The Armenian union of producers and businessmen organized a discussion on the topic of currency exchange rate changes.
The organizers had invited Tigran Sargsyan (Central Bank president), Vahram Nersisyants (RA president’s adviser), Karen Chshmarityan (RA minister of economy and development) and other economists. As always, Tigran Sargsyan assured the participants that the capacity of foreign transfers to Armenia had grown much during the past three years, as a result of which the currency exchange rates changed much. The latter also said that a part of the money transfers was spent on construction and services, due to which those two fields have registered 37% and 12% economic growth. Those fields have supported the total economic development as well. The CB president said that he thought that there is a tendency for growth and in the future it would develop those fields more; these fields are key components in the domestic economy. As for the national currency, the CB head said that its growth is conditioned by the mentioned factors. The CB president said that he thought “some businessmen had to agree with the idea that they had to close their businesses in the current development phase”. The president said that the producers had super-profits and had to lose a part of that money. As for these businesses, the CB head meant some monopolistic businesses. However, Mr. Sargsyan didn’t mention certain names and information about the mentioned companies. Sargsyan assures that the monopolistic companies get several times more profit than the foreign companies operating in the same fields. He said that one of those fields was the construction field. The CB head said that the third group of businessmen consists of those people that have or can find resources to develop businesses. He suggested the businessmen to reimburse their losses caused as a result of currency exchange rate changes by improving the productivity and management systems of their companies.
“We have been told since the Soviet times and have always known that we should apply new technologies to develop productivity and management systems. Tigran Sargsyan did not give us new information. We are working to do that as much as we can” said the head of diamond reproduction company “DCA”, Gagik Abrahamyan.
According to the businessmen, most of the companies worked with the help of foreign companies, i.e. foreign companies invested in domestic companies, imported raw materials, used the local cheap work force to produce or reproduce. However, if they are faced with an issue on either to install new technologies or make some changes, they may close their businesses and take them out of the country, which will be bad for the economy and the issue of unemployment in general. The head of the Armenian union of producers and businessmen, Arsen Ghazaryan added that the Armenian businessmen are clever enough to understand that they should modernize their businesses.
“This is what they have been doing during these four years”, said Arsen Ghazaryan, “Nevertheless, the currency rate changes are an obstacle for them and don’t let them compete. They make contracts abroad and when they come to Armenia, the exchange rates are different already. Several days ago we were present at the opening presentation of “Armenal” company, where they said that they were going to make big investments in that company. However, the investment capacity they are going to make is cheaper now by 37% and will not serve for the goals foreseen beforehand”. He says that it is impossible to prevent such changes, but the problem is the fact that the changes are fast and thus it is very difficult to make calculations based on reliable information and it makes more difficult for businesses to make decisions.
Anyway, Tigran Sargsyan still thinks that the exchange rate policy should be based on the floating rates course and in parallel with the growth of transfer capacities the exchange rates should change as well. Arsen Ghazaryan and the other businessmen did not agree with him and said that inflation didn’t grow in parallel with exchange rate changes. “You can buy as much products with the national currency as one or three years ago” said A. Ghazaryan, “we can’t buy goods with the same money now as we did several years ago”.
Besides the government officials, all the participants think that the income of companies in some fields should be re-estimated. They say that the government should consider their super profits and tax them as it should. Arsen Ghazaryan said that there are many businesses interested in taxing the companies in a duly manner, while there are companies that have super profits and are trying to hide their incomes and like those tricks, thus affecting the other businesses. “There is so much shady money in the economy, that they can just re-distribute all the businesses in the country and buy the companies that have been founded during many years” said A. Ghazaryan.
The participants discussed the mentioned issues and left. It is clear that the USD price will continue falling and some businesses will continue having super profits, the domestic producers that export goods will lose their competition potential and will close their businesses as Tigran Sargsyan advised them to do. As for our economy, as they say, it can develop for another 100 years in such conditions.