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Armenia's Economic Pulse

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  • #81
    Re: Armenia's Economic Pulse

    The Agriculture Sector (Part III)


    Noyan Tapan
    Nov 8, 2007

    YEREVAN, NOVEMBER 8, NOYAN TAPAN. Armenia is not supplied with
    high-quality seeds, and the RA ministry of agriculture is taking
    steps in this direction, the head of the ministry's plant growing
    development and plant protection department Garnik Petrosian said at
    the November 8 press conference.

    According to him, private economic entities are mainly engaged in
    seed growing in Armenia, and they need serious assistance. With this
    aim the ministry has prepared the 2007-2011 program on development
    of seed growing, which has been approved by the government.

    The department head informed those present that this year farms engaged
    in seed production have received subsidies of about 36 million drams
    (about 107 thousand dollars). In 2008, this amount will be increased,
    with the total annual cost of the program making about 105 million
    drams. At the end of the program - in 2011, the country will be fully
    supplied with high-quality seeds of grain cultured plants.

    It was mentioned that 60 tons of "super elite" autimn sowing wheat
    seeds and 15 tons of spring sowing barley seeds will be imported
    under the same program this year.

    Լուրեր Հայաստանից եւ Սփյուռքից, սպասվող իրադարձություններ, շուտով, տարեթվեր, նորություններ հայկական աշխարհից, Արցախից, The Noyan Tapan Highlights անգլերեն եւ ֆրանսերան շաբաթաթերթ, հրատարակչություն, գրքեր, հայ մամուլ, News from Armenia, Diaspora, Новости Армении и Диаспоры


    Noyan Tapan
    Dec 6, 2007

    YEREVAN, DECEMBER 6, NOYAN TAPAN. An assembly point of agricultural
    machinery has been created in Bavra for agricultural development
    of Ashotsk region in Shirak marz. The governor of Shirak marz Lida
    Nanian stated at the December 5 opening ceremony of the assembly
    point that it will mainly service Saragyugh, Sizavet and Tavshut
    village communities. In her words, the assembly point was created
    with the assistance of the Norwegian government and the United Nations
    Development Program (UNDP).

    The UNDP Resident Representative to Armenia Consuelo Vidal said that
    the four communities of Ashotsk region have been involved in the
    2007-2009 complex development program of the UN, which will help
    increase the efficiency of agricultural work in these communities
    and their incomes.

    According to the head of Bavra community Koryun Sumbulian, the creation
    of the agricultural machinery assembly point will allow local farms
    to cultivate more land plots. The assembly point has nine pieces
    of agricultural machinery, inlcluding four wheeled tractors made
    in Belarus.

    Լուրեր Հայաստանից եւ Սփյուռքից, սպասվող իրադարձություններ, շուտով, տարեթվեր, նորություններ հայկական աշխարհից, Արցախից, The Noyan Tapan Highlights անգլերեն եւ ֆրանսերան շաբաթաթերթ, հրատարակչություն, գրքեր, հայ մամուլ, News from Armenia, Diaspora, Новости Армении и Диаспоры

    Jan 17 2007

    YEREVAN, JANUARY 17, ARMENPRESS: Over 30 Armenian companies producing
    brandy, wines, vegetable and fruit preserves, honey and dried fruits
    will showcase their products at International Green Week fair in
    Germany's Berlin that opens today.

    Armenian agricultural minister David Lokian will lead an Armenian
    delegation participating in it.

    Armenian companies were assisted greatly by German KfW bank and GTZ

    Farming issues and global supply and demand will be discussed at a
    special forum and an international conference of agriculture ministers
    during Green Week, which runs until January 27.

    More than 400,000 visitors are expected to attend the exhibition,
    which is now in its 73rd year. Around 100,000 products are on display
    by 1,610 exhibitors from 52 countries.

    - News on Armenia, Artsakh, Armenian Diaspora, South Caucasus and the World: Armenpress- your source of reliable information


    Nov 8, 2007

    YEREVAN, November 8. /ARKA/. The yield of cereals, as per the
    preliminary information, is to total 435-437,000 tons in Armenia in
    2007, which is twice as much as in 2006 (213,000 tons), Chief of the
    Department for plant cultivation, forestry and plant protection of
    Armenia's Ministry if Agriculture Garnik Petrosian said.

    According to him, the reasons for the unprecedented high yields are
    favorable natural and climatic conditions and on-time fertilizing

    Particularly serious work has been done to ensure timely imports
    of nitrogen fertilizers provided to farms through state subsidies,
    Petrosian said. He also stressed the importance of the measures to
    grant 3,400 tons of high-quality seeds mainly to mountainous farms
    that suffered from drought.

    In spring, the Ministry of Agriculture imported 1,300 tons of
    high-quality barley seeds that provided high yield - up to 50-60
    centners from a hectare - in all regions of Armenia.

    The yield of cereals is to average 24 centners from a hectare this
    year, whereas the annual average indicator previously was 17-20
    centners from a hectare, Petrosian said.


    Noyan Tapan
    Nov 8, 2007

    YEREVAN, NOVEMBER 8, NOYAN TAPAN. Fruit production amounted to 235
    thousand tons in Armenia this year - against 283 thousand tons in
    2006. The head of the plant growing development and plant protection
    department of the RA ministry of agriculture Garnik Petrosian said
    at the November 8 press conference that the apricot crops declined
    by about 35 thousand tons, making only 13-14 thousand tons.

    According to him, 220 tons of grapes was produced, which is more by
    about 20 thousand tons than in 2006. Grapes were purchased by 30
    processing companies. The main purchasers were the Yerevan Brandy
    Company (29 thousand tons) and the Yerevan Wine, Vodka and Brandy
    Enterprise (20 thousand tons).

    G. Petrosian announced that 435-537 thousand tons of grain was
    harvested in the country this year - against 213 thousand tons in
    2006. The average crop yield of grain made 24 centners. In his words,
    this growth is due to favorable climatic conditions and to efficient
    masures aimed at improvement of seed supply. In particular, 3,400
    tons of high-quality wheat seeds were given gratis to farms in the
    autumn of 2006.

    The department head said that 570 thousand tons of potato was
    harvested this year, which is more by about 30-35 thousand tons than
    in 2006. Production of melons and watermelons has also increased.

    In his words, that by late 2007, the Armenian government will allocate
    subsidies of 200 million drams (about 606 thousand USD) for the import
    of 20 thousand tons of nitrogen fertilizer.

    Լուրեր Հայաստանից եւ Սփյուռքից, սպասվող իրադարձություններ, շուտով, տարեթվեր, նորություններ հայկական աշխարհից, Արցախից, The Noyan Tapan Highlights անգլերեն եւ ֆրանսերան շաբաթաթերթ, հրատարակչություն, գրքեր, հայ մամուլ, News from Armenia, Diaspora, Новости Армении и Диаспоры
    What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


    • #82
      Re: Armenia's Economic Pulse

      Transportation Links: The Armenian Railroads (Part I)


      Railway Gazette International, UK
      Jan 16 2007

      IN SEPTEMBER, the government of Armenia invited bids for a concession
      to renovate and operate the country's rail network, following an
      initial prequalification announcement in June.

      Armenia is currently implementing a wide range of economic reforms,
      supported by the US government, the World Bank, the European Union
      and the Asian Development Bank amongst others. Restructuring is
      already underway in the energy, water and communications sectors,
      and Armenian Railways has been established as a joint stock company
      wholly owned by the Ministry of Transport & Communications.

      'Our desire is to make the railway more productive and less dependent
      on government', explained Transport Minister Andranik Manukyan,
      addressing a pre-bidding roadshow held at the headquarters of
      the European Bank for Reconstruction & Development in London on
      September 6.

      'Armenia wants a successful railway', he emphasised. 'The government
      has taken action to strengthen the railway, improve the regulatory
      environment and reduce risks for the private sector. This concession
      will protect the economy of Armenia and enhance the contribution that
      will be made by rail transport.'

      At the World Bank's suggestion, US-based consultancy HWTSK was
      brought in to assess the condition of the Armenian rail network
      and advise on the scope for involving the private sector. The World
      Bank and the Armenian government provided US$15m in 2002-04 to fund
      the rehabilitation of 72 km of track, and the EU's tacis programme
      funded the installation of a new optic fibre communications network
      by Siemens which was completed in 2005. The government is currently
      negotiating funds for further infrastructure rehabilitation.

      The concessionaire will also be expected to provide investment
      funding. According to the consultants, AR needs around US$170m to
      modernise the network, of which half would go on infrastructure
      works and half on replacement of largely life-expired traction and
      rolling stock.

      Traffic bounces back The AR network is predominantly single-track,
      with 736 route-km active and approximately 110 route-km out of service
      due to the border closures and a landslide. The entire network is
      electrified at 3 kV DC. AR has 41 main line electric locomotives,
      mostly ex-Soviet designs of classes VL8, VL10 and VL11. There are
      also 56 diesel locos, mostly used for shunting, together with 68 EMU
      cars. Hauled stock comprises 189 coaches and 3657 wagons, of which
      barely half are operational.

      AR's traffic statistics clearly show the problems under which the
      railway has been labouring for the past 20 years. In 1988 the railway
      carried 30 million tonnes of freight and 5 million passengers.

      Traffic was hit badly by the Spitak earthquake in December 1988 which
      severely damaged the line around Gyumri. Then came the breakup of
      the Soviet Union, and Armenian independence in 1991. Harsh economic
      conditions saw a 50% fall in traffic across all the railways in
      the region.

      The war between Armenia and Azerbaijan in 1992 led to the border with
      Turkey being closed in 1993, cutting all transit traffic. However,
      there has been an upturn in recent years, due in part to a booming
      economy described by local business leader Arsen Ghazaryan as 'a
      Caucasian Tiger'. Armenia is currently recording double-digit GDP
      growth year on year.

      >From a low point of 14 million tonnes in 2000, AR's freight traffic
      has crept upwards to 27 million tonnes in 2006, and the target for
      2007 was 28 million. According to AR's First Deputy General Manager
      Vahagn Karagiozyan, freight traffic in the first eight months was
      400000 tonnes ahead of the previous year, and he was confident that
      traffic would top the 3 million mark by the year-end. 'We have the
      potential to double our traffic in the next few years', he predicted

      Around 60% of AR's freight business is international, but with four
      of the five border crossings closed, all traffic has to be routed
      via Airum on the line to Tbilisi. Longer-distance traffic moves via
      Georgia's Black Sea ports of Poti and Batumi, which are linked by
      train ferry to ports in Russia and Ukraine.

      Passenger traffic, however, has been declining steadily since a
      post-independence peak of 13 million passenger-journeys in 2002.

      Rehabilitation of the local road network, coupled with the roundabout
      rail routes, makes the typical road trip between three and five
      times faster than rail. This has hit AR hard. Today the railway
      runs just one local and five inter-city trains a day, plus a daily
      international service to and from Tbilisi and a summer-only train
      to and from Batumi. In 2006 passenger traffic totalled just 675 000
      journeys, or barely 27 000 passenger-km.

      Nevertheless, Manukyan insists that passenger operations should
      continue. 'A railway which does not have a passenger service
      is incomplete as a transport undertaking', he explains. 'Despite
      falling traffic in recent years, we still believe that passenger
      operations are an integral part of the railway. When the tender bids
      are assessed, advantage would be given to a bidder with a desire to
      keep the passenger operations, all other things being equal.'

      Concessioning process Having looked at various models for
      privatisation, including the separation of infrastructure from
      operations, HWTSK recommended that a vertically-integrated concession
      would be the most appropriate model.

      An initial concession period of 30 years is envisaged, with an
      option for further extensions. CPCS Transcom is acting as transaction
      adviser, preparing tender documentation and assisting the government
      in assessing the bids.

      As well as appointing external advisers, the Ministry of Transport
      & Communications has established a Project Implementation Unit to
      develop the concession, together with a separate working group dealing
      with legal and regulatory issues. PIU Director Alexander Bakhtamyan
      insists that 'we intend to conduct an open, equitable and transparent
      international tender.'

      Prequalification bids were due by September 21, and groups led by
      Russian Railways and Rites were shortlisted in October. However,
      Rites has subsequently withdrawn from the process, leaving RZD as
      the only party likely to have submitted a final bid on December 21.

      Financial bids are to be opened on January 8, and the ministry hopes
      to announce the winner on January 15, with a view to handing over
      control of the network during 2008.

      According to Gayan Torozyan, who heads the regulatory working group,
      the new railway law setting the framework for concessioning was
      'almost ready to go to the national assembly for ratification' at the
      end of September. This will be followed in due course by secondary
      legislation to put the detailed concession terms in place.

      With World Bank support, the government will take responsibility for
      funding the retirement or retraining of redundant staff, leaving
      the concessionaire free to recruit only as many employees as it
      feels necessary.

      Manukyan insists that 'the government does not want to interfere
      in the business activities of the concessionaire', although it is
      planning to put in place some provision for open access, mainly so
      that Georgian Railways could run to Yerevan or through to Turkey if
      the border re-opens. The consultants believe that open access provision
      would provide the concessionaire with a degree of competitive pressure,
      although there is unlikely to be enough traffic to attract independent

      'The concessionaire will have exclusive rights to manage the
      infrastructure, but a clause will provide rights for others to use
      network at pre-determined access fees', explains Torozyan. The
      methodology for setting access charges 'will be agreed by the
      government and implemented by the concessionaire', probably requiring
      the production of some form of annual network statement.

      The government also wants to retain the right to set maximum tariffs
      for 'commodities of strategic importance', although Torozyan says
      there will be a 'regulatory commission' to protect all parties.

      According to Bakhtamyan, there will be no government subsidy for
      the operation of passenger services, which will continue to be
      cross-subsidised from the profitable freight business.

      In parallel with the tendering process, PIU has started to draw up a
      draft concession agreement, which will form the basis of negotiations
      with the preferred bidder.

      International connection Given the high proportion of international
      traffic, maintaining a continuing relationship with Georgian Railways
      will be critical to the success of the Armenian concession.

      At the September roadshow, concerns were expressed about the Georgian
      government's announcement in August that it intended to award a 99-year
      concession to run the country's rail network to an international
      consortium (RG 9.07 p524) through a negotiated procedure, rather than
      by means of an open tender.

      That proposal has since been withdrawn, and the Georgians are
      now looking at some form of international tender with the aim of
      privatising their railway by the end of 2008. The Armenian government
      remains confident that any new owners would continue to honour the
      current traffic arrangements. 'International freight and passenger
      tariffs have been set through a bilateral agreement between the
      governments, and will be protected for the next three years',
      insists Manukyan.

      He believes that the winning bidder of the Armenian concession would
      be well placed to win a tender to operate the Georgian network as
      well. That would permit closer integration of the two railways to
      restore a truly international business, he suggests.

      CAPTION: One of Armenian Railways' few main line passenger services
      links Yerevan with Yerashk. An EMU is seen here awaiting departure
      from the capital CAPTION: Consultants have recommended withdrawal of
      all passenger services in Armenia because of dwindling ridership, but
      the government has pledged to retain them as part of an integrated
      network. This is the station in Yerevan CAPTION: The key junction
      and marshalling yard at Massis is controlled from a Soviet-era
      signalbox. Despite four of Armenia's five border crossings being
      closed, international freight is seen as a potential growth market
      for the railway in the future


      Oct 25, 2007

      YEREVAN, OCTOBER 25, ARMENPRESS: Transport and communication minister
      Andranik Manukian said yesterday handing the Armenian Railways to a
      concessional management is the only way to salvage the aging system
      and maintain it as a government property.

      Speaking during a parliament Q&A session he said since the collapse
      of the former Soviet Union the only investment in the system were $16
      million of a World Bank credit for a major repair of a 72-km section
      of the railway from Yerevan to Ayrum, while the entire length of the
      railway is 306 km.

      Manukian said two companies, one from Russia and the other from
      India, have made bids in a tender. He said the winning company will
      be announced on December 15 and the subsequent talks are expected to
      be over by January 15 next year.

      The winner of the tender will have to transfer $10 million as
      concessional payment and pay 2 percent of its incomes to the
      government The railway tariffs will be set by the Pubic Services
      Regulatory Commission.

      "In a couple of years Armenian Railways will lose its carriages and
      locomotives as they are in their last days. Armenia does not have
      extra $170 million to repair the railroads and buy new carriages and
      this is the main reason that prompts us to hand it to confessional
      management,' Manukian said.

      ARKA News Agency, Armenia
      Dec 4 2007

      Armenian parliament approves bill on railway transport

      YEREVAN, December 4. /ARKA/. The RA Parliament has approved in the
      second reading the bill `On railway transport'. RA Minister of
      Transport Andranik Manukyan said that the new law will serve as legal
      underpinnings for private management of the railway.

      The bill regulates the legal and economic relations in the operation
      of railway transport in Armenia.

      `The bill is aimed at ensuring uninterrupted and stable operation of
      railway transport,' Manukyan said.
      The bill entitles the RA Public Services Regulatory Commission to set
      rates and make calculations.

      The Minister reported that special tariffs for goods of strategic
      importance will be set. In presenting reports on the maximum tariff,
      the manager is supposed to inform the Government of the tariffs for
      strategic goods.

      On October 12, 2006, the RA Government made a decision on 30-year
      concession of the Armenian Railway Company, with the right to 20-year
      prolongation. Two companies won a tender for concession - Russian
      Railways Company and Rail India Technical and Economic Services

      The envelope with the feasibility report is to be opened on December
      21, and the financial proposals are to be made public on January 8,
      2008. The tender winner will be known on January 15.

      The Armenian Railway Company is owned by the Government.-0--

      Last edited by Siamanto; 01-29-2008, 07:27 PM.
      What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


      • #83
        Re: Armenia's Economic Pulse

        Transportation Links: The Armenian Railroads (Part II)


        ARKA News Agency
        Jan 10 2008

        YEREVAN, January 10. /ARKA/. The concession bid proposals of the
        "Russian Railroads" (RR) open joint stock company are very good,
        Armenia's Minister of Transport and Communication Andranik Manukian
        said at the government briefing in commenting the transfer of "Armenian
        Railroads" (AR) closed joint stock company for concession management.

        He said that the RR is expected to repair the most dangerous sections
        of the railroad and the infrastructures, Ayrum-Giumri, Dilijan-Ijevan
        in particular.

        The Minister reported that the RR suggest building a new branch line,
        rehabilitating Akhurian terminal, bringing the Armenian railroads in
        line with the modern technical requirements, increasing the volume
        of transportation and capacity of the railroads.

        The Minister also said that the Armenian Railroads will remain a
        state-owned company that is managed by the Russian company. "In
        our opinion, they will be more efficient managers, particularly
        because we would not be able to make such extensive investments,"
        the Minister said.

        Manukian reported that 805 of 1,125 kilometers of Armenia's railroads
        are within the competence of the AR. The company provides steady
        profit. In 2007, 3mln tons of cargos were transported through the AR
        against 2.7mln tons in 2006.

        Two companies - the "Russian Railroads" and Indian RITES (Rail
        India Technical and Economic Services) - have been pre-qualified
        for participation in the tender on concession management of the
        "Armenian Railroads" closed joint stock company. Later RITES refused
        to participate in the tender as it decided to take part in a tender in
        Africa; consequently, the "Russian Railroads" became the only bidder
        in the tender held in Armenia.

        According to the investment package opened on December 21, the RR
        plans to invest $570mln in the AR, including $230mln in the next five
        years. If the blockade around Armenia is raised, the Abkhazian railroad
        is opened and railway communication rehabilitated, investments will
        reach $2bln 130mln.

        In its bid package opened on January 8 the "Russian Railroads" offered
        bulk payment of 1.7bln Drams concession fee to Armenia's state budget
        and this proposal is not under consideration currently.

        The "Armenian Railroads" closed joint stock company is 100% state
        company that owns the main part of the country's rolling stock and
        practically the entire railroad infrastructure (930.8 km as per the
        information of Armenia's National Statistical Service). ($1=307.09


        Jan 10 2008

        On January 10 the minister of communication and transport Andranik
        Manukyan stated in a briefing that the Russian Railways which is the
        only tenderer for the Armenian Railways and will most probably win
        the tender, plans to restore railway communication with Turkey and
        Azerbaijan in 2009-2010.

        The minister says in 2009 the Russian company plans to restore
        communication between Armenia and Turkey and in 2010 with Azerbaijan.

        The minister repeated that the Russian manager plans to invest about
        600 million dollars in the Armenian railway infrastructure, and as
        soon as the blockade of Armenia is lifted, the investments will reach
        21 billion 100 million dollars. Andranik Manukyan says according to
        the bid package, the Russian company bids one-time payment of 1.7
        million dollars to the government of Armenia. Andranik Manukyan says
        the bid is under consideration.

        He says the Russian company's bid for the concession is favorable,
        and as soon as the Russian Railways takes up the management of the
        Armenian railway, it will improve the state of the railway, repairing
        the dangerous parts of the rails in the north of Armenia, replacing
        the trains, the infrastructure, build new rails, modernize and boost
        cargo shipment capacity.

        At the same time, the railways remain the property of Armenia,
        Andranik Manukyan explained. He says Armenia thinks the management
        by the Russian company will be more effective than by the ministry
        which now controls the Armenian railways, ARKA reports.

        The result of the tender will become known on January 15. The only
        tenderer is the Russian Railways which will win the tender. An Indian
        company had also bid for concession but it stopped halfway.


        ITAR-TASS, Russia
        Jan 16 2007

        YEREVAN, January 16 (Itar-Tass) -The Russian Railways Company will be
        officially named on Wednesday as the winner of an international tender
        for the concessional management of the Armenian Railways Company for
        a period of 30 years. A ceremony with the participation of Russian
        Railways President Vladimir Yakunin will be held in Yerevan.

        The terms of the concession provide for 170-million-dollar investments,
        but Russian Railways offered a far great sum - 570 million dollars
        of investments, with 230 million dollars to be invested in the coming
        five years.

        According to Armenian Minister of Transport and Communication Andranik
        Manukyan, the investments of Russian Railways will be even greater,
        if the border with Turkey is opened, and railway traffic to Armenia
        by the Azerbaijani railway and via Abkhazia is resumed.

        Russian Railways will contribute 5.5 million dollars to the Armenian
        budget as a one-time concession payment. Under the terms of the lease,
        Russian Railways will allocate 2 per cent of its annual turnover to
        the Armenian budget, along with current taxes and fees.

        Manukyan reminded that the Armenian Railways Company would continue
        to be the property of the Armenian government, and Russian Railways
        would only manage it.

        The Armenian railway was built on the order of the government of
        the Russian Empire in the second half of the 19th century. The first
        train came from Tiflis (now Tbilisi) to Alexandropol (later Leninakan,
        now Gyumri) in February 1899 after covering 220 kilometres. A total
        length of the railways belonging to the Armenian Railways Company is
        1,125 kilometres. It includes 75 railway terminals and four terminals
        on the border with Georgia, Azerbaijan and Turkey.

        The annual capacity of Armenian Railways is three million tons of
        cargoes and five million passengers. A through capacity of the Airum
        railway terminal, on the border with Georgia, is 30 pairs of trains
        a day. According to forecasts of transport specialists, railway
        transportation in Armenia will be doubled by 2010.

        What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


        • #84
          Re: Armenia's Economic Pulse

          Toursits Increased In Armenia, Family Vacation Affordable

          Last year 510 thousands tourists arrived in Armenia which is for 33% high compared with 2006, as Armenia attracts tourists and travelers for those searching for affordable family vacations and adventure travel due to its long history, mountains and rich Christian culture.

          According to Mekhak Apresyan, the head of tourism department at the Ministry of Trade and Economic development, once the number of the hotels were too few in our country. Today there are approximately 70 hotels and 35 of which are in Yerevan.

          According to Apresyan, Armenia is well presented in the international tourism and travel market, which has its positive impact on its development.

          Apresyan said that the condition of ecotourism in Armenia is more than sufficient, but there are lots of things to do.


          • #85
            Re: Armenia's Economic Pulse

            The Inflation Report (Part I)


            Noyan Tapan
            Feb 22, 2008

            YEREVAN, FEBRUARY 22, NOYAN TAPAN. Among inflation risks in Armenia in
            2008 are the considerable foreign currency inflow, a high GPD growth,
            the 60% increase of pensions, as well as a rise in prices of foodstuffs
            and power-bearing substances, the director of the IMF Armenia Office
            Nienke Oomes stated during a lecture-dicussion on February 22.

            According to her, in order to neutralize these risks, the appropriate
            Armenian bodies should conduct a more efficient policy of inflation
            targeting (in particular, extension of competition among banks,
            reduction of the dollarization level, development of the financial
            markets), contrubute to reduction in prices of imported goods, tighten
            the fiscal policy and provide more information about the inflation
            targeting policy.

            It was stated that in 2007, inflation was quite high in Armenia and
            made 6.6% at the end of the year. According to the IMF official, this
            index was not so high as compared with other countries. In her words,
            one of the reasons for relatively low inflation in Armenia is the
            Central Bank of Armenia's (CBA) policy aimed at inflation targeting
            rather than at controlling the exchange rate. In other CIS countries,
            the exchange rate of the national currency against the rates of
            foreign currencies is stable but the inflation is high.

            N. Oomes expressed an opinion that the low level of inflation in
            Armenia is also due to the strict tax and budgetary policy conducted
            by the ministry of finance and economy, thanks to which the deficit
            of the RA state budget is much less than in other CIS countries.

            In her words, 6.6% inflation in Armenia was mainly conditioned by a
            high growth in prices of foodstuffs, particularly, bread, butter and
            vegetable oil, which accounted for 4.5% of the overall inflation. 99%
            of the growth of food prices in Armenia was due to the growth of
            international prices rather than to an artificial rise of prices on
            the domestic market. The prices of these goods grew as much as in
            CIS countries.

            The IMF official reminded that the inflation in international markets
            was caused by a growth of consumption of bread, butter and other
            foodstuffs in China and India: 45% of the world population live in
            these countries.

            She said that the fact that the consumption and prices of fuel
            obtained from plants is increasing in parallel with the growth in
            prices of hydrocarbon fuel also contributes to a rise in food prices
            worldwide. About 50% of the overall inflation in international markets
            is due to the growth of the demand of the populations of China and
            India, while the other 50% is due to a decline in the supply.

            Լուրեր Հայաստանից եւ Սփյուռքից, սպասվող իրադարձություններ, շուտով, տարեթվեր, նորություններ հայկական աշխարհից, Արցախից, The Noyan Tapan Highlights անգլերեն եւ ֆրանսերան շաբաթաթերթ, հրատարակչություն, գրքեր, հայ մամուլ, News from Armenia, Diaspora, Новости Армении и Диаспоры


            Monday December 10 2007

            WASHINGTON, Dec 10 (Reuters) - Armenia's economy is growing at a
            double-digit clip that has helped ease poverty, but the country must
            take steps to curb price pressures, while the currency will probably
            continue to appreciate, the IMF said on Monday.

            "Monetary policy will need to be tightened in light of rising
            inflationary risks," the International Monetary Fund said under a
            regular review of Armenia's poverty-reduction facility, which expires
            next May.

            Consumer inflation is projected to average 6.3 percent next year,
            up from 4.3 percent in 2007, the IMF said, with economic growth of
            11 percent this year and 10 percent in 2008.

            The central bank raised interest rates in three steps of
            aquarter-percentage point each between July and November. The banking
            rate is now 11 percent and the repo rate 5.75 percent.

            In addition, the central bank lifted its inflation target to 4 percent
            from 3 percent, a move that the IMF said it had opposed.

            "A firm commitment to a medium-term inflation target will be critical
            for anchoring price expectations and building credibility in the
            transition to full-fledged inflation targeting," the IMF said.

            The Armenian dram was also expected to continue to advance against
            the dollar due to persistent foreign-exchange inflows, which may harm
            the country's export competitiveness.

            This means Armenia must step up efforts to lift domestic competition
            and keep fiscal policy tight, the IMF said.

            It also warned that mounting infrastructure and poverty-reduction
            spending will increase budget pressures, and it urged the government
            to meet this demand for additional public finance by strengthening
            tax collection methods.

            (Reporting by Alister Bull; Editing by Jan Paschal )

            CBA FORECASTS 5.4% INFLATION FOR 2008

            YEREVAN, JANUARY 15, NOYAN TAPAN. According to forecasts of the Central
            Bank of Armenia (CBA), by the version of the unchanged level of
            interest rates, inflation will make 5.4% in Armenia in the 12-month
            period following December 2007 and 6.3% in the second quarter of 2008.
            The base scenario of inflation until the end of the second quarter 2008
            includes the version that a growth in prices of bread products, butter
            and vegetable oil will contribute to the growth of the cumulative
            consumer price index by 3.8%, while the growth of gas prices due to the
            supposed end of budgetary subsidizing will contribute to the growth of
            this index by 1.2%. These forecasts were announced at the December 29
            sitting of the CBA Board.

            According to the CBA press service, by CBA's forecasts, the formation
            of higher international oil and food prices (including grain prices)
            than is expected may contribute to higher actual inflation than the
            forecast index, while the increase of oil prices will depend on both
            geopolitical and external economic developments. Besides, it may be
            also contributed by a higher than forecast growth of the consumption
            component in the overall demand and further positive deviation from the
            balanced level of consumption, as well as by higher than expected
            growth rates of crediting of the economy.

            The registration of a lower actual inflation index than is forecast may
            be contributed by an increase in foreign currency amounts of exports
            (as a result of higher than forecast prices of base metals), as well as
            by a fall in prices of imported goods under conditions of greater
            capital inflow, as a result of appreciation of the dram.

            At the same time, developments in the agricultural sector which mainly
            depend on climatic conditions may involve risks of both a fall and rise
            in prices.

            Taking into account the developments in the fourth quarter of 2007 and
            the CBA's forecasts for the further 12-month period, the CBA Board
            registered that despite some stabilization of oil and food prices, the
            inflation pressures from the external environment remained at the end
            of the fourth quarter of 2007 and will remain in the forecast period.
            In case of absence of unexpected shocks in the external environment,
            these pressures will be milder than in the past period. The CBA Board
            also stated that the impact of the internal environment created smaller
            inflation pressures than was forecast - in the fourth quarter of 2007,
            while it is possible that combined with most expanding tax and
            budgetary policy, the high growth rates of private consumption will
            increase inflation pressures to some extent in the forecast period. In
            these conditions the CBA Board still sees risks in ensuring the 2008
            target inflation index.

            At the same time the CBA Board discussed the seasonal manifestations,
            which are typical of Armenia's economy and financial sector and are
            most pronounced at the beginning of a year, particularly a sharp
            decline in demand for money in January, due to which a rise in interest
            rates cannot have the desired effect on interest rates in the interbank
            market. It was underlined that the consistent tightening of the
            conditions of the monetary and credit policy by the CBA in recent
            months allows to refrain from raising the interest rates at the given

            Under conditions of various opinions about reduction of inflation
            pressures from the external environment, the deviation of inflation
            from the central position of the target interval, and the possible
            scenarios of further changes in interest rates, the CBA Board discussed
            the options of either raising the CBA refinancing interest rate or
            leaving it unchanged.

            As a result, at the December 29 sitting the CBA Board made a decision
            to leave the CBA refinancing interest rate unchanged - 5.75%. The pawn
            credit and deposit interest rates were fixed at 8.75% and 2.75%

            At the same time the CBA Board expressed a willingness to be consistent
            in the issue of correcting the interest rates if inflation pressures
            from the internal and external environments do not decline.

            Լուրեր Հայաստանից եւ Սփյուռքից, սպասվող իրադարձություններ, շուտով, տարեթվեր, նորություններ հայկական աշխարհից, Արցախից, The Noyan Tapan Highlights անգլերեն եւ ֆրանսերան շաբաթաթերթ, հրատարակչություն, գրքեր, հայ մամուլ, News from Armenia, Diaspora, Новости Армении и Диаспоры


            ARKA News Agency
            Feb 1 2008

            YEREVAN, February 1. /ARKA/. The annual minimal consumer basket totaled
            AMD 277,718.5 (about $73) in Armenia in the fourth quarterly period
            of 2007, the RA National Statistical Service reports. The monthly
            minimal consumer basket amounted to AMD 23,143.2 (about $73) in the
            reporting period.

            The annual minimal consumer basket (including the actual price in the
            fourth quarterly period of 2007) totaled AMD 430,463.7 ($1,357.6)
            in the reporting period (the monthly minimal basket totaling AMD
            35,872 or $113.1 monthly).

            Bellow is the annual rate of products per capita: bread-made products -
            AMD 49,808.4 (the share of bread being AMD 32,868 with 91.3kg annual
            consumption), meat - AMD 56,385.2 (36.5kg), milk products - AMD
            54,864.8 (milk - AMD 21,761.3 with 73 liters of annual consumption,
            ghee - AMD 16,249.8 with 7.3kg annual consumption, cheese - AMD
            11,674.4 with 9.1kg annual consumption), potatoes - AMD 17,018.3
            (91.3kg), vegetables (cabbages, onions) - AMD 15,319.1 (109.5kg),
            fruit (apples) AMD 26,243.5 (182.5pcs), vegetable oil - AMD 6,755.4
            (7.3kg), margarine - AMD 3,275.6 (3.7kg), fish - AMD 33,028.6 (11kg).

            The RA Ministry of Health helped form the consumer basket. The latter
            is based on the World Bank's (WB) survey of 6,816 households carried
            out from April 1, 2004 to March 31, 2005. This consumer basket
            significantly differs with its constitution from the previous ones.

            According to WB, the monthly consumer basket should amount to AMD
            17,877.4 ($56), the minimal consumer basket totaling AMD 27,710

            In Armenia, the share of the basic salary (AMD 20,000 or $63) in
            the minimal consumer basket, minimal food basket and average monthly
            salary is 55.8%, 86.4% and 23.2% respectively.

            The share of the average monthly salary in the country's minimal food
            basket was 240.7% in 2007.

            According to NSS, GDP per capita totaled AMD 973,021 ($2,844), the
            basic average monthly salary amounting to AMD 76,922 ($225).

            1mln 168,000 people were economically active in Armenia in 2007
            with 92.9% (1,085.3) being involved in economy. 82,500 people were
            unemployed in the reporting period. Armenia's resident population
            totaled 3mln 229,900 on January 1, 2008 ($1 - AMD 306.84).

            What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


            • #86
              Re: Armenia's Economic Pulse

              Part 1 of 2


              ARKA News Agency
              Feb 4 2008

              ARKA: Mr. Sargsyan, what preliminary estimates of the country's key
              macroeconomic indicators for 2007 can you make?

              Sargsyan: 13.6% macroeconomic growth was recorded in Armenia in
              January-November 2007, which growth was mainly facilitated by such
              sectors as construction, services and agriculture. In January-November,
              a 2.7% increase was recorded in the industrial sector, and a 9.1%
              increase without the diamond-cutting industry.

              The increase was mainly due to the food industry, particularly due to
              the confectionary industry, the production of alcoholic beverages,
              tinned food and natural juices. The increase was also facilitated
              by the nonferrous industry, namely, the production of aluminum and
              ferromolybdenum, and that of building materials, particularly cement
              and lime.

              The agricultural sector recorded a 9.6% increase, mainly due to a 10.6%
              increase in plant cultivation. Bumper fruit and vegetable harvest
              was gathered thanks to favorable weather conditions in Armenia last
              year. The cattle-breeding industry recorded an increase as well,
              mainly due to an increase in the output of meat and eggs.

              In January-November 2007, the construction sector recorded a
              19% increase, mainly due to capital investments in transport and
              communication, particularly due to large investments made by mobile
              operators, as well as due to road construction carried out on the funds
              allocated by the Lincy Foundation. The increase was also facilitated
              by intensified energy construction, particularly the construction of
              small hydro-power plants, as well as the construction of the second
              section of the Iran-Armenia gas main.

              A 13% increase in the service sphere was mainly facilitated by a
              considerable increase in the amount of transport and communication
              services, as well as in the volume of trade (primarily wholesale and
              the trade in cars). The amount of services rendered by all types
              of transport increased, and the primary reason for the increase
              in communication services is the increase in mobile communication

              Moreover, an approximate 20% rise in wages was recorded on the labor
              market along with reduction of unemployment and higher rates of
              increase in labor productivity - by about 13% against 12.5% in 2006.

              ARKA: How well have the principal provisions of the monetary
              management program been implemented? What were the major obstacles
              to the accomplishment of the tasks set?

              Sargsyan: The major obstacle we encountered in implementing our
              monetary management policy involves the world commodity markets,
              which not only sprang a surprise on us, but also exerted serious
              influence on all the processes of global economy. First of all, this
              is a rise in prices for food products, bread, baked goods and butter.

              Also, the prices for oil and oil products have risen since the
              beginning of the year. This all seriously influenced prices worldwide,
              with special damaged caused to transitional economies, as the share
              of the aforementioned products in the basket of goods there is rather
              large compared with developed countries. So the inflation exceeded
              the planned level in all the countries in transition. I would like to
              note that inflation exceeded the planned level by about 4% in all the
              countries of the Commonwealth of Independent States (CIS). Inflation
              is to reach about 12% in Russia, and rather high inflation is expected
              in Georgia. In Azerbaijan inflation may be twice as high as in Armenia.

              Armenia is expected to end this year with inflation about 7%. With
              monetary factors alone considered, inflation would not exceed 3%
              (about 2.6%), the cause of the rest 4% being the rise in prices on
              the world markets.

              As regards the principal provisions of the monetary management policy
              of the year, most of them have been implemented. The increase in
              the monetary base and money supply exceeded the planned level, the
              primary reason being the fact that the economic growth rates exceeded
              the planned level, which made the Central Bank serve the real sector
              by means of emission, which was actually done.

              A special feature of the year is also the huge amount of foreign
              exchange the Central Bank has purchased from the market. By our
              preliminary estimates, this index will exceed last year's index by
              about 40% and reach $350mln.

              Despite this, further AMD revaluation against the USD has been
              observed and is to make about 17%. However, this process facilitated
              the reduction of inflationary pressures and potential.

              By and large, the major obstacles we have encountered this year are:
              first, the world prices, second low-level price elasticity, which
              testifies to the need for measures to step up competition on the
              domestic market for the AMD revaluation to be accompanied by control
              over import prices.

              ARKA: The Central Bank has been managing all the market segments for
              the second year. What are the results?

              Sargsyan: First of all, the Central Bank is trying to smooth away
              the existing serious differences between individual segments of the
              country's financial market. It is no secret for anybody that Armenia's
              banking system has made considerable progress and meets international
              standards now, which cannot be said about the insurance market, the
              securities market and the pension system. So it is obvious that more
              rapid reforms are necessary to smooth away the existing differences.

              It should be noted that the largest resources were directed to the
              nonbank part of the financial sector. First of all, this is the
              securities sector, for which we drafted a special bill later adopted
              by the Parliament. Moreover, the Central Bank approved a large number
              of statutory acts.

              The second segment is the insurance market, where we are cleaning the
              insurance field. At the initial stage, 23 insurance companies were
              operating in Armenia, whereas only nine are working now. The process
              of clearing the segment is accompanied by the improvement of insurance
              laws. In 2007, the RA Parliament adopted a bill on insurance companies
              in conformity with European standards. The new law will allow reforms
              to be implemented at higher rates.

              And finally, an important achievement of 2007 is the entry of the
              OMX operator to Armenia's market, which will promote the development
              of Armenia's financial market in general and the formation of a real
              capital market in particular.

              ARKA: What is your general assessment of Armenia's financial system?
              What are the financial results of the year?

              Sargsyan: In general, Armenia's financial system can be characterized
              as rather stable. The share of banks and credit institutions that
              recorded a considerable increase is 97% now.

              First of all we are happy over the banking sector, which recorded
              a 70% increase in crediting of the country's economy. High-rate
              increase in assets was recorded. As a result, a 3-point increase in
              the assets/GDP ratio was recorded during one year - up to about 23%,
              which is a rather serious result. In general, Armenia's banking system
              can be said to be solidly based. The rates of the banking sector's
              development are expected to exceed those of economic growth during
              the next few years. It should also be noted the bank capitalization
              level is rather high in Armenia in the context of financial stability -
              29% against the CBA-set 12%.

              Credit institutions have recorded progress as well. The banking
              sector recorded a 70% increase in crediting, while credit institutions
              doubled their crediting volume. The interest in credit institutions
              has increased, and their number has reached 22, as many as commercial
              banks. In general, credit organizations are developing at higher
              rates than banks.

              Nonresident entities have shown interest in the local insurance market,
              and we hope that new serious players will come to Armenia next year,
              and new insurance companies will launch their activities here. First
              of all, the matter concerns the HSBC Group, which plans to open its
              insurance company in Armenia. We have been negotiating with it for
              a long time. Besides, we hope for another European insurance company
              to come to Armenia. One Russian and one Ukrainian insurance company
              are expected to launch their activities in Armenia as well.

              ARKA: What is your view of 2007 in the context of the entry of new
              banking brands to Armenia's market?

              Sargsyan: The Central Bank is welcoming this process. We are vitally
              interested in first-rate participants entering Armenia's banking
              sector, which, on the one hand, promotes competition in the sector,
              and on the other hand, will contribute to the development of financial
              intermediation in Armenia.

              Thus, we can state that the emergence of the German ProCreditBank
              will promote competition in the retail sector. The Russian Troyka
              Dialog Company will introduce new technologies and products on the
              securities market. The Lebanese Byblos Bank will introduce corporate
              management culture and private banking, which is well-developed
              in Lebanon. Finally, the Russian Gasprombank will promote banks'
              competition for large enterprises.

              All this is rather promising for Armenia's financial sector, if we
              consider the fact that it is due to new players that the Armenian
              banking system's capital increased by about 40% in 2007.

              ARKA: Since the banking system remains the largest player on the
              financial market, what is your assessment of the current stage of
              development of Armenia's banks. What are the forecasts for 2007
              and 2008?

              Sargsyan: First of all, noteworthy is a considerable decrease in net
              external assets of the banking system in 2007 - by approximately 82bln
              AMD. As a result, the system's net external assets for the first time
              proved to be negative - minus 71.6bln AMD (over $200mln).

              This means that our banks started attracting more funds from
              nonresidents and investing them in Armenia, primarily in the country's
              economy. Another important feature is a lower dollarization level in
              the country. First, AMD credits doubled.

              Secondly, a decrease in the share foreign-exchange deposits was
              accompanied by an increase in the share of AMD deposits - up to 53%.

              Assets increased by 41% and amounted to 741bln AMD, the share of
              AMD assets being 65% - a 7% increase. The share of assets in the GDP
              increased from 19.8% in 2006 to 23% in 2007.

              The banking system's liabilities increased by 43% during one year
              and amounted to 580bln AMD, and individual deposits increased by 34%
              and amounted to 191.6bln AMD. The number of banks' clients increased
              by 150,000 or 20% and reached 913,000, and the number of accounts
              reached 1,000,000 - a 15% increase.

              The capital increased by 34% or by 41bln AMD and reached 161.6bln
              AMD. Nine banks replenished their authorized capital with 27mln AMD.

              The banking system's net profit is to total 23.5bln AMD - a 40%
              increase compared with 2006.

              As regards forecasts for 2008, we hope that the development of the
              banking system will doubly exceed that of the real sector. The raising
              of the financial intermediation level requires the development of the
              banking system at higher rates. Also, we expect the Dutch Postbank
              in Armenia next year.

              ARKA: Early this year you mentioned three "problematic" banks in
              Armenia, which received low marks by the CAMELS system. Have the
              problems of the banks been resolved, and are all the banks operating
              without any problems?

              Sargsyan: All the three banks have improved their financial situation
              this year. At present we have no banks that would not meet economic
              requirements and have any supervision-related problems with the
              Central Bank. In this aspect, all the problems have been resolved. Of
              course, competition will encourage banks to pay more attention to
              the management level. It is no secret that it is primarily a bank's
              management that accounts for its success or failure. So next year we
              will pay more attention to raising the management level at banks.

              ARKA: Early this year you stated the intention to introduce principles
              of protecting consumers' interests in the banking system.
              At what stage is the process, and what progress in the accomplishment
              of the tasks has been made?

              Sargsyan: The Parliament has adopted a number of normative documents.

              We have started putting into practice the requirements for banks'
              activities to become more transparent. Clients must be ware of the
              services rendered by banks, of the interest rates and of the prices.

              The Central Bank's web-site contains full information on the services
              rendered by all the local banks.

              We also plan the introduction of a system of universal interest rates
              with due regard for clients' other expenses. This will help banks'
              clients to be aware of the real cost of credits.

              New bills have been drafted, which take into account the best
              international experience and are aimed at the protection of clients.

              The laws are supposed to regulate crediting process, ensure the
              protection of clients' rights and make the services rendered by banks
              opener. Specifically, we have drafted bills "On financial ombudsman",
              "On consumer crediting", "On order of attracting deposits".

              The Central Bank has also prepared a new concept of financial
              arbitration. All the aforementioned procedures and concepts will be
              submitted to the Government and Parliament in 2008.


              What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


              • #87
                Re: Armenia's Economic Pulse

                Part 2 of 2


                ARKA News Agency
                Feb 4 2008

                ARKA: What other new legislative amendments concerning Armenia's
                financial system, particularly banks, credit institutions, insurance
                market and stock market , were adopted in 2007?

                Sargsyan: In 2007, the Central Bank seriously mitigated the bank
                management and banking supervision requirements, which allowed banks
                to manage operational risks using market mechanisms. The bank liquidity
                requirements were mitigated as well. The first step toward Basel-2 was
                made. Specifically, a standard approach to credit risk calculation was
                introduced. For financial services to be more available in Armenia's
                regions and rural communities, banks were allowed to carry out field

                As I have already noted the newly adopted laws allowed of radical
                changes in the management of securities and insurance markets. The
                relevant legislation was brought to conformity with European
                standards. The new law on insurance prohibits life and nonlife
                insurance of only one legal entity. New requirements for and standards
                of corporate and risk management were set for insurance companies.

                In conformity with the new law on the regulation of securities, the
                Armenian Stock Exchange and the Central Depository were transformed
                to open corporations and later sold to the Swedish OMX stock exchange
                operator. Minimal requirements to capital were set for professional
                market participants. The new law allows banks to be immediate
                securities market participants.

                ARKA: What is your assessment of Armenia's insurance market? What
                is the Central Bank's current policy and forecasts? What are your
                expectations of the sphere in 2008?

                Sargsyan: The first result we achieved is to clear the sector of
                weak insurance companies that are unable to function in conformity
                with insurance standards. If we fail to clear the insurance market,
                we cannot speak of solid foundations for the development of insurance
                in Armenia.

                Our goal is to clear the sector with further introduction of the best
                standards. We have adopted a law our German colleagues assessed as
                one of the best laws on insurance. All the changes are supposed to
                create favorable conditions for the development of insurance business
                in Armenia.

                Our next step is the introduction of compulsory insurance in Armenia.

                We hope that the Government will approve the concept of compulsory
                third-party insurance against traffic accidents, which will promote
                the development of the insurance sector. The next field is medical
                insurance. The Government has included measures to develop medical
                insurance in its program of action. Among the requirements for the
                development of insurance business is also the development of the
                institute of actuaries and the creation of a database.

                ARKA: How much will the OMX's entry intensify the activities on
                Armenia's stock market. Can any results be expected this year? In your
                opinion, how many enterprises will be working on the stock exchange
                in 2008?

                Sargsyan: A priority task for 2008 is the formation of
                infrastructure. We have quite a long list of measures we must implement
                in cooperation with the OMX. Specifically, the matter concerns
                legislative and statutory acts, formation of market institutes,
                which are necessary for normal operation of the stock exchange and
                depository. In other words, in 2008 we will direct all our resources
                to the formation of infrastructure.

                In 2007, several entities showed interest in the securities market,
                and we encourage this process in every possible way, practicing the
                rating of enterprises. Some of the enterprises have issued their own
                bonds. In fact, we have entities on the market which will intensify
                their activities after the OMX enters the market, and, naturally,
                the interest in the securities market will increase.

                ARKA: What inflation level is expected in Armenia in the context of
                the global economic processes? How well is the bank accomplishing its
                major task, namely, maintaining stable prices in the country? What
                is your general opinion of inflation?

                Sargsyan: Serious inflationary potential was accumulated in 2007,
                which is a rather serious problem for global economy creating serious
                turbulence on all the financial markets. Of course, the behavior of
                China and India exerts serious influence on prices, world markets. In
                this context, we have fears that the inflationary pressure from the
                world markets will be rather strong in 2008.

                Our goal is 5.5% highest inflation. We hope that this goal will
                be attainable by the end of 2008. As regards the year 2007, I have
                already noted that 7% inflation is expected in Armenia.

                ARKA: Will anything be changed in your inflation targeting policy in
                2008? Are our exporters now able to oppose inflation?

                Sargsyan: In 2008, the Central Bank will continue implementing all
                the necessary measures to switch over to full inflation targeting in
                the medium-term prospect. Among the measures are the enhancement of
                confidence in the Central Bank's policy, further development of the
                financial system, improvement of the macroeconomic forecast system,
                instruments of monetary policy, etc..

                As regards the second part of the question, it is important that the
                financial market participants are already offering new services to
                their clients, particularly derivatives, which will allow them to have
                forecast exchange rates at their disposal for a small price. Of course,
                it is primarily transparent enterprises able to sign relevant contracts
                with commercial banks that will be allowed to use these services. On
                its part, the Central Bank will encourage the introduction of a new
                culture of financial market, and the market participants must learn
                to manage their currency risks.

                ARKA: Do Armenian citizens trust the Armenian dram now, and how much
                did the dollarization level reduce?

                Sargsyan: Our citizens obviously give their preference to the Armenian
                dram. Specifically, last year (2006) we reached 50% level in assets,
                and this year (2007) we reached this level in liabilities.

                Over 50% are funds attracted in terms of drams, and this trend will
                be continued. This process is facilitated by the revaluation of the
                Armenian national currency on the one hand, and by the reduction of
                shadow economy on the other hand, which, in turn, stimulates reduction
                of the dollarization level.

                I think that approximate 10% reduction of dollarization level can
                be expected in 2007 if it is estimated in the context of the share
                of drams assets in our banks' gross assets as well as that of USD
                deposits in the total amount of deposits.

                ARKA: Does the sovereign rating assigned to Armenia produce any results?

                Sargsyan: There is increasing interest in Armenia, especially in the
                context of the forecasts on the ratings being made. In their turn,
                our commercial banks started paying more attention to their ratings,
                which facilitates the establishment of contacts with foreign partners
                and attraction of new financial resources. The ratings assigned to
                Armenia are of paramount importance for the country's further economic
                development, especially in the context of the region.

                ARKA: What is Armenia's real and specific potential to become a
                regional financial center in the context of present-day geopolitical situation?

                Sargsyan: First, our banking system is more advanced from the
                viewpoint of management, organization, knowledge and skills compared
                with the other countries of the Commonwealth of Independent States
                (CIS). International experts point out a rather high level of
                management and supervision in Armenia. The experience and knowledge
                of employees of Armenia's banking sector play an important role as
                well. Besides, we plan to direct considerable resources to sharply
                increase the potential necessary for the country's financial market
                to be able to render world-class services.

                ARKA: At what stage is the KfW Bank's mortgage crediting program in Armenia?

                Sargsyan: At present, nine commercial banks and two credit institutions
                are involved in the program. It is being implemented according to
                the schedule agreed on with the German side. By mid-2007, under the
                program financial institutes had issued 286 credits amounting 1.6bln
                AMD. By our estimates, during the first quarter of 2008 the first
                tranche of the program, [email protected], will have been utilized. The second
                [email protected] tranche is expected in April-May 2008.

                In 2008, more attention will be paid to the development of the
                secondary mortgage market, which is most important for us. In tote,
                mortgage crediting doubled in Armenia in 2007 and amounted to 55bln
                AMD - a 110% increase.

                ARKA: What is the expected amount of private transfers in 2007? What
                are the expected trends for 2008?

                Sargsyan: I would like to note that the amount of transfers
                is increasing. This is reality accounted for by our nation's
                peculiarities. Two thirds of Armenians are residing abroad, and
                when their economic and financial situation gets better, they are
                more active in investing in Armenia. Naturally, this is a generally
                positive trend for our nation.

                It is no secret for anybody that Armenia is a center of economic
                interests of not only our country's citizens, but also all Armenians,
                and the creation of a favorable investment environment in Armenia
                promotes inflow of capital, development of tourism and use of
                services. This is reality which shows a long-term trend, and, if no
                cataclysms occur in the world, particularly in Russia and in the USA,
                the countries that are principal providers of transfers and have the
                largest Armenian communities, this trend will continue.

                This year our forecasts of private transfers have been exceeded. They
                were expected to increase by 20-25 per cent, while the actual
                increase was 40%. That is the volume of private transfers is to exceed

                What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


                • #88
                  Re: Armenia's Economic Pulse

                  The Inflation Report: Trends and Policies (Part II)


                  ARKA News Agency, Armenia
                  Dec 17 2007

                  YEREVAN, December 17. /ARKA/. Armenian parliamentarians toughen the
                  responsibility of economic entities for the unreasonable rise in
                  prices for consumer goods.

                  When presenting the package of amendments to the Law "On protection of
                  economic competition" Gagik Minasyan, Chair of the Standing Committee
                  on Financial-Credit, Budgetary and Economic Affairs of the National
                  Assembly of Armenia, said that it is envisaged mainly to toughen
                  sanctions for unreasonable rise or fall in prices.

                  "If at present the State Commission on the Protection of Economic
                  Competition (SCPEC) imposes fines on economic entities within 2% of the
                  profit gained, after the amendments come into force it is envisaged
                  to authorize the SCPEC with the right of transferring the groundless
                  profit of the violators to the country's state budget," he said.

                  Minasyan said that thus the economic entities will be deprived of
                  the profit from unreasonable rise, fall or maintenance in prices.

                  He also pointed out that the elaboration of the package of amendments
                  was accounted for by the recent unreasonable rise in consumer prices
                  in Armenia.

                  "It should be taken into account that Armenia belongs to those
                  countries the markets of which have dominating entities. This package
                  of amendments to laws is called to regulate their activity," he said.

                  4.1% inflation is recorded by the group of goods "animal and vegetable
                  fats" in November 2007, which is a result of rise in price for
                  margarine by 9.5% and vegetable fat by 6.5%. Prices for butter rose
                  by 3.3%.

                  The inflation on the group "grain products" totaled 2.7% accounted
                  for by rise in price for flour by 5.1%. In November, prices for bread
                  rose by 1.3%. Grained sugar became cheaper by 7.4% in November.

                  The climax of rise in prices in Armenia was recorded in October 2007
                  when, according to the National Statistical Service, 3% inflation was
                  recorded as compared to December 2006. The trend of rise in prices
                  for bread, flour, butter and vegetable oil continued in the country
                  in October and totaled 13.5%. In October the rise for bread totaled
                  7.4%. From the beginning of the year, the rise in prices for bread
                  and flour totaled 23.8% and 28.9%, respectively.

                  According to the state budget, the inflation in Armenia is planned at
                  the level of 4% (1,5%) by the end of 2007. Earlier Chairman of the
                  Central Bank of Armenia Tigran Sargsyan announced that the inflation
                  in Armenia in 2007 will total 7%.

                  By Shakeh Avoyan

                  Radio Liberty, Czech Republic
                  Jan 9 2008

                  The prices of basic food products such as bread and cooking oil are
                  higher in Yerevan than in the majority of other former Soviet capitals,
                  an Armenian government official said on Wednesday.

                  Gurgen Martirosian, a senior official at the National Statistical
                  Service (NSS), based this assertion on a comparative analysis of food
                  price indices in the capitals of Armenia and eight other former Soviet
                  republics, including Russia and Azerbaijan. The data were provided to
                  the NSS by the Inter-State Statistical Committee of the Commonwealth
                  of Independent States.

                  According to those figures cited by Martirosian, Yerevan boasts the
                  highest retail prices of cooking oil and eggs. Those products cost
                  less even in Moscow, one of the most expensive cities in the world
                  and by far the wealthiest place in the former Soviet Union.

                  Armenia meets its demand in cooking oil mainly through imports, and
                  government officials could argue that the high cost of transporting
                  goods to the country pushes up its cost in the domestic market. By
                  contrast, the bulk of eggs sold in Yerevan stores come from Armenian
                  poultry farms supposedly competing with each other. Speaking to
                  RFE/RL, Martirosian could not explain why they are more expensive
                  than in Moscow and the seven other ex-Soviet capitals.

                  Only in one of those cities, Kazakhstan's capital Astana, the average
                  price of bread, a staple food across the former USSR, is higher than
                  that in Yerevan. The Armenian capital also trails only Moscow as
                  well as the capital of Kyrgyzstan, Bishkek, in terms of the cost of
                  butter. In Martirosian's words, sugar is apparently the only basic
                  foodstuff whose price in Yerevan is close to the CIS average.

                  The official statistics reflect the increased cost of life in Armenia
                  which is not confined to food. New research presented by a Yerevan
                  think-tank last August, for example, concluded that Armenians pay more
                  for fixed-line phone services than residents of not only neighboring
                  countries but the United States.

                  by Venla Sipila

                  Global Insight
                  February 12, 2008

                  Industrial producer prices increase by an average of 0.6% over
                  2007, according to the Statistical Committee of the Commonwealth of
                  Independent States (CIS). This is a very low rate in peer comparison,
                  and follows average industrial producer price inflation rates of 0.9%
                  and 7.7% seen in 2006 and 2005, respectively.

                  Significance:The now reported further easing of already moderate
                  producer price inflation in 2007 was combined with accelerating
                  consumer price inflation. Indeed, consumer prices increased by 6.6%
                  year-on-year (y/y) in December 2007, while the average inflation
                  rate accelerated from 2.9% in 2006 to 4.4% last year (see Armenia: 2
                  January 2008: ). The persistently very strong domestic demand pushed
                  up consumer prices, necessitating the Central Bank of Armenia (CBA)
                  to allow the dram exchange rate to appreciate strongly over the year,
                  as it had little other means to sterilise the effect of strong foreign
                  currency inflows in the form of workers' remittances and FDI.

                  Indeed, the dram/US$ rate ended 2007 at 304.22, having strengthened
                  by some 17% over the year. This, further, acted to moderate producer
                  price pressure, as the strength of the dram counteracted the high
                  price of energy imports, moderating the upward impact of commodity
                  prices on domestic producer price inflation. As domestic demand is
                  finally expected to cool somewhat, at the same time as international
                  energy prices remain at high levels, demand pressure on consumer price
                  inflation should somewhat ease, leading further to weaker upward
                  pressure on the dram. Thus, producer price inflation is likely to
                  somewhat pick up this year.

                  UP TO ANNUAL 6%

                  ARKA News Agency
                  Feb 4 2008

                  YEREVAN, February 4. /ARKA/. Central Bank of Armenia decided Monday
                  to drive refinancing rate 0.25 percentage points up to annual 6%,
                  the CBA press office reports.

                  The report says that the bank board's members are united in thinking
                  that high inflation rate create adverse environment for weakening
                  inflation pressures on domestic economy.

                  At the same time, developments inside the country will heavily
                  depend on high pace of individual consumption growth and the taxation
                  budgetary policy to be widened in 2008.

                  The CBA board members expect the outside inflation pressure to go on
                  throughout this year. They think it will be possible to curb inflation
                  and mitigate inflation pressure only by tightening monetary conditions.

                  2.4% inflation was recorded in Armenia in January 2008, compared with
                  the previous year's December, and 6.6%, compared with January 2007.

                  In the state budget, inflation is planned to be 4% (+- 1.5%) by
                  late 2008.

                  by Venla Sipila

                  Global Insight
                  February 12, 2008

                  The Board of the Central Bank of Armenia (CBA) has decided to increase
                  the annual refinancing rate by 25 basis points, ARKA reports. This
                  move takes the key policy rate up to 6%, and follows a hike of similar
                  magnitude in December, while the rate was left unchanged in January
                  (see Armenia: 6 December 2007: and 9 January 2008: ).The board of
                  the CBA remained concerned over both external and domestic inflation
                  sources. The CBA attributed the continued strength of domestic demand
                  to expansive fiscal policy. They further maintained that as external
                  inflation pressure is likely to persist over this year, lowering
                  inflation expectations and keeping the inflation rates within the
                  target range are likely to call for further tightening of monetary

                  Significance:The CBA's inflation-targeting policy has proved
                  relatively successful, but necessitating strong appreciation of the
                  dram exchange rate, in conditions of strong foreign remittance and
                  FDI inflows. Latest data show that inflation remained at an elevated
                  level in January, boosted notably by high food prices (see Armenia:
                  6 February 2008: ). Some moderation in Armenian inflation is likely in
                  the near term as growth should finally moderate from the double-digit
                  rates. However, some demand-side inflation pressures will remain as
                  domestic demand is likely to still remain robust, even if finally
                  easing. Moreover, oil prices are also likely to remain at very high
                  rates for some time to come, providing a constant source of inflation
                  pressure from the cost-side. In addition, the cost of food still
                  has a very large bearing on Armenian inflation, and development of
                  grain prices will also be of considerable importance for Armenia's
                  inflation this year. We believe that the central bank will continue
                  to be vigilant, stepping in with further rate rises if needed.

                  What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


                  • #89
                    Re: Armenia's Economic Pulse

                    Oh wow, is this thread on steroids? 305,171 postcount.


                    • #90
                      Re: Armenia's Economic Pulse

                      Originally posted by aray View Post
                      Oh wow, is this thread on steroids? 305,171 postcount.
                      Now 305,517. How you fertilize it Siamanto