The devaluation of the dollar has not only mixed up the plans of the “Hayastan” all-Armenian fund, but also the business and friendly relations between Armenia and the Armenian Diaspora. President of the fund Naira Melkumyan has announced that the devaluation of the dollar has had a negative influence on the insertion of contributions in dollars.
“Many benevolent organizations of Armenia have temporarily stopped working with the fund. Large benevolent organizations no longer provide large sums of money to the fund. The fund also had some financial problems, but the Board of Trustees is going to solve everything soon,” said Naira Melkumyan. Mrs. Melkumyan doesn’t know how this issue will be solved, but she thinks that it will be solved. She also believes that the authorities of Nagorno Karabakh know “how serious the issue is”.
For several times, we have heard that the Karabakh authorities complain about the pace and quality of work of the fund. By saying “seriousness of the issue”, Naira Melkumyan probably wanted to say that the implementation of the fund’s projects are moving at a slow pace because of the devaluation of the dollar and the shortage of financial contributions, which of course, has an influence on the process. The budget for the projects is calculated by the Armenian dram. The local authorities probably realize this, but do the benefactors, whose financial contributions are devaluated day by day, realize that? Let’s say, the 10,000 dollars granted for the implementation of a project last year, which was the equivalent of 4.7 million drams, became 4.5 million dram a couple of months later; in summer 2006, it was 4 million and now it’s 3.8 million drams. The 4.7 million drams went down nearly a million dram, or approximately 20%. This obviously has a negative impact on the implementation of projects. Perhaps the fund’s board of trustees realizes this and doesn’t want to understand this because they have already realized something else-the devaluation of the dollar in Armenia is a result of speculation, that a group of people simply earn a lot of money through the means of their charities and don’t want to feel “cheated on” by making their contributions. But Mrs. Melkumyan believes that the benefactors will understand the issue at hand. “We have told the benefactors and local bodies that the fund will no longer present any project worth in dollars. We are going to present it in drams, so they can look at the Armenian dram currency exchange rates on the Central Bank website and they make the money transfers based on the exchange rate of the day. I must say that the fund’s benefactors and the local bodies are ready and willing to solve the problem. In other words, we have an agreement with them, they have agreed to transfer the money not beforehand in dollars, but rather in the currency, which we are forced to accept,” says Naira Melkumyan. According to her, in 2006 the local bodies assembly decided that each project implemented by the fund must have a 5-10% stored amount in order to avoid the ups-and-downs of the exchange rates. However, Armenian reality showed us that the dollar has gone down by 20% in a year, so that 5-10% can’t cover up for the entire loss in that one year of the dollar devaluation, especially since parallel to the dollar devaluation, or as the Armenian authorities like to call it-evaluation of the dram-prices for construction materials have gone up. Based on the data of the statistics department, prices for construction materials have gone up by 8.4% compared to the prices last year. This mark is not too accurate, in other words, it’s low because based on the data of the same statistics department, the price for cement has gone up by 38%, plaster-35%, varnish-26%, paint-7%. Experts say that the prices for imported metals and wood for construction have gone up too. Armenian benefactors probably know that the plaster and cement are produced in Armenia and there is no objective reason for the increase in the prices. As for the other two products, they are imported and that’s why they had to decrease in price because they are sold in drams, while they are imported to Armenia by paying dollars. It’s quite possible that the benefactors realize that production of construction materials and import are monopolized in Armenia and bring the owners a lot of profit; that the same owners take in some of the money they receive and that’s why they don’t find it necessary to increase the amount of dollars of their charities, or they simply stop doing charity. Mrs. Melkumyan assures that project implementation won’t suffer the consequences of the inflation of construction materials. “We know that when a constructor signs a contract with the fund, he takes the risk and knows that the prices for some things may go up and down. So, we’re not really afraid from that point of view. Of course, the only thing we fear is the dollar exchange rate. If we get a yearly income of 15 million dollars, how much is the difference in drams?” I don’t agree with N. Melkumyan because the constructor won’t care about the loss in profit, but rather he won’t do high-quality work. Let’s recall the North-South Highway, which was constructed and finished in 2001 with funding provided by the “Hayastan” fund and collapsed.
As I mentioned above, the Karabakh authorities not only complain about the fund’s pace, but also the quality of projects implemented by the fund. However, Mrs. Melkumyan doesn’t agree with them and doesn’t know what kinds of experts have evaluated the work, especially since international auditors haven’t found any money laundering. If the auditors haven’t found anything, it means that there is no money laundering. But we Armenians can say that those international experts haven’t paid much attention. The proof is once again the collapsed road. Besides that, we can see the positive but subjective conclusions in the different fields of Armenia’s economy.