Re: Armenia's Economic Pulse
ARMENIA: LIKE GREECE, TOO MUCH FOREIGN DEBT?
EurasiaNet.org
Oct 6 2015
October 6, 2015 - 11:41am, by Gayane Abrahamyan
Some economic experts in Armenia are starting to worry: they believe
the Armenian government is taking on too much foreign debt without
clear means to finance it.
For some, Armenia's debt picture is conjuring up images of Greece,
though admittedly on a much smaller scale. The tiny South Caucasus
country's $4.6 billion in foreign debt is just a sliver of that which
EU-member Greece ran up (360 billion euros, or just over $400 billion,
at its height), and Yerevan's predicament has far fewer potential
implications for the international financial system. But on a basic
level, some observers in Yerevan are questioning whether the Armenian
government is following a Greek pattern by using infusions of outside
cash to cover fiscal gaps and postpone economic reforms.
Armenia's foreign debts have increased by roughly 300 percent over
the past seven years, and now account for 46.6 percent of its 2015
Gross Domestic Product of over 4.5 trillion drams ($9.63 billion),
according to the country's Central Bank. The International Monetary
Fund already has expressed concern about that debt load.
"We think that Armenia's external debt is now in the discomfort
range, and the ... government needs to take measures so that the debt
against the GDP index begins to fall," the International Monetary
Fund representative in Armenia, Teresa Sanchez, said in a July 20
interview with the local daily Haykakan Zhamanak.
At nearly $1.6 billion, the World Bank holds roughly 40 percent of
Armenia's foreign debt, the highest portion, the Central Bank states.
The IMF ranks as a distant second, with over $442 million, or about
12 percent of the official total. The Asian Development Bank has
provided $300.6 million, or nearly 8 percent of the load.
Exact figures for all of Armenia's annual interest payments and other
obligations could not be immediately defined. Experts' estimates of
interest payments range from $80 million to $200 million per year.
As was the case in Greece, foreign debt is growing at a faster rate in
Armenia than economic growth. In 2015, debt increased by 10.58 percent,
while export rates have decreased by more than 15.7 percent since 2014,
official statistics show.
The IMF in late September estimated that Armenia's economy will expand
this year by 2.5 percent. Unemployment stands at 18.2 percent of the
estimated working-age population of roughly 2.18 million; unofficial
numbers peg the rate much higher. Nearly a third of Armenia's roughly
3 million inhabitants live in poverty.
Foreign debt, which now outstrips Armenia's state budget by $1.6
billion, according to the Central Bank, was supposed to help put the
country on a sustainable development path, but, so far, the country
has little to show for it, said economist Artak Manukian of the
anti-corruption watchdog Transparency International Armenia.
"The borrowed funds have not boosted the economy at all, not
contributed to the development of promising economic sectors, have not
diversified the economy; hence, there is no stable income," he said.
Only "shopping malls and casinos," rather than "new factories,"
have opened recently.
"The issue is not so much about the size of the debt, as it is
about ...
development opportunities," agreed economist Vilen Khachatrian, a
professor at the Armenian State University of Economics in Yerevan,
the Armenian capital. "Such a speedy increase in foreign debt is a
reason for concern because those funds are used for eliminating the
budget deficit and have become an additional burden unfavorable for
economic growth."
Some observers also voice worry about the way loan money is used. For
instance, a 2014 investigation by the Control Chamber, which monitors
government spending, found that a $13 million World-Bank-financed
project to develop 700 hectares of apricot, peach and walnut orchards
resulted in only four hectares of crops planted. An inquiry into the
use of the loan money remains ongoing.
Beyond the IMF's comments on the debt in July, representatives of
the international financial community have not publicly criticized
the government on the issue.
The World Bank's Yerevan office previously has declined to speak on
topics not covered by its usual scope of research. When queried about
the debt level by EurasiaNet.org at a September 25 news conference,
an IMF representative declined to offer additional comment, and the
IMF did not respond to follow-up inquiries.
The Central Bank did not respond to a request for comment.
Estimates vary about the actual size of Armenia's foreign debt. Former
Prime Minister Hrant Bagratian, an economist and former World Bank
advisor, claims the actual foreign debt is higher than the officially
reported $4.6 billion. Multiple government guarantees for corporate
debt, such as Soviet-era chemical plant Nairit's $450 million
guarantee, add to the debt level, he alleged.
"We have no precise knowledge of the amount of companies' and banks'
foreign debts, which also has to be keyed into the grand total,"
said Bagratian, now an opposition MP.
Officials and governing party politicians downplay the notion that
that Armenia faces any problems from its foreign debt. Gagik Minasian,
the chair of parliament's Standing Committee on Financial Credit
and Budget Affairs, told EurasiaNet.org that the $4.6 billion debt
was a "moderate, manageable amount." In 2015, Armenia will use "only
about 4 percent of its revenues" to meet obligations on that debt,
he estimated.
Editor's note: Gayane Abrahamyan is a freelance reporter and editor
in Yerevan.
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Re: Armenia's Economic Pulse
Digitec 2015 Set To Attract Record Number of Participants
YEREVAN (ARKA)—The 11th Digitec technology exhibition, which will take place in Yerevan on October 2-4, is expected to bring together a record number of participants, Karen Vardanyan, the executive director of the Union of Information Technology Enterprises (UITE), the organizer of the annual event, said today.
Speaking at a news conference, Vardanyan said that 170 companies have confirmed their participation in the exhibition to showcase their products and services. The number is 70% higher from last year’s figure, he said, adding that they expect 40,000 visitors.
“This year we have companies from the U.S., China, Taiwan, Russia, Sweden, Ukraine, Belarus, Georgia and Iran,” said Vardanyan.
Vardanyan said that Armenia’s technological progress has consolidated ethnic Armenians across the globe as well as ethnic Armenian technological leaders. He said that a group of Armenians from the U.S. who will participate in Digitec have already arrived in Yerevan.
Director of Ucom, Hayk Yesayan, said his company, which is a platinum sponsor of Digitec, has prepared surprises for visitors, which they will reveal tomorrow. Yesayan said Ucom has participated in six Digitec exhibitions and believes the event is important as a good platform to speak with Ucom subscribers, understand their problems, and provide them with new ideas and solutions.
The Union of Information Technology Enterprises of Armenia was founded in 2000 to protect the economic interests of information technology companies, to stimulate business development, and promote research in the field of information technology.
Ucom (Universal Communications) founded in 2007, is engaged in providing telecommunications services. With assistance from Ericsson, the company has created a broadband access network, providing Internet services, IP-TV, and fixed telephone services.
http://asbarez.com/140379/digitec-20...-participants/
MICE tourism and Entertainment tourism (concerts, sporting events like marathons and bike races, theater) are definitely the direction Armenian tourism should go in. They attract larger number of people, higher caliber people, for positive causes. Being in the center of the Eurasian continent, there is a competitive advantage.
https://en.wikipedia.org/wiki/Meetin...g,_exhibitionsLeave a comment:
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Re: Armenia's Economic Pulse
This is good news, however one should realize that large infrastructure projects like this do not really benefit the average Armenian. There isn't enough cargo going into and out of Armenia to justify rail. Politically however, it is absolutely necessary to be part of as many big projects that link us to the global supply chain and strengthen our position as a transit country. Partnering with China, Russia, India, the ME, and the EU as an air, rail, and road hub is part of building stronger ties with the International Community. If possible, we should let these countries foot the bill for as many projects as they can.Originally posted by Zeytun View PostThe Silk Road takes a new fork
As China continues to attempt to spread its soft power across developing countries in East Europe, Armenia has become a focus as direct way for Beijing to spread its links to Europe directly.
The most compelling element about Armenia over its counterparts is its favorable geography, which would allow it to function as a unique connecting link not only to Europe but to the Middle East and Asia as China spreads its Silk Road plans across the world.
The country historically was on the original so-called “Silk Road,” the network of roads, trails and tracks for a cavalcade of traders who took silks, spices and other Asian goods over the thousands of kilometers that stretched across Asia and Eurasia eventually to Europe and even London, trading as they went in both directions.
Today the projected revival of the Silk Road put forward by Chinese President Xi Jinping in 2013 has motivated the two countries to deepen bilateral relationships. Over the past decade, much of Central Asia has grown from a marginal position in Beijing’s strategic calculus to the top of its diplomatic priorities: China is fast emerging as a vital economic and political player in this strategically located and resource-rich region. In 2013, Xi visited several Central Asian countries bringing billions in investment.
One of the major projects said to have caught China’s attention is an Armenian-Iran railroad, ostensibly to be funded by the Chinese government. Such an agreement gained credibility after a visit by the Prime Minister of Armenia, Hovik Abrahamyan, to Beijing last week. Abrahamyan came at the invitation of China’s premier, Li Keqiang, to participate in the Euro-Asia Economic Forum taking place September 24-26, in Xi’an, the capital city of northwest China’s Shaanxi province.
Although Armenia and Iran have different religions and controversial general histories stretching back to the Middle Ages and even before, they have been considered to be loyal neighbors for decades. The new railroad between the two countries could increase trade turnover and would have a great impact on their economies as well as China’s.
A preliminary estimate of the expense of building the railroad is approximately US$3 billion. Analysts assigned by Li Keqiang is reportedly now researching projected returns of the project, according to Karen Chshmarityan, Armenia’s Economics Minister, who joined Prime Minister Abrahamyan during his visit to China.
China has its own special economic-political interests in an Armenian-Iran railroad given its ties to Iran in addition to providing a direct rail path to Europe. As for Armenia, it would give the country immediate access to Central Asia and China.
Chinese organizations are also considering involvement in an ongoing Armenian project, the ”North-West road corridor,’ 556 km of freeway which will stretch to the Iranian border. The freeway is designed to deliver goods to the Georgian border, then to Black Sea ports. The budget of the project is estimated at US$1.5 billion. The deadline for completion is 2019. The Armenian government believes the project will improve European-Caucasus-Asian road communication, at the intersection of Western Asia and Eastern Europe. Armenia has been cooperating with the Asian Development Bank. China is not only interested in launching a smooth way for future trading opportunities, but also is motivated in spreading Chinese culture and language in East Europe, especially in Armenia. After ongoing layout process, during this autumn, the construction of the first Chinese school in the region, in Yerevan, is expected to kick off.
The school is designed for 600 students. The school will cost about 8 million USD according to the Minister of Education Armen Ashotyan briefed last year. It will be provided by a hall, museum, theater, and dormitory. In the future, Chinese language may also be on the schedule of secondary school program as a selective foreign language.
China assists also Armenian military field. Based on the memorandum signed by Armenian and Chinese Defense Ministers, in 2013, Republic of China provides Armenia with annual military assistance for 5 million Chinese Yuan.
In the recent years, Chinese government has assisted the economic and social development of Armenia in equipping buses and ambulances, as well as lent one hundred million Yuan financial aid. Overall, as reports armenpress.am, a state news-agency, from 2012 to 2014 Chinese government has donated Armenia 230 million Yuan assistance.
And also, both countries have confirmed their attitude towards each other’s national sensitive issues. Two presidents have announced it during the visit of Serj Sargsyan, President of Armenia, in China,in March, this year. Summarizing the visit, President.am particularly, reported that two sides will not participate in any alliances or coalitions that focus on either the sovereignty, security or territorial integrity of China or Armenia.Leave a comment:
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Re: Armenia's Economic Pulse
The Silk Road takes a new fork
As China continues to attempt to spread its soft power across developing countries in East Europe, Armenia has become a focus as direct way for Beijing to spread its links to Europe directly.
The most compelling element about Armenia over its counterparts is its favorable geography, which would allow it to function as a unique connecting link not only to Europe but to the Middle East and Asia as China spreads its Silk Road plans across the world.
The country historically was on the original so-called “Silk Road,” the network of roads, trails and tracks for a cavalcade of traders who took silks, spices and other Asian goods over the thousands of kilometers that stretched across Asia and Eurasia eventually to Europe and even London, trading as they went in both directions.
Today the projected revival of the Silk Road put forward by Chinese President Xi Jinping in 2013 has motivated the two countries to deepen bilateral relationships. Over the past decade, much of Central Asia has grown from a marginal position in Beijing’s strategic calculus to the top of its diplomatic priorities: China is fast emerging as a vital economic and political player in this strategically located and resource-rich region. In 2013, Xi visited several Central Asian countries bringing billions in investment.
One of the major projects said to have caught China’s attention is an Armenian-Iran railroad, ostensibly to be funded by the Chinese government. Such an agreement gained credibility after a visit by the Prime Minister of Armenia, Hovik Abrahamyan, to Beijing last week. Abrahamyan came at the invitation of China’s premier, Li Keqiang, to participate in the Euro-Asia Economic Forum taking place September 24-26, in Xi’an, the capital city of northwest China’s Shaanxi province.
Although Armenia and Iran have different religions and controversial general histories stretching back to the Middle Ages and even before, they have been considered to be loyal neighbors for decades. The new railroad between the two countries could increase trade turnover and would have a great impact on their economies as well as China’s.
A preliminary estimate of the expense of building the railroad is approximately US$3 billion. Analysts assigned by Li Keqiang is reportedly now researching projected returns of the project, according to Karen Chshmarityan, Armenia’s Economics Minister, who joined Prime Minister Abrahamyan during his visit to China.
China has its own special economic-political interests in an Armenian-Iran railroad given its ties to Iran in addition to providing a direct rail path to Europe. As for Armenia, it would give the country immediate access to Central Asia and China.
Chinese organizations are also considering involvement in an ongoing Armenian project, the ”North-West road corridor,’ 556 km of freeway which will stretch to the Iranian border. The freeway is designed to deliver goods to the Georgian border, then to Black Sea ports. The budget of the project is estimated at US$1.5 billion. The deadline for completion is 2019. The Armenian government believes the project will improve European-Caucasus-Asian road communication, at the intersection of Western Asia and Eastern Europe. Armenia has been cooperating with the Asian Development Bank. China is not only interested in launching a smooth way for future trading opportunities, but also is motivated in spreading Chinese culture and language in East Europe, especially in Armenia. After ongoing layout process, during this autumn, the construction of the first Chinese school in the region, in Yerevan, is expected to kick off.
The school is designed for 600 students. The school will cost about 8 million USD according to the Minister of Education Armen Ashotyan briefed last year. It will be provided by a hall, museum, theater, and dormitory. In the future, Chinese language may also be on the schedule of secondary school program as a selective foreign language.
China assists also Armenian military field. Based on the memorandum signed by Armenian and Chinese Defense Ministers, in 2013, Republic of China provides Armenia with annual military assistance for 5 million Chinese Yuan.
In the recent years, Chinese government has assisted the economic and social development of Armenia in equipping buses and ambulances, as well as lent one hundred million Yuan financial aid. Overall, as reports armenpress.am, a state news-agency, from 2012 to 2014 Chinese government has donated Armenia 230 million Yuan assistance.
And also, both countries have confirmed their attitude towards each other’s national sensitive issues. Two presidents have announced it during the visit of Serj Sargsyan, President of Armenia, in China,in March, this year. Summarizing the visit, President.am particularly, reported that two sides will not participate in any alliances or coalitions that focus on either the sovereignty, security or territorial integrity of China or Armenia.Leave a comment:
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Re: Armenia's Economic Pulse
WORLD BANK APPROVES US$21 MILLION LOAN FOR ARMENIA'S PUBLIC SECTOR MODERNIZATION
10:52, 01 Oct 2015
Siranush Ghazanchyan
The World Bank Board of Executive Directors today approved a US$21
million loan for theThird Public Sector Modernization Project (PSMP
III) for Armenia. This project will further assist the Government
of Armenia in its on-going efforts to improve quality of the public
financial reporting and to improve access to selected enhanced
e-government services.
PSMP III supports three main components: (i) Public Financial
Management Information Systems; (ii) e-Governance Solutions for
Improved Service Delivery; and (iii) Capacity Building and Small
Capacity Building Interventions.
The first component will assist the Government to improve the
efficiency, effectiveness and comprehensiveness of its financial
management and accounting through the development of a Government
Financial Management Information System (GFMIS). The proposed GFMIS
modules will include improvement, among others, in budget planning,
budget execution, public procurement, debt management, accounting,
budget reporting, and the general ledger.
"Strengthening governance through improved public service delivery is
among the priorities for Bank support," said Laura E. Bailey, World
Bank Country Manager for Armenia. "I will particularly highlight
the proposed Citizen-Government Interface for Accountability under
the second project component. This will support the establishment
of feedback mechanisms to facilitate citizen and business access
to government services, address grievances, and monitor client
satisfaction."
The second component will support the implementation of select
priorities as identified in Armenia's e-Governance Strategy. Key
elements will include: development of the enabling environment by
strengthening policy, regulatory frameworks and building institutions
and capacity within the government to undertake introduction of
e-governance platforms, and introduction of foundational platforms
and infrastructure necessary for government-wide e-services.
Other sub-components are focused on developing:e-Transport modules
to improve efficiency and the quality of transportation services in
Yerevan; additional modules to the current e-Consular system, including
a consular registration process for travelers and issuing e-visas;
and upgrading the current e-Licensing system through automation of the
simplified procedure of licenses issued on behalf of the Ministry of
Finance, management of electronic license registry, and streamlined
reports and notifications.
The third component seeks to strengthen the capacity of the Civil
Service Council and Armenian Academy of Public Administration to
modernize the training system for public servants and raise the
quality of trainings.
PSMP III continues the reforms supported under PSMP I and PSMP II
(on-going). PSMP-I, implemented between 2004 and 2011, supported
institutional reforms in the areas of policy formulation, local
government and civil service, together with Public Financial Management
interventions in the areas of public procurement and external and
internal audit.
The World Bank will provide a US$21 million IBRD fixed spread loan
with a 14.5-year grace period and a total repayment term of 25 years.
Since joining the World Bank in 1992 and IDA in 1993, the commitments
to Armenia total approximately US$2,179.730 million.
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Re: Armenia's Economic Pulse
ARMENIA'S BRANDY INDUSTRY CONTINUES FALLING
YEREVAN, September 30. /ARKA/. Armenia's brandy industry keeps falling,
according to the National Statistical Service of Armenia.
Its output shrank 10.7% in Jan-Aug 2015, compared with the same period
a year earlier, to 8, 872,600 liters.
Vodka and beer production fell as well. In particular, vodka output
dropped 6.1% to 5,581,800 liters and beer 12.4% to 16,139,300 liters.
Instead, wine output grew 7.8% to 3,485,200 liters and champagne 6.6%
to 225,000 liters.
According to the statistical report, 50,741,300 liters of soft drinks
were produced in Jan-Aug 2015 - 4.7% more than at the same period a
year before. ---0-----
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Re: Armenia's Economic Pulse
More Competitive: Armenian economy up in WEF’s global rankings
Armenia has improved its position in the Global Competitiveness Index rankings.The World Economic Forum has published the Global Competitiveness Report of 2015-2016, according to which, Armenia has climbed from 85th to 82nd place in rankings.
Like during the previous review, Switzerland, Singapore, and the United States remain in the top three nations on the list of 140.
From neighboring countries Russia has jumped to 45th from 53rd place, but it still continues to yield to its partner Eurasian country Kazakhstan which is in the 42nd place, and China, which is in the 28th position. Azerbaijan lost two points and is now ranked 40th. Turkey likewise has gone down in the rankings. Georgia currently ranks 66th on the list.
The objective the World Economic Forum is to show the advantages of national economies and the factors which hamper those advantages. It is drawn upon the basis of 111 indicators, which are presented in 12 groups.
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Re: Armenia's Economic Pulse
IMF revises upward its outlook for Armenia’s growth in 2015
YEREVAN, September 25. / ARKA /. The International Monetary Fund (IMF) has revised upward its previous forecast of economic growth in Armenia for 2015, Mark Horton, IMF Mission Chief to Armenia, told reporters on Friday.
Mr. Horton said according to an earlier IMF forecast, the economic growth in Armenia in 2015 was to be 1%, but given the GDP growth in the first half and the ongoing trends IMF believes that Armenia will close the year with a 2.5% growth.
He said the growth in the first six months was driven by several factors that are unlikely to repeat in 2016- namely, the commissioning of a new copper mine and a very favorable year for agriculture.
Mr. Horton said the IMF projection is based on GDP growth that accelerated to 4.1% in the first half of 2015 from 2.6% in the same period in 2014. He also said IMF expects the economic growth in 2016 to be 2.2%, a little lower than in 2015.
The IMF Mission Chief to Armenia said the economic slowdown in 2016 will result from high interest rates on loans, lower levels of lending and reduction in the profitability of Armenian banks.
According to him, this suggests the need for aggressive changes in the market, diversification of industries and trade areas. He also singled out Armenia’s efforts to activate trade contacts with the Middle East and China.
At the same time, Mr. Horton pointed out a ‘mysterious’ phenomena, namely high economic growth in the first half and a fairly low level of tax collection, but added this may be conditioned by growth in sectors, which are tax-free or enjoy preferential tax terms – agriculture and services. At the same time, the government can increase tax collection rate through VAT payments by the Eurasian Economic Union, which are paid within 50 days after the import of goods.
The Armenian government’s projection of 2015 GDP growth is 4.1%. The Asian Development Bank (ADB) has downgraded the outlook for growth of Armenia's GDP in 2015 from 1.6% to 1.2%. The World Bank and the Eurasian Development Bank expect it to grow by 0.8%, the EBRD predicts stagnation. In its latest review the Central Bank of Armenia has improved its forecast to 2.1%-2.5%.
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Re: Armenia's Economic Pulse
LI KEQIANG INSTRUCTS TO STUDY TECHNICAL-ECONOMIC FEASIBILITY OF ARMENIA-IRAN RAILWAY CONSTRUCTION
15:03, 25 September, 2015
YEREVAN, SEPTEMBER 25, ARMENPRESS. Li Keqiang, Premier of the State
Council of the People's Republic of China, assigned corresponding
government officials to coordinate with the Armenian party the
activities of Armenia-Iran railway construction, in particular
study technical-economic feasibility, the volume of products to be
transferred via the railway.
Republic of Armenia Minister of Economy Karen Chshmaritian said the
aforementioned during his meeting with the journalists after Government
session, when introducing the results of PM Hovik Abrahamyan's visit
to China.
"It was noted that this is the basic and concrete historical part of
the Great Silk Road. The atmosphere was rather constructive at the
meeting. The cornerstone of the project is to link China with Europe;"
"Armenpress" reports, Karen Chshmaritian said, adding that no deadlines
had been set for the studies of the project. According to Minister,
if the results of the studies are beneficial to the Chinese, China
will finance the railway construction that will cost 3,2 billion USD.
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