high.
An accident at Metsamor would devastate the capital of Yerevan, only 20 miles away and home to a third of Armenia’s population.
It would also render unusable the Aras River Valley, Armenia’s premier agricultural area, where Metasamor is situated.
In addition, radiation would envelop Turkey, whose border is only 10 miles from the nuclear facility, and Armenian neighbors Georgia and Iran.
Despite the danger of an older nuclear plant situated in an earthquake-prone area, Armenians are unwilling to return to the days without electricity, when people died in ice-cold apartments, stripped forest land of trees they could burn, and drew down the water in Lake Sevan to dangerous levels to obtain power from the dam there.
Until the government is able to obtain the financing for a new nuclear plant, Armenia will continue to hope that Metsamor will not fail.
And the region and the world will join Armenians in holding their breath.
Armine Sahakyan is a human rights activist based in Armenia. A columnist with the Kyiv Post and a blogger with The Huffington Post, she writes on human rights and democracy in Russia and the former Soviet Union. Follow her on Twitter at: www.twitter.com/ArmineSahakyannLeave a comment:
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Re: Armenia's Economic Pulse
Russia’s Gas Discount Unlikely to Benefit Armenian Economy
YEREVAN (ARKA)—A 9 percent reduction in the price of Russian natural gas supplied to Armenia is unlikely to have any serious positive impact on the Armenian economy, economy minister Artsvik Minasyan said today.
The agreement to reduce the price for Armenia was signed by the chief of Russia’s Gazprom giant, Alexei Miller, and deputy energy minister Anatoly Yanovsky with Armenian officials in Yerevan during Russian prime minister Medvedev’s visit to Armenia earlier this month.
After the Russian-Armenian talks, Armenian Prime Minister Hovik Abrahamyan told reporters that the wholesale price of Russian gas for Armenia fell from $165 to $150 per thousand cubic meters, however, he would not say whether the price for Armenian consumers would also go down by 9 percent. “We will discuss this issue with relevant bodies and inform our fellow citizens,” he said.
“Any decline in prices is positive, but in this case, a $15 drop can not be considered a serious help to reduce the prime cost of Armenian goods,’ Minasyan told reporters today.
Concerning a possible change in the tariff for end consumers, the minister said the question falls within the competence of the Public Services Regulatory Commission (PSRC) that can start appropriate proceedings on its own initiative or on the basis of an operator application.
“At this moment I have no information that an application was submitted to PSRC for the revision of the tariff, ‘ Minasyan said.
Russia is the main supplier of natural gas to Armenia, delivered by transit through the territory of Georgia.
In addition to gas prices decreasing, Armenia’s jewelry and diamond processing industry is expected to see a more than 30% growth in 2016, Minasyan added, recalling that in 2015, 14.6 billion drams worth jewelry goods were sold. He said if this growth rate continues, in the next three or four years this industry will reach the mid-2000s’ indicators.
He also recalled that in 1970 the total volume of diamond processing in Armenia amounted to 140,000 carats per year, falling to 80,000 carats in the 2000s.
“I want to note that the 30% increase is not so great. Today’s figures are 10 times lower of what we had in the 2000s. Besides, Russia’s precious metals and gems repository Gokhran is opening today its warehouses, which means that our factories will be able to import higher quality diamonds, ‘”said Minasyan.
“For the development of this industry such factors as currency exchange rates, availability of skilled specialists, a platform for the sale of polished diamonds, proper branding and marketing are very important. Armenia-processed diamonds are very competitive in the world,’ Minasyan said.
According to the National Statistical Service, the jewelry production output increased by 61% in 2015 to over 18 billion drams. Nine diamond cutting companies employ a total of 400 people. In 2015, some 152,456.5 carats of diamonds worth about $ 37.1 million were imported to Armenia.
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Re: Armenia's Economic Pulse
Rating Action: Moody's downgrades Armenia's government bond rating to B1, changes the outlook to stable from negative
Global Credit Research - 18 Mar 2016
Frankfurt am Main, March 18, 2016 -- Moody's Investors Service, ("Moody's") has today downgraded Armenia's long-term issuer and senior unsecured debt ratings to B1 from Ba3. Concurrently, Moody's has changed the outlook to stable from negative.
The key drivers for the downgrade to B1 are:
1. Armenia's increasing external vulnerabilities stemming from (a) declining remittances from Russia that have not yet bottomed out, (b) an uncertain outlook for foreign direct investment (FDI) inflows that collapsed in 2015 and (c) an elevated susceptibility to renewed pressures on the local currency and the country's foreign exchange reserves;
2. Armenia's worsening fiscal and government debt metrics and the expectation that Armenia's general-government-debt-to-GDP ratio will rise above 50% in 2017 under the baseline assumption of a growing economy.
The stable outlook reflects Moody's expectation that downside and upside risks to Armenia's credit profile are broadly balanced at the new, lower rating level of B1.
In the same action, Moody's has also lowered Armenia's long-term foreign-currency deposit ceilings to B2 from B1 and the long-term local-currency bond and deposit ceilings to Ba2 from Ba1. At the same time, the long-term and short-term foreign-currency bond ceiling and the short-term foreign-currency deposit ceilings remain unchanged at Ba2/NP and NP, respectively.
RATINGS RATIONALE
RATIONALE FOR DOWNGRADING THE RATING TO B1 FROM Ba3
FIRST DRIVER: ARMENIA'S HIGH DEGREE OF EXTERNAL VULNERABILITY
The first driver for downgrading Armenia's issuer and government bond ratings to B1 (from Ba3) is the country's increasing external vulnerabilities stemming from (a) declining remittances from Russia that have not yet bottomed out, (b) an uncertain outlook for foreign direct investment (FDI) inflows that collapsed in 2015, as well as (c) an elevated susceptibility to renewed pressures on the local currency and the country's foreign exchange reserves.
Russia remains Armenia's largest single export market destination as well as the major originator of gross money transfers (remittances) and FDI inflows into the country. Russia's ongoing economic crisis has not only weighed on Armenia's export sector, but also, and more importantly, depressed domestic private consumption through a drastic decline in remittances from Russia. Remittances from Russia, which had already contracted by 10% in US$ terms or 8.6% in local-currency (Armenian Dram; AMD) terms in 2014, declined by a further 35.6% in 2015 US$ terms (or 26% in AMD terms). Increased remittances from other countries, including the US, were not able to compensate for the deep fall in remittances from Russia. As a result, total gross remittances into Armenia decreased by 23.5% in 2015 in US$ terms (or 12.1% in AMD terms), addition to the contraction of 7.8% (or 6.3%) that had already occurred in 2014.
Despite recent declines, remittances from Russia still account for more than 60% of Armenia's total remittances (or 9.5% of Armenia's GDP). Given Russia's ongoing economic problems, Armenia's remittances will likely decline further this year and continue to depress private consumption. The collapse in FDI inflows also means that Armenia's gross capital formation will remain weak, weighing on the economy in the near term and constraining Armenia's medium-term growth potential. While Armenia's gross capital formation continued to contract for the third consecutive year in 2015 (latest number is as of Q3 2015: -13.2% Y-o-Y), annualized FDI inflows (as measured by the 4 quarter moving sum) decreased by almost 80% Y-o-Y in US$ terms in the third quarter of last year.
Meanwhile, Armenia's gross external debt level has remained high both relative to Armenia's GDP as well as current account receipts, leaving the country vulnerable to a further worsening of external conditions. While Armenia's gross-external-debt-to-GDP ratio increased to more than 80% in 2015 (according to latest available data for Q3 2015) from 73.3% in 2014, the country's ratio of gross external debt to current account receipts rose further to an estimated 168% from roughly 153% in 2014. Although Armenia's external vulnerability indicator (EVI, the ratio of short-term external debt in the previous year plus currently maturing long-term external debt in the current year and total non-resident deposits over one year in the current year to official foreign exchange reserves of the previous year) declined to an estimated 153% for this year -- mainly due to an increase in foreign exchange reserves in 2015 -- from more than 190% in 2014, it remains very high both in absolute terms as well as relative to the median EVI ratios of around 40% and 65% for Ba3 and B1 rated sovereigns, respectively.
SECOND DRIVER: ARMENIA'S WORSENING FISCAL AND GOVERNMENT DEBT METRICS
The second driver captures Armenia's worsening fiscal and government debt metrics in the recent past and the likely upward debt trend trajectory over the coming two years. Armenia's fiscal and government debt metrics are today much weaker than prior to economic crisis in 2009 when the country's construction boom came to an end with real GDP contracting by roughly 14% and the fiscal deficit widening to 7.5% of GDP. Only in 2009, Armenia's government-debt-to-GDP ratio spiked to 40.4% from just 16.4% (+24 percentage points of GDP).
After remaining broadly stable between 2010 and 2014, Armenia's government debt resumed its upward trajectory in 2015, primarily as a result of fiscal easing to support the domestic economy amid severe external headwinds and also because of the debt-raising effects stemming from the currency depreciation on the government's large share of foreign-currency debt. Specifically, the government-debt-to-GDP ratio increased to 48.7% in 2015 from 43.5% in 2014. At the same time, the government-debt-to-revenue ratio rose to around 208% (from roughly 180%). Debt affordability as captured by the ratio of interest payments to government revenues also deteriorated, increasing to 6.5% in 2015, up from 5.2% in 2014. Going forward, Moody's forecasts the ratio of interest payments to government revenues to increase further to around 8.5% in 2016, more than double the level of 2013 (4.2%).
The government will face significant headwinds this year and beyond in its efforts to gradually narrow the fiscal deficit as a result of weakening economic conditions. After benefiting from one-time boosting effects in the agriculture and mining sectors, Moody's expect real GDP growth to decelerate to 2.2% in 2016 (from an estimated 3.0% in 2015) given the ongoing adverse external environment. Beyond this year, economic growth is unlikely to pick up rapidly given the latent and weak recovery expected in its main trading partner, Russia. As a result, the rating agency expects the upward debt trajectory to continue, with the debt-to-GDP to rise above 50% in 2017. Our baseline scenario does not foresee a reversal of this unfavorable trend in the coming years. Therefore, the strength of the government's balance sheet will remain much weaker than in the past, leaving the country more vulnerable to the adverse impact of potential renewed economic shocks in the future.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook reflects Moody's expectation that downside and upside risks to Armenia's credit profile are broadly balanced at the new, lower rating level of B1.
Downside risks mainly relate to worsening economic situation in Russia, which would adversely hit Armenia's economy more sharply than expected, mainly through the remittances, trade and investment channels, and which could prompt significant downward pressures on the local currency and the country's foreign exchange reserves. Moreover, further major downside risks stem from lower prices for Armenia's major commodity export items (such as copper or metals), which would further affect the country's terms of trade. Under this adverse macro-economic scenario, the budgetary and debt trajectory would likely worsen significantly and further erode the country's fiscal strength.
Major upside risks stem from a faster-than-expected improvement in the external environment and the related positive spill-over to the Armenian economy as well as rising prices for Armenia's major commodity export items (such as copper or metals), which would lead to an improvement in the country's terms of trade and would make foreign direct investment into Armenia's commodity sector more attractive. Stronger- than-expected growth could pave the way for more favorable budgetary outcomes and general government debt trends.
WHAT COULD MOVE THE RATING UP
Upward pressures could be exerted on Armenia's issuer and government bond ratings following a reduction in Armenia's high degree of external vulnerability and/or the prospects that Armenia's government-debt-to-GDP ratio will show a firm downward trajectory over the medium term. A reduction in Armenia's external vulnerability could be triggered, for instance, by a faster-than-expected economic stabilization of Russia, Armenia's largest single export market destination and key source of remittances and foreign direct investment, and the related positive spill-overs to the Armenian economy. Also, a decrease in geopolitical risks could lead to upward pressures on Armenia's sovereign bond rating. Furthermore, significant improvements in the country's institutional framework and business environment, sustained economic diversification and a rise in Armenia's medium-term growth potential could create upward pressure on the sovereign rating.
WHAT COULD MOVE THE RATING DOWN
Downward pressures could develop on Armenia's issuer and government bond ratings following a worsening economic situation in the Russian economy, which would adversely hit Armenia's economy more sharply than expected, mainly through the remittances, trade and investment channels, and which could prompt significant downward pressures on the local currency and the country's foreign exchange reserves. Moreover, the rating could come under downward pressures if Armenia's government debt metrics deteriorated faster and more pronounced than expected over the near term and diminishing prospects for an ultimate stabilization and/or reversal of the country's high government debt burden over the medium term. Also, an increase in geopolitical risks, for instance, related to the unresolved conflict with neighboring Azerbaijan over the disputed territory of Nagorno-Karabakh could lead to downward pressures on Armenia's sovereign bond rating.
GDP per capita (PPP basis, US$): 8,164 (2014 Actual) (also known as Per Capita Income)
Real GDP growth (% change): 3.4% (2014 Actual) (also known as GDP Growth)
Inflation Rate (CPI, % change Dec/Dec): -0.1% (2015 Actual)
Gen. Gov. Financial Balance/GDP: -1.9% (2014 Actual) (also known as Fiscal Balance)
Current Account Balance/GDP: -7.3% (2014 Actual) (also known as External Balance)
External debt/GDP: 73.3 % (2014 Actual)
Level of economic development: Low level of economic resilience
Default history: No default events (on bonds or loans) have been recorded since 1983.
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