According to the information of the CB, wire transfer capacities increased by 37% within 2003-2005 and covered 15% of GDP. This information concerns the banking system only, while we know that often money transfers reach their destinations not via banking services, but by other means. The exact capacities of those transfers are not evident. The CB has conducted research with the purpose of finding out information. They conducted the mentioned research in February-April, 2006 along with “Alpha plus consulting” supported by the World Bank. According to head of the foreign statistics department of the CB, Karine Karapetyan, the mentioned research is the biggest one that has ever been conducted in Armenia. The research covered three fields: those who receive transfers (2.000 families), those who transfer money (2.000 families from Moscow) and organizations that receive money and distribute it. Karine Karapetyan said that such a research was organized in the U.S. in September-November too, and the results may be combined with others. I was informed by a representative of “Alpha plus” that their research covered different representatives of different groups from all regions of Armenia. They conducted their research mainly in “Anelik” bank and “Unistream” money transfer branches.
Senders
Now let’s take a look at what they found. Let’s start from those who make money transfers. Most financial transfers come from Russia (72%). The second biggest group comes from the U.S. (14%). Armenians receive money transfers from Germany, Greece and Ukraine too, but the total capacity of transfers from those countries does not exceed 5% of the total share of transfers from abroad. 31% of the transfer capacities are sent by people that work abroad seasonally, and 69% are sent by people that live in those countries permanently. There is an interesting thing; those who have lived abroad for over 15 years don’t always help their relatives in Armenia. Only 6% of those people send money to their relatives in Armenia. But those that continue sending money to Armenia assure that they will not stop doing so. 85% of citizens assured that they would continue sending money to their relatives.
They have interesting information about the occupation and incomes of those people. Those who send money from Russia to their relatives in Armenia mainly work in the fields of construction (47%) and trade (21%). Things are different in the U.S.; only 6% work in construction and 10% – in trade.
In order to send money to their relatives, first of all they need to take care of their own expenses, save a little money and then think about sending a part of that money to Armenia. It means that money to be sent depends on their income capacities. Specifically, those who have $500 income per month send 12.1% of their income to Armenia. Those who get $500-1000 per month send 18.8% of that money to their relatives, those who get $1000-2500 send 36.7% of their income. Generally, Armenians working abroad send 27.2% of their income to Armenia. Their monthly current expenses cover 55%, as for leisure, they spend only 7% of their income. 28% of those people refused to work in Armenia, while 44% of them said that they might agree to work in Armenia if they received $300-1000 per month.
According to Karine Karapetyan, most of the wire transfers (97%) are in USD.
Recipients
Now let’s move on to the people receiving the money. As Edward Aghadjanov says, 37% of Armenian economy depends on the “wire transfer injection”.
34% of the total number of transfers are sent to citizens of Yerevan. As for the regions, the second one is Gegharkounik region after Yerevan. 51% of families in this region receive wire transfers from abroad. The second one is the Tavoush region (44%). The last one is the Lori region (21%). These figures may show the migration tendency from regions of Armenia as well. Recipients are classified in several groups based on their incomes.
As we know, the CB explains its policy not to take any steps to stop the fall of USD prices in the following way: if the CB buys a part of USD share in Armenia with the purpose of keeping its prices stable, it may lead to inflation. According to the CB, inflation may affect the purchasing power of citizens generally, as for the fall of USD prices, that may affect the purchasing power of only a group of citizens. This group covers 37% of the society.
The bad thing about the CB policy is the fact that the group of poor citizens suffer because most of them get their incomes in USD. The CB doesn’t agree with this and thus we wonder which part of the wire transfers covers poor groups of citizens. They have given an original answer to this question. “There are not many poor people, thus, the share of very poor people is very small”, as stated in the statement of the CB. With this they want to say that this process doesn’t affect the pockets of poor people.
If so, which groups get those shares of transfers? We can find the answer to this question in the same statement: “…wire transfers are mainly sent to the medium group…” The explanation of this term is very interesting: “…medium group is a group of citizens, whose monthly incomes exceed the level of the minimum consumer basket”. The CB has considered 19.373 (almost $50) AMD income as a limit for defining a “poor” status. In fact, the WB has approved this mark. I wonder what the citizens of Roger Robinson’s country would think about him if he said that those who receive $50 could live normally. They would definitely think that Armenians live in a heavenly country, where everything is cheap and the people who get $200 per month live very well. I believe that those who receive $50 don’t represent the medium group that Seiran Avagyan used to mention a long time ago.
There is one figure in the statement which contradicts the term “medium group”. “Families that receive wire transfers spend over 76% of that money on their current expenses…” If these people represent the medium group how can they spend such money on food or other current expenses? People spend 3.4% of the money they receive on purchasing electronic, technical facilities, and save 1.1% of that money.
“Those who distribute money”
This research also tried to find out how people receive those money transfers and which part of that money is transferred via bank services and other similar organizations. According to a research organized by the CB in 2005, which purpose was to find out the level of “dollarization” in Armenia, 56% of money transfers were transferred to Armenia via bank services, 29% were sent to people directly in cash and 15% – via other similar organizations. The results of the latter research differ from these. This time they estimated the bank wire transfer capacities as 78%, cash transfers as 12.5% and 8.6% through other organizations. As informed by “Alpha plus”, these services are carried out by ten organizations experienced in cargo transportation and money transfer services. According to those who conducted the research, the mentioned organizations refused to give them information, but they asked for information from their competitors and colleagues so as to have enough imagination about the field in general.
Transfers from Russia are made mainly through bank services and they are sent through other organizations from the U.S.. The reason is the fact that banks ask more money for money transfers than the mentioned organizations and they also ask for more documents for handling those services. It’s no secret that most Armenians living in the U.S. live there illegally and can’t have the necessary documents.
Anyhow, according to CB specialists, 78% is a good mark (wire transfers via banks). For instance, this mark covers 53% in Moldova, 50% in Kyrgyzstan and 46% in Albania.
On the basis of the figures registered after the research (22%) on money transfers through other services than the official ones, last year the CB estimated the total capacity of annual money transfers to Armenia as $940 million.