Armenia's Economic Pulse

[londontsi]

Re: Armenia's Economic Pulse

Armenia Sells More Eurobonds

Hovannes Shoghikian
Հրապարակված է՝ 20.03.2015

In its most expensive ever borrowing operation reflecting the fallout from an economic crisis in Russia, the Armenian government has issued its second Eurobond worth $500 million at a yield of 7.5 percent.

........

The worst part of this debt is the fact that EURO has hit the deck and its on the way up.
Far more burden to repay than the 7.5 percent interest.


.

[londontsi]

Re: Armenia's Economic Pulse

U.S.-based Armenian think tank slams Yerevan over Eurobond issuance

http://armenianow.com/economy/61737/armenia_eurobond_issuance_pfa

PFA Considers the issuance of the Eurobond by Armenia's Government Irresponsible and Damaging

Policy Forum Armenia (PFA), a Washington-based group of Armenian economists, political scientists, journalists, legal experts and others, considers the recent issuance of Eurobonds by Armenia’s Government “irresponsible” and “damaging for the country”.

In a statement released on Tuesday, the PFA suggested that Armenia needs economic reforms rather than issuance of expensive foreign debt, something that it believes will result in “even bigger losses”.

Last week, the Armenian government issued its second Eurobond worth $500 million at a yield of 7.5 percent. The 10-year dollar bonds were sold in international financial markets through Deutsche Bank, HSBC and JP Morgan on Thursday.

In approving the measure in January the Cabinet led by Prime Minister Hovik Abrahamyan cited the need to finance Armenia’s budget deficit and “neutralize” the Russian recession’s spillover effects on the Armenian economy.

But the PFA has criticized the Armenian government for the move and its “desire to avoid policy changes”.

“Deep reforms are needed to move Armenia’s economy from an imminent collapse. Issuing expensive foreign debt and attempting to pay one’s way out of the crisis will only delay the inevitable and result in even bigger losses for consumers, banks, and the sovereign balance sheet,” the organization’s Executive Board said.

The PFA, which is known to question the legitimacy of the current Armenian government and alleges large-scale government corruption in Armenia, also called on the international community and capital market participants “to cease funding the regime in Yerevan”.

“Future democratic governments of Armenia will have every reason to declare these debts illegitimate and stop servicing them,” it concluded.

The Armenian government carried out the first dollar bond issuance in September 2013, raising $700 million at a yield of 6.25 percent. It was then touted as a successful operation.

.

[Mher]

Re: Armenia's Economic Pulse

U.S.-based Armenian think tank slams Yerevan over Eurobond issuance

http://armenianow.com/economy/61737/armenia_eurobond_issuance_pfa

The PFA is a disgusting and cowardly organization. Nothing but a bunch of stuck up westernized pseudo intellectuals. Their demands are so far removed from reality on the ground that its painful to even take seriously. They are essentially rooting for a collapse of the Armenian government, with the hope that it occurs before the collapse of the nation as a whole. And they absolutely refuse to acknowledge any improvements in Armenia. Because its their psychotic radical world its revolution or nothing. Regardless of what better policies could have been pursued, it's undeniable that there are major external forces at work that were almost impossible to predict, and way out of our control. If Azerbaijan with its $15B foreign reserves and $37B sovereign wealth fund still had to devalue its currency 33%, do they really believe there is anything Armenia could have done to not have been effected here? Perhaps their most pathetic endeavor is their disgusting smear campaign against ArmeniaFund that has no basis in fact or reality. And the organization is so cowardly that if you ever dare challenge their ludicrous facebook posts with a contradicting comment, your comment immediately gets deleted.

[londontsi]

Re: Armenia's Economic Pulse

The PFA is a disgusting and cowardly organization. Nothing but a bunch of stuck up westernized pseudo intellectuals. Their demands are so far removed from reality on the ground that its painful to even take seriously. They are essentially rooting for a collapse of the Armenian government, with the hope that it occurs before the collapse of the nation as a whole. And they absolutely refuse to acknowledge any improvements in Armenia. Because its their psychotic radical world its revolution or nothing. Regardless of what better policies could have been pursued, it's undeniable that there are major external forces at work that were almost impossible to predict, and way out of our control. If Azerbaijan with its $15B foreign reserves and $37B sovereign wealth fund still had to devalue its currency 33%, do they really believe there is anything Armenia could have done to not have been effected here? Perhaps their most pathetic endeavor is their disgusting smear campaign against ArmeniaFund that has no basis in fact or reality. And the organization is so cowardly that if you ever dare challenge their ludicrous facebook posts with a contradicting comment, your comment immediately gets deleted.

I do not have as intimate knowledge as you seem to have about this organisation.

Clearly they do not have any executive power and arguably do not bear any responsibility for the state of affairs in Armenia.

You say “they are rooting for the collapse of the Armenian Government”.
That may or not be the case however the current Government in power is doing just the opposite.
Namely making sure the current Government does not fall at the expense of the state of Armenia and the Armenian nation.

Yes there are external forces that have exacerbated the state of affairs in Armenia but these are only recent.

The current authorities have been in power nearly 8 years long enough time to improve things.

Instead we have increase of poverty to nearly 40%
Mass migration
Overt corruption with reward and immunity to the corrupt.
Abuse of the law and the constitution etc etc.

Recently a body was formed to tackled corruption in Government.
Imagine who were appointed to lead the committee.
The prime minister and the economics minister.
Some objectivity of the effort, both oligarchs.

The time has come for the chickens to roost.
We need scapegoats, how about some cowardly westernised pseudo intellectuals who are pointing that the government is on the wrong path.

Borrowing 7.5% when Euro interest rates are 0.5% and when the Euro is at its lowest value shows how much risk premium we are paying.

More than bankrupt European countries.

.

[Haykakan]

Re: Armenia's Economic Pulse

That interest rate does seem exceedingly high. I would bet the loan was taken as a part of some political deal with some other political entity. We should also not forget that the groups like the one you guys are speaking of have been around far longer then the present government. By no means are all foreign ngos spies but some are and are extremely dangerous.

[Mher]

Re: Armenia's Economic Pulse

I do not have as intimate knowledge as you seem to have about this organisation.

Clearly they do not have any executive power and arguably do not bear any responsibility for the state of affairs in Armenia.

You say “they are rooting for the collapse of the Armenian Government”.
That may or not be the case however the current Government in power is doing just the opposite.
Namely making sure the current Government does not fall at the expense of the state of Armenia and the Armenian nation.

Yes there are external forces that have exacerbated the state of affairs in Armenia but these are only recent.

The current authorities have been in power nearly 8 years long enough time to improve things.

Instead we have increase of poverty to nearly 40%
Mass migration
Overt corruption with reward and immunity to the corrupt.
Abuse of the law and the constitution etc etc.

Recently a body was formed to tackled corruption in Government.
Imagine who were appointed to lead the committee.
The prime minister and the economics minister.
Some objectivity of the effort, both oligarchs.

The time has come for the chickens to roost.
We need scapegoats, how about some cowardly westernised pseudo intellectuals who are pointing that the government is on the wrong path.

Borrowing 7.5% when Euro interest rates are 0.5% and when the Euro is at its lowest value shows how much risk premium we are paying.

More than bankrupt European countries.

.

More on the organization, a very good article by William Bairamian that I recommend everyone to read

Sanctions Proposed Against Armenia

http://thegampr.com/2013/11/27/sanctions-proposed-against-armenia/

That's sums up perfectly my gripe with the organization. As far as the issue at hand, and your response, you make some good points, but here's my take:
I'm no apologist for the Armenian government, or a supporter of the HHK. And I want no part of the hypocritical and clueless Diaspora train saying people of Armenia don't complain too much, it's not so bad, while living far away in comfort. The HHK is corrupt and incompetent for the most part. There is a emigration issue. There is no total rule of law.The courts are not perfectly impartial, and there is abuse of power.

With that said, I would lying if I didn't mentions the positives
In the past four year, Armenia has moved from 128th to 94th on Transparency International's Corruption Perception Index, improving every year
Armenia is a leader regionally in press freedom
Our GDP growth for the past 4 years at 4.7%, 7.2%, 3.5%, and 3.4% has been solid

The idea that government change would improve everything can not be based on reality. Besides the fact that much of opposition has proven itself to be either incompetent, or equally corrupt, I would say it's undeniable that any future government would have had to taken these exact same steps given the current conditions in Armenia. It would have been necessary not for their own survival, but for the survival of the nation. Armenia is in a constant state of live or die. It's not Argentina or India, where you can have difficult periods, and your people suffer, but the country moves on. With such a small population, that's so prone to emigration, it's unrealistic to expect to go through another massive economic crisis and be sure you will survive.

[Haykakan]

Re: Armenia's Economic Pulse

YUAN STRENGTHENS AFTER ARMENIA CURRENCY SWAP DEAL

ECNS, China
March 26 2015

2015-03-26 13:22 Xinhua Web Editor: Gu Liping

The central parity rate of the Chinese yuan strengthened by 35 basis
points to 6.1375 against the U.S. dollar on Thursday, according to
the China Foreign Exchange Trading System.x The surge came after a
currency swap deal between China and Armenia valued at 1 billion yuan
(162.93 million U.S. dollars), or 77 billion Armenian dram.

The three-year deal signed by China's central bank and its Armenian
counterpart aims to boost bilateral trade and investment, and it
could be extended upon agreement by both sides, said the People's
Bank of China late on Wednesday.

To encourage international use of the yuan, China has signed currency
swap agreements with more than 20 countries and regions since the
onset of the global financial crisis in late 2008.

In China's spot foreign exchange market, the yuan is allowed to rise
or fall by 2 percent from the central parity rate each trading day.

The central parity rate of the yuan against the U.S. dollar is based
on a weighted average of prices offered by market makers before the
opening of the interbank market each business day.

http://www.ecns.cn/business/2015/03-26/159526.shtml

[Mher]

Re: Armenia's Economic Pulse

Not bad considering the conditions in the region. At this point I would consider anything above zero a success


World Bank Cuts Armenian Growth Outlook

Sargis Harutyunyan
Հրապարակված է՝ 31.03.2015

In a significant downward revision of its earlier projections, the World Bank said on Tuesday that economic growth in Armenia will likely slow to just under 1 percent this year due to spillover effects of a recession in Russia.

The bank forecast late last year that the Armenian economy will expand by 3.5 percent in 2015 -- as fast as it did in 2014, according to official statistics. The Armenian government was even more upbeat, forecasting a growth rate of 4.1 percent.

Laura Bailey, the head of the World Bank’s Yerevan office, said that the figure is unlikely to exceed 0.8 percent. She warned that even this growth projection could prove overly optimistic in case of a deeper-than-anticipated crisis in Russia or renewed drastic fluctuations of the Armenian dram’s exchange rate.

“I don’t have a forecast for what will happen with the dram,” Bailey told a news conference. “What I am trying to communicate is that if there were sharp, abrupt changes either direction, that can be disruptive to exports and trade.”

“That’s what we worry about, not as much whether the dram were to weaken a bit more gradually or strengthen but the sharpness,” she said, cautioning against a repeat of a brief currency crisis that hit Armenia in December.

The Armenian currency weakened by roughly 18 percent against the U.S. dollar in November and December amid falling remittances from Armenians working abroad and Russia in particular. Its exchange rate has been largely stable so far this year.

Deputy Prime Minister Vache Gabrielian seemed to acknowledge on Monday that the government too will have to revise its projections downwards. “The government has never said that there will be no changes in the [forecast] indicators,” he told reporters. “There will be discussions [in the government] soon. I will present forecasts to you as soon as those discussions are over.”

“We are going to have less growth than was projected,” said Arsen Ghazarian, the head of Armenia’s largest business association. “Forecasts range from 0.5 percent to 2 percent.”

http://www.azatutyun.am/content/article/26930803.html

[Mher]

Re: Armenia's Economic Pulse

IMF Expects Recession In Armenia

Emil Danielyan եւ Sisak Gabrielian
Հրապարակված է՝ 15.04.2015

The Armenian economy will likely contract by 1 percent this year due to spillover effects of Russia’s economic troubles, the International Monetary Fund has said in a sharp downward revision of its growth projections for Armenia.

“Armenia and Belarus are projected to enter into recession in 2015, and Georgia’s growth will slow. In all three economies, the downward turns reflect spillovers from Russia,” the IMF said in its latest World Economic Outlook released late on Tuesday.

Mark Horton, the head of an IMF mission visiting Yerevan likewise predicted last week that economic growth in Armenia will be “close to zero” in 2015. He too cited the fallout from the recession in Russia, the South Caucasus state’s leading trading partner and the main source of multimillion-dollar remittances.

Both the IMF and the World Bank forecast a 2015 growth rate of 3.5 percent as recently as last fall. The bank cut its outlook late last month, saying that Armenia’s Gross Domestic Product will at best increase by 0.8 percent in real terms.

The Armenian government recorded a GDP increase of 3.4 percent in 2014 and expected faster growth this year. The slowing growth is putting at risk its tax revenue and spending targets.

Apparently anticipating the downturn, the government sold about $500 million in dollar bonds in international markets late last month. It is due to spend $83 million of the Eurobond proceeds on covering the 2015 state deficit projected at roughly $250 million. Another $200 million is to be channeled into a government “stabilization fund” for special budgetary expenditures.

The IMF expects the Russian economy to shrink by 3.8 percent this year and another 1.1 percent in 2016 mainly because of recent months’ sharp fall in oil prices.

The Russian recession has already dramatically slashed the dollar value of remittances from scores of Armenia migrant workers in Russia. The resulting depreciation of the Russian ruble is hitting hard Armenian agribusiness firms and beverage manufacturers oriented towards the Russian market.

The IMF report said that Armenia and other ex-Soviet states dependent on Russia should “if necessary” further depreciate their national currencies. “Tighter monetary policy may be needed to address inflation pressure resulting from currency depreciation,” it said.

The Armenian dram weakened by roughly 17 percent against the U.S. dollar in November and December but has been largely stable so far this year. Its current exchange rate appears to have been bolstered by a 15 percent rally in the ruble’s value registered in the first quarter.

The looming recession coincided with Armenia’s recent accession to the Russian-led Eurasian Economic Union (EEU). President Serzh Sarkisian and his political allies have said all along that EEU membership will improve the country’s economic prospects.

But critics are already seizing upon the worsening macroeconomic situation to dismiss those assurances. “In the past three months we have had a fairly serious drop in trade [with other EEU member states,]” Vilen Khachatrian, a Yerevan-based economist, said on Wednesday. “This means that the EEU is still unable to function properly as an economic cooperation structure.”

http://www.azatutyun.am/content/article/26957365.html

[Mher]

Re: Armenia's Economic Pulse

Copper, which is Armenia's biggest export at 20.5% has made a 10% recovery in recent weeks after hitting a 5 year low in Q1 of 2015.

http://www.nasdaq.com/markets/copper.aspx?timeframe=1y