It turns out that in Armenia not only the authorities are optimists (or are trying to be optimists) but the owners of private companies as well. We came to the conclusion by reading the results of a survey conducted by the ARKA news agency among finance sector representatives concerning the prospects in 2011.
Of course optimism is a good thing. However strong optimism is suspicious. The financial sector of Armenia is more developed and stabile but still there are problems. Let’s start discussing these problems from the sector of banks. 2009 was a crisis year. Notwithstanding the efforts of the authorities our financial system was not accepted seriously by the international community as a safe place for financial investments, thus investments were not directed into Armenia. There were no serious collapses or bankruptcy cases in Armenia, but the financial system could not escape from financial crisis and the negative results, thus the incomes of banks were reduced. In 2010 there was a small development in this sector. As the tax information shows, the banking system has not felt this development. It is logical that if companies and the sector generally are growing, the tax payments should grow as well. Specifically, the direct taxes should be more. However, the figures and data provided show another situation. Twenty trade banks involved in the list of the largest 20 taxpayers of Armenia have paid 3.8bln dram more taxes to the budget in the crisis year of 2009 than in 2010.
Specifically, in 2010 the tax payments reduced by 26%. It is worth mentioning that 11 banks out of the banks included in the list have cut down the tax payments to the budget. However, all 100% of the surveyed bank officials assured that in 2011 the bank circulation will grow and the salaries of their employees will be increased. As for the profitability growth, only 8% of banks said that this would not happen.
Maybe bankers have reasons to be optimistic. The information concerning the three months will be available in a month. However the high inflation rate and restriction of the monetary policy do not inspire optimism. The increase of the refinancing rate will result in the increase of credits and reduction of the capacity of credits provided by banks. Even bankers agree with this opinion. In answer to question whether they expect a third wave of crisis only 46% of the respondents gave a negative answer. 54% of them said they did not know. In other words, more than the half of the Armenian bankers do not know what will happen to the international crisis but they believe their business will be good next year. The median optimism index of the bankers was equal to +86.5.
We will not bring details about credit organizations as their role in the economy is weak. They are less optimistic than banks. Their optimism index is +54.4.
The most optimistic companies are insurance companies. All the respondents from insurance companies believe in 2011 the capacities of their deals, their salaries and incomes will grow.
It is normal that insurance companies are so optimistic because in the end of last year the government gave them a great gift by adopting a law on obligatory insurance of vehicles. However, the number of cars in the country is limited and if either of those companies recruits more clients and money, it will be on the account of other companies. Besides that insurance companies say that drivers have found ways to cheat them and make money. If after all these things the insurance companies still believe that their business will go well, we can only wait and see what will happen to them.