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Armenia's Economic Pulse

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  • #51
    Re: Armenia's Economic Pulse

    ARMENIAN MINING GIANT TO START WORK ON MAJOR COPPER DEPOSIT
    By Astghik Bedevian

    Radio Liberty, Czech Rep.
    Oct 2 2007





    A leading Armenian mining company said on Tuesday that it is pressing
    ahead with the development of a massive copper and molybdenum
    deposit in the country's north despite strong resistance from local
    environmentalists.

    Gagik Arzumanian, chief executive of the Armenian Copper Program (ACP),
    was confident that the Liechtenstein-registered company will soon get
    final government clearance to start work on the Teghut deposit. He
    said it is already making preparations for open-pit operations in
    the wooded area estimated to contain 1.6 million tons of copper and
    about 100,000 tons of molybdenum.

    "We know of no circumstances that can call into question the project's
    implementation," Arzumanian told RFE/RL.

    Buoyed by record-high international prices for non-ferrous metals,
    ACP plans to spend $270 million on turning the wooded area located
    in the northern Lori region into a huge mine. It intends to extract
    more than 30,000 tons of copper and molybdenum ores there per annum
    starting from 2012.

    The project, if implemented, will lead to the destruction of 357
    hectares of rich forest, including 128,000 trees. Hence, the outcry
    it has sparked among Armenian environment protection groups. They say
    that the Teghut mine would wreak further havoc on Armenia's forest
    that have already shrunk dramatically since the 1990s.


    Hakob Sanasarian of the Armenian Union of Greens warned on Tuesday
    that crop-growing and other agricultural activity in the area close
    to Georgia would also be hit hard. "Even in nearby forests, which
    are not supposed to be chopped down, it will be dangerous to collect
    fruits and berries," he said.

    ACP admits the heavy environmental cost of its plans but says it will
    be more than offset by 1,400 new jobs which it has pledged to create in
    the economically depressed area. The company has also pledged to build
    new schools and make other investments in the local infrastructure.

    The Armenian government clearly accepts ACP's arguments, with the
    Ministry of Environment formally giving its mandatory go-ahead to
    the Teghut project earlier this year.

    "It is beneficial for the state because new jobs will be created, more
    taxes will be paid to the state budget, and local infrastructure will
    be upgraded," said Gagik Haroyan, a senior official at the ministry's
    Geological Agency. "If there is a deposit of natural resources,
    it must be exploited."

    Non-ferrous metals and ores are currently Armenia's main export
    products. The local mining sector is dominated by ACP and the
    German-owned Zangezur Copper-Molybdenum Plant operating in the
    southeastern Syunik region.


    http://www.armenialiberty.org/armeni...ADDBB4C0E6.asp

    ..........



    THE START OF EXPLOITATION OF TEGHUT COPPER-MOLYBDENUM DEPOSIT IN ARMENIA REQUIRES $ 150MLN, A SPECIALIST THINKS

    ArmInfo News Agency, Armenia
    Oct 9 2007

    ArmInfo. The start of exploitation of Teghut copper-molybdenum
    deposit in the North of Armenia requires $ 150mln, as a minimum,
    the Head of the Department of Nature Utilization Economy and Mining
    Industry of the Armenian Ministry of Trade and Economic Development
    Artur Ashoughyan said at a press conference, Tuesday.

    According to him, years will pass before the investor starts to make
    profit from the deposit's exploitation. He named Teghut a difficult
    deposit in view of complete absence of ways of communication. Teghut is
    the second largest copper and molybdenum deposit in Armenia following
    the one in Kajaran. However, there are no roads, power transmission
    lines, dams, tailing damps and other necessary ways of communication
    there, he said. A. Ashoughyan thinks it necessary to implement this
    project, which may create a sufficient raw material base in Armenia
    and ensure development of the mining sphere.

    To note, the Russian Vneshtorgbank-VTB (Bank for Foreign Trade) is
    ready to grant a credit of $200mln to Armenia Copper Programme (ACP)
    for commissioning Teghut deposit. Gaining of credit will make it
    possible to mine and process 7mln tons of ore from Teghut deposit,
    annually. Teghut deposit is promising and it is the second with
    its copper and molybdenum reservoirs in Armenia following the one
    in Kajaran. The approved reserves make up 1,6mln tons of copper and
    99 000 tons of molybdenum. The contents of copper in a ton of ore is
    0,4% and in the concetrate-33%. The contents of molybdenum in a ton
    of ore is 0,02%, and in the concentrate-51%".

    http://www.arminfo.info/index.php?sh...13300_eng_4373
    What if I find someone else when looking for you? My soul shivers as the idea invades my mind.

    Comment


    • #52
      Re: Armenia's Economic Pulse

      Energy Production & Trade




      Energy Production

      GAZPROM INTERESTED IN RUSSIA-ARMENIA-IRAN OIL REFINERY

      Tehran Times
      Oct 11 2007
      Iran

      Gazprom said it is still positive about joint project between Russia,
      Iran, and Armenia to construct an oil refinery in Armenia.

      Gazprom Neft - the oil arm of Russian energy company Gazprom - is
      reportedly considering an investment of $1.7 billion to build the
      joint oil refinery, which would process oil pumped from Tabriz in
      northern Iran, "The Messenger" reported.

      Gazprom officials say it will process 5-6 million tons of oil
      annually. Some would be used by Armenia; most would be shipped back
      to Iran.

      Valery Golubev, head of Gazprom's Investment and Construction
      Department, commented that the project is still in the offing but an
      appropriate 400 hectare site for the refinery has not yet been found.

      Some Russian commentators suggest the project is motivated by political
      rather than financial interests, as usually the most economically
      productive location for an oil refinery is near a major pipeline
      route or at a seaport.

      However, Gazprom replies that with effective management, the refinery
      could be economically profitable and may offer competition for
      Azerbaijan, the main oil exporter in the South Caucasus.

      However, Regnum reports Gobulev as saying, "Building an oil refinery
      in Armenia is interesting for Gazprom from the geopolitical point
      of view."

      http://www.tehrantimes.com/index_View.asp?code=154756

      Lragir, Armenia
      Oct 19 2007

      OIL REFINERY COSTS 1.7 BILLION DOLLARS

      The technical feasibility and economic justification of the oil
      refinery in Armenia will be offered in November 2007, said the
      Armenian minister of energy Armen Movsisyan.

      The refinery will be built in Meghri. Russia and Iran said likely to
      participate in this project. The plant will refine up to 7 million
      metric tons of oil annually and costs 1.7 billion dollars. Another
      one billion dollars will be spent on transportation infrastructure.

      http://groong.usc.edu/news/msg207324.html


      INTERNATIONAL CONFERENCE ON GEOTHERMAL ENERGY LAUNCHED IN YEREVAN

      ARKA News Agency, Armenia
      Oct 18 2007

      YEREVAN, October 18. /ARKA/. International conference focused on
      geothermal energy and its development prospects in Armenia launched
      on Thursday in Yerevan.

      Radik Martirosyan, president of Armenian National Academy of
      Sciences, said at the opening ceremony that the event's aim is to
      make Armenian entrepreneurs familiar with international experience
      of using geothermal energy.

      "Development of alternative energy sources is a quite pressing
      problem to Armenia because of own organic energy resources shortage",
      Martirosyan said.

      French Ambassador to Armenia Serge Smessov stressed the importance
      of geothermal energy because of the necessity of alternative energy
      sources.

      "Development of alternative energy sources is very important to
      Armenia, which has no own energy resources", he said.

      He said that France has a rich experience in this area, which can be
      applied also in Armenia.

      The ambassador expressed hope that Armenia's cooperation with French
      specialists will enlarge room for developing geothermal energy and
      putting all plans into practice.

      This two-day conference is organized by Armenian Energy Ministry
      along with French Embassy in Armenia.

      Participants of the event will discuss international experience and
      outline geothermal energy exploitation prospects in Armenia.

      Armenia conducted geothermal researches yet in 60s and embarked on
      intensive search in 1978.

      Hakavan-Zangezur volcano-rich areas are being explored now.

      The researches conducted over the period between 1980 and 1988 laid
      ground for assumption that magma source may be found here in 1500-
      to 2000-meter depth.

      http://www.arka.am/eng/energy/2007/10/18/6648.html



      Russia & CIS Business and Financial Newswire
      October 18, 2007 Thursday 6:55 PM MSK

      Feasibility study for new Armenian NPP to be ready by next summer

      Armenia is planning to build a new nuclear power plant and put it
      into operation by 2016-2017, Armenian Deputy Energy Minister Areg
      Galstian told an international energy conference in Yerevan on
      Thursday.

      The conference was devoted to Armenia's geothermal energy potential.

      The technical and economic feasibility study for the new NPP will be
      ready by mid-2008, and after that, technical requirements for the
      plant's construction will be developed, Galstian said.

      A new 1,000-megawatt power generating unit will be built on the
      territory of the existing NPP, which is to be shut down by 2016, he
      said.

      http://groong.usc.edu/news/msg207404.html



      ARMENPRESS

      ARMENIA TO HAVE TWO MORE WIND POWER PLANTS

      YEREVAN, OCTOBER 19, ARMENPRESS: An Italian and an
      US-based companies are set to launch construction of
      two wind power plants in Armenia in 2008, deputy
      energy minister Areg Galstian said yesterday.
      The deputy minister was speaking at an
      international conference in Yerevan on geo-thermal
      power potential of Armenia.
      He said one of the plants with a capacity of 90
      megawatt will be constructed in Karakhach and the
      second with a capacity of 25 megawatt in Sotk.
      Armenia has one wind power plant built by the
      Iranian Sanir company. It comprises 4 units each
      offering 660 kW of electricity. The plant is located
      in north eastern Armenia. The government of Iran
      donated $3.5 million to build it.
      Galstian also said the nuclear power plant in
      Metzamor will be shut down in 2016, but he added that
      the government plans to build a modern nuclear power
      plant instead with a capacity of 1,000 megawatt.

      http://www.armenpress.am/eng/news/econom.htm






      Energy Trade

      ARMENIAN-RUSSIAN GAS COMPANY PLANNING TO EXPORT ELECTRICITY

      ArmInfo, Armenia
      Sept 12 2007

      Yerevan, 12 September: The HayRusgazard closed-type joint-stock company
      is not just a gas company, it also intends to take an active part in
      the electricity business in the region, the chairman of the council
      and general manager of HayRusgazard, Karen Karapetyan, told a news
      conference today.

      He said that Armenia is pursuing a liberal policy with regard to power
      export to neighbouring countries that experience a shortage of power.

      The second Iran-Armenia gas pipeline is being built in Armenia as an
      alternative to the northern main gas pipeline, which creates extra
      energy in the republic.

      "We have acquired Hrazdan-5 [power station] and are planning to
      export electricity," Karapetyan said. He added that the company has
      been exporting electricity to Georgia since 2002.

      We should recall that Armenia stopped exporting electricity to Georgia
      last year because Georgia does not need it and has its own resources.

      Moreover, the price of power export from Armenia has risen due to
      the strengthening of the dram [national currency].

      http://www.redorbit.com/news/busines...ity/index.html


      RUSSIA, ARMENIA TO COOPERATE IN ENERGY SPHERE

      ITAR-TASS News Agency
      September 25, 2007 Tuesday

      Russia and Armenia have agreed to cooperate in the energy sphere.

      Russian Prime Minister Viktor Zubkov told reporters after his talks
      with Armenian Prime Minister Serzh Sarkisyan in Moscow on Tuesday
      that the two countries have a "clear energy programme, and a fairly
      reliable relations have formed in this field".

      "Armenia already has excess production of energy, in which it can
      trade," Zubkov said.

      The two countries' cooperation is promising in the construction of a
      nuclear power plant and the modernisation of already existing energy
      reactors, he said.

      "All this will be a strong stimulus for Armenia for development and
      trade with other countries. The country can make big money on that."

      Sarkisyan said the "biggest hindrance to cooperation is a lack of
      convenient transportation communications".

      "The liquidation of this limitation could strongly increase our trade,
      the growth of which has been 72 percent over the first half of this
      year," he said.

      "Armenia is buying a lot of oil products not in Russia, but in other
      places, even though raw materials are Russian."

      This occurs because of a lack of transportation links.

      Their development would lead to a "sharp increase in trade",
      Sarkisyan said.

      http://groong.usc.edu/news/msg203678.html
      What if I find someone else when looking for you? My soul shivers as the idea invades my mind.

      Comment


      • #53
        Re: Armenia's Economic Pulse

        AGREEMENT ON SALE OF ARMENIAN STOCK EXCHANGE AND DEPOSITORY TO BE SIGNED IN LATE OCTOBER OR EARLY NOVEMBER
        Author: Karapetian Rita Editor: Eghian Robert

        Noyan Tapan News Agency
        Oct 10 2007
        Armenia

        YEREVAN, OCTOBER 10, NOYAN TAPAN. The amendment to the Law on
        Securities Market will provide the Armenian government with a
        legislative opportunity to sign an agreement on sale of the Armenian
        stock exchange and depository with Swedish-Finnish company OMX AB.

        The chairman of the Central Bank of Armenia (CBA) Tigran Sargsian told
        this to reporters at the end of the discussion of the bill on the
        amendment to the indicated law and the legislative package related
        to it at the RA National Assembly on October 10. According to him,
        the agreement will be signed in late October and early November -
        immediately after the law will come into force.

        "Following this, the stock exchange business will be conducted by
        market rules in Armenia. It means that we open the way for foreign
        investors, allowing them to make investments and develop the stock
        exchange and the depository in our country," the CBA chairman stated.

        At the same time T. Sargsian pointed out that there are many norms
        used in international practice which have not yet been included in
        the law. In his words, the Law on Securities Market will be improved
        step by step: in 2008, a new legislative package will be submitted
        and an attempt will be made to use new mechanisms and principles in
        parallel with developing the market.

        On the same day the National Assembly discussed in second and third
        reading the indicated legislative package, whose adoption will be
        voted on soon.
        ......


        CENTRAL BANK KEEPS CONFIDENTIALITY OF TALKS WITH SWISS OMX STOCK OPERATOR

        ArmInfo Agency, Armenia
        Oct 10 2007

        ArmInfo. Because of confidentiality Armenian Central Bank does not
        want to divulge the details of the of talks with Swiss OMX stock
        operator, as a result of which the latter will become the owner of
        Central Depository and ArmEx, chairman of Armenian Central Bank Tigran
        Sarkisyan told journalists and added that they will inform about the
        final results of the talks.

        To note, according to the signed Memorandum, ArmEx and Central
        Depository should come forward as a commerce organization but not
        self-regulated organizations. The new status will make attracting of
        foreign investments possible. For this reason there is a necessity
        of changing of the acting legislation of Armenia with an accent of
        its transmission to the European model of funds market regulation, in
        particular experience of Estonia and Slovenia was used. As a result
        several points appeared in the law according to which regulation
        of funds market will be more effective and flexible, which will
        make it possible to integrate Armenian finance market with the
        stocks of European states. In particular, OMX will give to Armenian
        company-emitters access to international capital without the listing
        process out of the country

        http://www.arminfo.info/index.php?sh...31600_eng_4395
        What if I find someone else when looking for you? My soul shivers as the idea invades my mind.

        Comment


        • #54
          Re: Armenia's Economic Pulse

          ARMENIA A MODEL FOR DEVELOPING NATIONS

          BusinessWeek
          http://www.businessweek.com/globalbi...ge_top+stories
          Oct 23 2007

          Economic reform and investment by Armenian expatriates have helped
          the country boost GDP by more than 10% a year for a decade by S. Adam
          Cardais

          To appreciate just how far Armenia has come in the last 15 years,
          it helps to imagine yourself living through an Armenian winter in
          the early 1990s.

          It's the middle of January, it's five degrees below zero, and you
          and your family have only two hours of electricity a day -- such
          was the abysmal state of the energy sector in a country crippled by
          the dissolution of the Soviet Union, a traumatic earthquake in 1988,
          and war with neighboring Azerbaijan.

          But Armenia has been "radically transformed," in the words of one
          World Bank official, since its independence from the former Soviet
          Union. Today, the average Armenian has electricity around the clock.

          An influx of cash and a series of reforms have taken Armenia from
          economic basket case, with GDP plummeting 50 percent between 1990
          and 1993, to "Caucasian tiger," to quote a World Bank report issued
          earlier this year. It has become a model transition economy that
          should continue prospering with a second wave of reforms.

          GDP has increased more than 10 percent a year for a decade largely
          thanks to robust investment in a booming construction industry by the
          Armenian diaspora in Europe and the United States. Sharp growth in the
          services sector, including the financial sphere, and retail trade are
          also contributors, according to the European Bank for Reconstruction
          and Development.

          "Given the fact that it doesn't have natural resources, its growth is
          quite impressive," says Heike Harmgart, country economist for Armenia
          at the EBRD.

          And the most laudable aspect of that growth, World Bank economist
          Aristomene Varoudakis says, is "that macroeconomic stability has
          been preserved. Inflation has remained low," between 3 percent and
          4 percent. Last year was an exception to this trend, with inflation
          climbing to 5.6 percent, but the International Monetary Fund forecasts
          a fall to 4 percent in 2007.


          REFORMS REAP REWARDS

          This fiscal discipline is an indication the government has backed
          up the bountiful diaspora remittances, which are more good fortune
          than anything else, with sound policy. Indeed, remittances alone
          don't make Armenia a model transition economy. A series of early,
          sustained governmental reforms enabled the country to capitalize on
          the cash inflow.

          For instance, the government eliminated wage controls and privatized
          the majority of land and small businesses in the mid 1990s to encourage
          investment in construction and other sectors. The central bank has
          also been a key reformer, streamlining its operations and improving
          supervision over the banking industry to spur a dynamic financial
          services sector in a short period.

          More recently, a new credit bureau to bolster small business lending
          and a modernized bankruptcy law have further improved the investment
          climate, two reasons Armenia ranks 39th out of 178 economies in the
          World Bank's "Doing Business 2008" report.

          On all of these reforms, Armenia has been wise to cooperate closely
          with international institutions such as The World Bank and the IMF.

          "The Armenian government has been listening to institutions very well,
          which is positive," Harmgart says. "The government has always been
          open minded."

          It would be hard to overstate the benefit this economic revolution
          has brought the population. According to the World Bank report, the
          poverty rate has fallen from more than 55 percent in the early 1990s
          to 30 percent. Extreme poverty had dropped to 5 percent two years ago.


          GENTRIFYING NEIGHBORHOOD

          The good news for the region is that Armenia's prosperity isn't
          unique. Georgia's economy is growing at just under 10 percent and is
          one of the leading reformers in the world, at No. 18 on the "Doing
          Business 2008" report. Azerbaijan posted a whopping 34.5 percent GDP
          growth in 2006 thanks to its thriving oil industry.

          As in these countries, though, there's still a lot of progress to
          be made in Armenia. Tax evasion remains rampant. It's extremely
          costly for an individual or business to file taxes, and tax revenues
          are only 15 percent of GDP, one of the lowest rates in the region,
          resulting in less money for strengthening the economy or fighting
          poverty through spending on education or health care.

          The government is trying to increase tax compliance by introducing
          a system that allows payers to submit their returns by post or
          electronically, publishing a list of the country's largest contributors
          in a sort of ego-driven motivator, and opening specialized collections
          units, but more progress is needed.

          Corruption, though becoming less pronounced, is also a major concern,
          as is Armenia's over-reliance on the construction industry. Though
          analysts predict Armenia will sustain double-digit growth in the short
          and medium term, it has to begin diversifying its economy by making
          trade more dynamic and attracting new knowledge-based investments,
          such as IT companies.

          Reforms in corporate transparency, competition, and education will be
          central to realizing this goal, but "these are more complex reforms
          than the first round," Varoudakis points out.

          Armenia has without a doubt taken great strides, but nothing highlights
          progress like starting from nothing. If the country wants to remain a
          "Caucasian tiger," it had better prioritize these difficult reforms
          now.

          These will take a lot longer than turning on the power.
          What if I find someone else when looking for you? My soul shivers as the idea invades my mind.

          Comment


          • #55
            Re: Armenia's Economic Pulse

            DRAM VALUATION GROWS DEEPER
            Vasak Tarposhyan

            Hayots Ashkharh Daily
            Oct 23 2007
            Armenia

            After the stabilization recorded in summer, during the last month
            the process of the valuation of dram resumed.

            Though it deteriorated for a while, when it was 342 against dollar,
            nevertheless it lasted for some days, immediately after which the
            strengthening of dram resumed. This tendency grew deeper particularly
            during the recent week and at present the exchange rate of dram against
            dollar fluctuates between 320-325. That is to say in one week national
            currency became stronger by 13 drams. For a long period of time it
            was stable (337-338 drams).

            We should underscore that such an exchange rate of dollar has been
            recorded in Armenia in 1994, 10 months after putting the national
            currency into circulation.

            Besides dollar, dram has been valuated against other currencies as
            well. This means the process of strengthening the national currency
            is on.

            The regular stage of the valuation of dram started after the abrupt
            growth of the prices of certain goods.

            Similar manifestations created serious risks in terms of the provision
            of the anticipated level of the growth of prices. Moreover because the
            growth of price coming from external factors are still preserved. And
            there are very little chances to stop this tendency in Armenia. The
            law on the protection of economic competition doesn't work and this
            consequently creates serious problems in the provision of stability
            of prices.

            Perhaps it was not accidental that in October Central Bank had to
            increase the refinancing interest rate to alleviate the existing
            risks of the growth of prices. After adopting the policy of planning
            the growth of prices, the change of refinancing interest rate is a
            so-called influencing factor on the financial market. By this the
            Central Bank gives certain signals to the participants of the market.

            In this case the increase of the refinancing interest rate means
            increase of the price of dram.

            In parallel with this shares were released two times, last week.

            Thus as we know the Central Bank involved additional sum of dram. The
            reduction of the sum of dram, particularly in the condition of the
            increase of currency means, naturally leads to the strengthening of
            the national currency. Whereas unlike the refinancing interest rate,
            the influence of releasing shares, on the currency market is expressed
            in a very short period of time.

            On the other hand, but for the tendencies of the strengthening of dram
            during the recent days, the situation in the foreign exchange market is
            rather quiet. Usually in such cases the deals in the foreign exchange
            market liven up. Whereas from October 15-21 only 4,4 million dollars'
            sale - purchase was realized here. During some bargaining processes the
            deals made up 300 - 350 thousand dollars, a very low index. Similar
            passiveness is a very rare phenomenon in this market. During those
            days the average deals in the foreign exchange market made up 600
            thousand dollars.

            The deals of the foreign exchange market become active particularly
            when the central Bank partakes in the bargaining process. That is
            to say, during the pervious days Central Bank manifested a neutral
            stance towards the market. What was it that led to the strengthening of
            dram? It is not a secret that in the condition of a big flow of dollar
            and a certain sum of dram time after time Central Bank involves dollar
            from the market, not to allow further strengthening of dram. Though
            during the recent days dram became stronger with 9-10 units Central
            Bank preferred not to interfere in the market processes.

            The foreign exchange market became active on October 22. That day the
            volume of sale and purchase was almost two times more (8 million 150
            thousand drams).

            Of course even this abrupt interference didn't lead to stopping the
            valuation of dram, it continued on October 23.

            Anyway the activeness of the foreign exchange market will preserve
            during the coming two three days, after which the exchange rate of
            dram will become stable.

            http://www.armtown.com/news/en/has/20071024/198565433
            ......


            MONEY REMITTANCES TO ARMENIA IN NINE MONTHS REACH $1.2 BILLION

            ARMENPRESS
            Oct 11 2007

            YEREVAN, OCTOBER 11, ARMENPRESS: Money remittances from Armenians
            working in Russia, USA and other countries to relatives in Armenia
            in January -September of this year rose almost 30 percent from a year
            ago to $1.2 billion.

            These figures were unveiled today by Armenian Central Bank governor
            Tigran Sarkisian, who spoke at the opening of an international
            conference on retail banking services in Yerevan.

            Sarkisian said the Central Bank forecast was a 10 percent growth. The
            bulk of money transfers- 70 percent- are coming from Russia.

            Sarkisian said handling money remittances have become a very lucrative
            business in Armenia. Unlike Armenia, money remittances to Russia
            make annually some $700 million while transfers from Russia reach
            $3 billion, according to Garegin Tosunian, chairman of the Union of
            Russian Banks.

            According to Tigran Sarkisian, local commercial banks have earned
            8.5 billion Drams this year from providing money transfer services,
            by 2 billion drams more form a year ago. He said also no bank is
            dominating in this sector and because of competition the banks have
            to lower their commission charges.

            http://groong.usc.edu/news/msg205810.html
            What if I find someone else when looking for you? My soul shivers as the idea invades my mind.

            Comment


            • #56
              Re: Armenia's Economic Pulse

              ROARING AHEAD: HOW HAS ARMENIA MANAGED TO SLASH ITS POVERTY RATE AND BECOME A MODEL FOR OTHER DEVELOPING NATIONS?
              by S. Adam Cardais

              Transitions Online, Czech Republic
              Oct 23 2007

              To appreciate just how far Armenia has come in the last 15 years,
              it helps to imagine yourself living through an Armenian winter in
              the early 1990s.

              It's the middle of January, it's five degrees below zero, and you
              and your family have only two hours of electricity a day - such was
              the abysmal state of the energy sector in a country crippled by the
              dissolution of the Soviet Union, a traumatic earthquake in 1988,
              and war with neighboring Azerbaijan.

              But Armenia has been "radically transformed," in the words of one
              World Bank official, since its independence from the former Soviet
              Union. Today, the average Armenian has electricity around the clock.

              An influx of cash and a series of reforms have taken Armenia from
              economic basket case, with GDP plummeting 50 percent between 1990
              and 1993, to "Caucasian tiger," to quote a World Bank report issued
              earlier this year. It has become a model transition economy that
              should continue prospering with a second wave of reforms.

              GDP has increased more than 10 percent a year for a decade largely
              thanks to robust investment in a booming construction industry by the
              Armenian diaspora in Europe and the United States. Sharp growth in the
              services sector, including the financial sphere, and retail trade are
              also contributors, according to the European Bank for Reconstruction
              and Development.

              "Given the fact that it doesn't have natural resources, its growth is
              quite impressive," says Heike Harmgart, country economist for Armenia
              at the EBRD.

              And the most laudable aspect of that growth, World Bank economist
              Aristomene Varoudakis says, is "that macroeconomic stability has
              been preserved. Inflation has remained low," between 3 percent and
              4 percent. Last year was an exception to this trend, with inflation
              climbing to 5.6 percent, but the International Monetary Fund forecasts
              a fall to 4 percent in 2007.

              REFORMS REAP REWARDS

              This fiscal discipline is an indication the government has backed
              up the bountiful diaspora remittances, which are more good fortune
              than anything else, with sound policy. Indeed, remittances alone
              don't make Armenia a model transition economy. A series of early,
              sustained governmental reforms enabled the country to capitalize on
              the cash inflow.

              For instance, the government eliminated wage controls and privatized
              the majority of land and small businesses in the mid 1990s to encourage
              investment in construction and other sectors. The central bank has
              also been a key reformer, streamlining its operations and improving
              supervision over the banking industry to spur a dynamic financial
              services sector in a short period.

              More recently, a new credit bureau to bolster small business lending
              and a modernized bankruptcy law have further improved the investment
              climate, two reasons Armenia ranks 39th out of 178 economies in the
              World Bank's "Doing Business 2008" report.

              On all of these reforms, Armenia has been wise to cooperate closely
              with international institutions such as The World Bank and the IMF.

              "The Armenian government has been listening to institutions very well,
              which is positive," Harmgart says. "The government has always been
              open minded."

              It would be hard to overstate the benefit this economic revolution
              has brought the population. According to the World Bank report, the
              poverty rate has fallen from more than 55 percent in the early 1990s
              to 30 percent. Extreme poverty had dropped to 5 percent two years ago.

              GENTRIFYING NEIGHBORHOOD

              The good news for the region is that Armenia's prosperity isn't
              unique. Georgia's economy is growing at just under 10 percent and is
              one of the leading reformers in the world, at No. 18 on the "Doing
              Business 2008" report. Azerbaijan posted a whopping 34.5 percent GDP
              growth in 2006 thanks to its thriving oil industry.

              As in these countries, though, there's still a lot of progress to
              be made in Armenia. Tax evasion remains rampant. It's extremely
              costly for an individual or business to file taxes, and tax revenues
              are only 15 percent of GDP, one of the lowest rates in the region,
              resulting in less money for strengthening the economy or fighting
              poverty through spending on education or health care.

              The government is trying to increase tax compliance by introducing
              a system that allows payers to submit their returns by post or
              electronically, publishing a list of the country's largest contributors
              in a sort of ego-driven motivator, and opening specialized collections
              units, but more progress is needed.

              Corruption, though becoming less pronounced, is also a major concern,
              as is Armenia's over-reliance on the construction industry. Though
              analysts predict Armenia will sustain double-digit growth in the short
              and medium term, it has to begin diversifying its economy by making
              trade more dynamic and attracting new knowledge-based investments,
              such as IT companies.

              Reforms in corporate transparency, competition, and education will be
              central to realizing this goal, but "these are more complex reforms
              than the first round," Varoudakis points out.

              Armenia has without a doubt taken great strides, but nothing highlights
              progress like starting from nothing. If the country wants to remain a
              "Caucasian tiger," it had better prioritize these difficult reforms
              now.

              These will take a lot longer than turning on the power.

              S. Adam Cardais, a former business editor at The Prague Post, is a
              freelance journalist based in Berlin.

              http://www.ceeol.com/aspx/issuedetai...e-3845acad9a63
              What if I find someone else when looking for you? My soul shivers as the idea invades my mind.

              Comment


              • #57
                Re: Armenia's Economic Pulse

                EASING ARMENIA'S TRANSITION TO A MARKET ECONOMY

                World Bank Group, DC
                http://web.worldbank.org/WBSITE/EXTE...:73154,00.html
                Nov 19 2007

                With independence in 1991, Armenia suffered a severe economic
                contraction. Between 1990 and 1993, GDP dropped by more than 50
                percent. This led to hyperinflation, a budget deficit that reached a
                high of 55 percent, factory closures, little electricity supply, and
                large-scale emigration. About 80 percent of the population survived
                on humanitarian assistance and more than half the population lived
                below the poverty line.

                A series of 10 projects-spanning a dozen years-supported Armenia's
                economic reform program to restore and maintain macroeconomic
                stability, create conditions for economic growth, and improve
                living conditions. These broad areas would form the foundation for
                the transformation of the economy from a centralized model to a
                market-based one. The program included a rehabilitation credit for
                1995-1996, five structural adjustment credits between 1996 and 2004,
                two structural adjustment technical assistance credits between 1996
                and 2002, and two poverty reduction support credits beginning in
                2004 and ongoing. The technical assistance projects supported the
                implementation of the eight adjustment operations by providing the
                necessary expertise for strengthening institutions.

                Over this 12-year period, Armenia has achieved spectacular income
                growth - by about 10 percent on average per year, rising to 13-14
                percent in 2005 and 2006 - and poverty reduction - from 56 percent
                in 1998 to 30 percent in 2005.

                Highlights: Financial Discipline and Public Sector Management -
                Economic stabilization: inflation fell to 0.6 percent in 2005 from 176
                percent prior to the adjustment program; the budget deficit fell from 9
                percent to 1.9 percent; growth has averaged about 10 percent per year.

                - Improving budget management through the adoption of a rigorous
                medium-term expenditure framework to manage the scaling-up of sector
                reforms.

                - Improving customs and tax administration and broadening the tax base.

                - Improved payment discipline in energy: collections increased from
                30 percent to 85 percent.

                Private Sector Development - Removal of nearly all price controls
                and trade barriers.

                - Adoption of key financial legislation early in the program: a real
                property code, bank insolvency law, bankruptcy law, collateral law.

                - Reduction in bureaucracy: Armenia ranked 34 in the World Bank
                Group's Doing Business 2007 report.

                - Privatization of nearly all state-owned enterprises.

                Social Development - Adoption of a poverty reduction strategy that
                provides a powerful tool for policy formulation.

                - Significant increase in budget allocations for health and education,
                doubling from 2002 to 2006.

                - Family poverty benefit and pensions increased by more than 50
                percent during 2002-04.

                - The 10 projects totaled US$410 million of which US$382 million came
                from IDA financing and US$28 million from other sources-principally
                the Netherlands, as well as Argentina.

                - Operations were in rapid succession, providing sustained financial
                and technical support to the government and generating a critical
                mass of reforms that helped to raise living standards.

                - More than just providing critical deficit financing, the projects
                also provided a genuine opportunity for the government to benefit from
                external expertise. Technical assistance came from IDA and bilateral
                donors, with significant support from the Japanese Policy and Human
                Resources Development fund.

                - Parallel investment operations in water, health, education and power
                were mutually reinforcing. For example, improved energy regulation
                and ownership policies supported by policy-based credits were matched
                by investment lending in energy.

                - These policy operations were closely linked to IMF stabilization
                and poverty reduction programs.

                - IDA is providing two more Poverty Reduction Support Credits that
                focus on supporting the government to strengthen corporate and public
                governance, including tax and customs, and competition policy and
                human development. These policy-based projects are closely linked
                with on-going sector-specific projects.

                - The completion of the credit series will coincide with
                the parliamentary and presidential elections of 2007 and 2008,
                respectively. Future policy-based lending will depend upon budgetary
                needs and the government's commitment to pursuing a reform agenda.
                What if I find someone else when looking for you? My soul shivers as the idea invades my mind.

                Comment


                • #58
                  Re: Armenia's Economic Pulse

                  Armenia's Securities Market


                  CBA CHAIRMAN BELIEVES THAT ARMENIA CAN PROVIDE FINANCIAL SERVICES FOR OTHER CIS COUNTRIES

                  Noyan Tapan
                  Nov 20 2007

                  YEREVAN, NOVEMBER 20, NOYAN TAPAN. The Central Bank of Armenia
                  (CBA) expects that Armenia may become a financial center of regional
                  significance. The CBA Chairman Tigran Sargsian stated at the Yerevan
                  State University Department of Economics on November 20 that for this
                  purpose Armenia should provide such financial services to local and
                  foreign residents that will be high-quality, exclusive and cheap
                  services and they will also have some advantages over financial
                  services provided in other countries.

                  In the words of the CBA chairman, a "political bid" to invite
                  supportive partners for solution of the problem should be presented on
                  the way of forming a regional financial platform in Armenia. A famous
                  financial operator - the Swedish-Finnish OMX AB company has already
                  expressed its willingness to act as a partner. T. Sargsian added
                  that a comprehensive draft on forming a regional financial center
                  in Armenia should be worked out by respective experts. The terms and
                  measures of the center's formation will be stipulated in the draft.

                  T. Sargsian presented the versions of forming a regional financial
                  center's model in Armenia. One is the model of Beirut, which has
                  functioned successfully for three decades. By this model, customers
                  are offered private banking technologies and services which are not
                  provided in Europe and the US. According to him, Lebanese banks are
                  now trying to find regions where they will be able to continue working
                  in this way, in particular, the entrance of Byblosbank into Armenia
                  is conditioned by it.

                  T. Sargsian also considers it possible to use Ireland's experience:
                  by providing specialized banking services, Ireland has become a back
                  office for hundreds of first-rate banks. T. Sargsian said that HSBC
                  Bank is forming a back office in Armenia, and it envisages "to service
                  all its functions in CIS countries from here".

                  In the opinion of T. Sargsian, Armenia is one ot two steps ahead
                  of CIS countries in terms of its banking sector's regulation field,
                  "and our commercial banks may have relative advantages in providing
                  specific banking services for these countries".

                  http://groong.usc.edu/news/msg211515.html


                  EBRD APPRECIATES QUALITY OF LAW ABOUT SECURITIES MARKET OF ARMENIA

                  ARKA News Agency
                  Nov 15 2007
                  Armenia

                  YEREVAN, November 15. /ARKA/. The European Bank for Reconstruction
                  and Development (EBRD) appreciates the quality of the country's law
                  about securities market of Armenia, says EBRD report on countries
                  with transitional economy.

                  The law about corporate management has also been appreciated in the
                  report. The quality of the law about bankruptcy is assessed as "medium"
                  and the law about transactions on security in Armenia is evaluated as
                  "not working".

                  The new law "About Securities Market" was passed on October 11. The
                  law was developed on the basis of the model of securities markets of
                  Estonia and Slovenia. Under the new law, banks and credit organizations
                  should have right to directly participate in securities market without
                  special license. Apart from that, the Central Depository and the
                  Stock Exchange of Armenia should be commercial organizations.

                  The transactions with security are regulated by the Civil Code of
                  Armenia and cover such securities as pledge, advance payment, forfeit,
                  guarantee and other means provided by under the law or agreement.

                  http://www.arka.am/eng/economy/2007/11/15/7016.html


                  OMX SAYS BUYS ARMENIAN STOCK EXCHANGE
                  Reporting by Adam Cox, editing by Sue Thomas

                  Reuters, UK
                  Nov 21 2007

                  STOCKHOLM, Nov 21 (Reuters) - Nordic and Baltic stock exchange company
                  OMX (OMX.ST: Quote, Profile, Research) said on Wednesday it had bought
                  the Armenian stock exchange and the Central Depository of Armenia.

                  Terms were not disclosed.

                  OMX is buying 100 percent of the shares in the exchange, known as
                  Armex, and the depository. It said in a statement the deal was in
                  accordance with a letter of intent signed in April.

                  "In addition to the share purchase agreement, OMX and the government
                  of Armenia have also signed a cooperation agreement outlining joint
                  efforts to support the long-term development of the capital market
                  in Armenia," the Nordic and Baltic bourse owner said.

                  OMX's board is considering a cash offer of 265 crowns per share from
                  state-run Borse Dubai, which has teamed up with U.S. exchange Nasdaq
                  (NDAQ.O: Quote, Profile, Research) to buy the Nordic and Baltic
                  exchange owner.

                  The firms have said the offer has received acceptances representing
                  47.6 percent of OMX shares.

                  Regulators have given the green light for the Nasdaq-Dubai deal.


                  http://today.reuters.com/news/articl...MX-ARMENIA.XML



                  ARMEX REORGANIZED INTO PUBLIC CORPORATION

                  ARKA
                  Nov 9, 2007

                  YEREVAN, November 9. /ARKA/. The Armenian Stock Exchange (ARMEX)
                  self-regulating organization has been reorganized into public
                  corporation.

                  ARMEX members made such a decision during a special meeting on November
                  9, 2007.

                  By the RA law on the Securities Market Regulation, creditors of
                  a self-regulating organization have a right to demand from ARMEX
                  additional guarantees for the fulfillment of obligations, discharge
                  or early release, as well as compensation seven days after the
                  notification.

                  A self-regulating organization, ARMEX was established on the basis
                  of 21 brokerage companies and was registered by the RA Securities
                  Commission on February 13, 2001. The organization has been organizing
                  exchange trade in securities and foreign currency since July 6, 2001.

                  The CBA (Central Bank of Armenia) and the leading Scandinavian expert
                  in exchange industry OMX signed a memorandum on the purchase of ARMEX
                  and the Central Depositary. The transaction will probably be conducted
                  this November.

                  http://www.arka.am/eng/economy/2007/11/09/6932.html

                  Related Posts:
                  Originally posted by Siamanto View Post
                  Financial Markets: Banking & Securities
                  What if I find someone else when looking for you? My soul shivers as the idea invades my mind.

                  Comment


                  • #59
                    Re: Armenia's Economic Pulse

                    The Millennium Challenge Corporation has signed a five-year, $235.65 million Compact with the Government of Armenia.

                    Today, over one million Armenians live in rural areas and are dependent on semi-subsistence agriculture. Farmers are operating on small plots of land and are constrained by poor roads, inadequate irrigation, and an under-developed market economy.

                    The Armenia Compact is focused on one goal: the reduction of rural poverty through a sustainable increase in the economic performance of the agricultural sector. Armenia plans to achieve this goal through a five-year program of strategic investments in rural roads, irrigation infrastructure and technical and financial assistance to improve the supply of water and to support farmers and agribusinesses. The Program will directly impact approximately 750,000 people, or 75% of the rural population, and is expected to reduce the rural poverty rate and boost annual incomes.


                    Rural Road Rehabilitation
                    The Compact includes a $67 million project to rehabilitate up to 943 kilometers of rural roads, more than a third of Armenia's proposed Lifeline road network. When complete, the Lifeline road network will ensure that every rural community has road access to markets, services, and the main road network. Under the Compact, the Government of Armenia will be required to commit additional resources for maintenance of the road network.


                    Improved Irrigation
                    The Compact also includes a $146 million project to increase the productivity of approximately 250,000 farm households (34% of which are headed by women) through improved water supply, higher yields, higher-value crops, and a more competitive agricultural sector. This project consists of two activities:
                    * An infrastructure activity that aims to increase the amount of land under irrigation by 40% and will improve efficiency by converting from pump to gravity-fed irrigation, reducing water losses and improving drainage; and
                    * A water-to-market activity that will improve the efficiency of water delivery to farmers and boost farm productivity and profitability through technical assistance and credit support.

                    Administrative and monitoring and evaluation costs of the Program are budgeted at approximately $23 million.


                    Engaging Civil Society
                    In preparing its proposal for Millennium Challenge Account assistance, Armenia engaged in a comprehensive consultative process that reached out to a broad cross-section of constituents, including rural community members, NGOs and the private sector. Meetings were held outside of city centers to seek input on potential program components and various media outlets were used to reach remote areas. To increase transparency, the Government of Armenia sponsored a process that resulted in three NGOs being named as observers to the Government's MCA Board of Trustees an inter-governmental body, chaired by the Prime Minister, and responsible for overseeing the Compact development process. Going forward under the Compact, a Stakeholders' Committee will be formed to represent the beneficiaries of the Program. The Stakeholders' Committee will be entitled to nominate voting members from Armenia's NGO sector to serve alongside the government's representatives on the Governing Council of MCA-Armenia, the entity that will be established to oversee and implement the Compact.

                    More...

                    1. Program Summary
                    2. Details of the Agreement.
                    3. 2007 Scorecard
                    4. Status Report



                    From "The Armenian Reporter"

                    Armenia's success brings new challenges

                    * MCC issues new scorecards
                    * Most scores reflect 2006 data

                    by Vincent Lima

                    YEREVAN -- Armenia's performance in most policy areas measured by the
                    Millennium Challenge Corporation (MCC) has remained steady or
                    improved, a scorecard released on November 14 by the U.S. government
                    entity shows. Armenia has graduated from the group of low-income
                    countries to the group of lower-middle-income countries.

                    The scorecard compares Armenia's performance with that of other
                    countries in its peer group. In its first year in the new peer group,
                    Armenia's performance in several categories was not above the median
                    for the group.

                    Armenia is in the second year of a five-year $236 million MCC
                    compact to improve rural infrastructure. (See story above.) To receive
                    the entire grant, Armenia must show that it is continuing reforms and
                    improving its overall performance on the indicators.

                    The scorecards include 17 indicators in three categories: ruling
                    justly, investing in people, and economic freedom.

                    In the newly released scorecard, Armenia's performance was below the
                    median for its new peer group in five of six "ruling justly"
                    indicators, including the all-important "control of corruption"
                    indicator. The indicators reflect performance in 2006 and do not take
                    into consideration the widely praised parliamentary elections held in
                    May 2007.

                    In the "investing in people" category, Armenia's performance was
                    below the median in three of five categories, including, surprisingly,
                    the "girls' primary education completion category" in which it
                    excelled in last year's scorecard. It is expected to surpass the
                    median in these categories when the 2007 data is in.

                    In the "economic freedom" category, which measures compliance with
                    free-trade policies favored by official Washington, Armenia is above
                    the median in all but one of six categories.

                    * December review

                    In early December, the board of the MCC will review the performance of
                    countries with which it has compacts. After that meeting, it is
                    expected to urge Armenia to work harder during 2008 to improve its
                    performance in the "control of corruption" indicator as well as other
                    indicators in the "ruling justly" category. These additional
                    indicators comprise "political rights" and "civil liberties," both
                    measured by Freedom House, "government effectiveness," "rule of law,"
                    and "voice and accountability," all measured by the World Bank
                    Institute, which also provides the data used for the control of
                    corruption indicator.

                    The MCC will closely follow reports by the OSCE election monitoring
                    teams, international and local NGOs, and Armenia's Central Electoral
                    Commission regarding the February 2008 presidential election -- and
                    the campaign season that has already begun.

                    If Armenia continues to show progress toward free and fair
                    elections, as it did in this year's parliamentary election, it is not
                    expected to face any problems with continued eligibility through the
                    December 2008 board meeting. The MCC has the option, however, of
                    suspending the program at any time.

                    The MCC scorecard and additional information are available at http://www.mcc.gov.
                    Last edited by Siamanto; 11-27-2007, 08:22 PM.
                    What if I find someone else when looking for you? My soul shivers as the idea invades my mind.

                    Comment


                    • #60
                      Re: Armenia's Economic Pulse

                      The Millennium Challenge Corporation has signed a five-year, $235.65 million Compact with the Government of Armenia.
                      I wonder what the real price of this "aid" was?
                      "For all evils there are two remedies -- time and silence."

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