– Can the international crisis drastically affect Armenia’s economy? Will the foreign monetary remittances be decreased or not?
– A lot was said about the possible effects of the international crisis in Armenia. Therefore, I’d not like to focus too much on that. As of its volumes I think in this economic quarter the effects are going to be higher on Armenia’s economy. The inflow of foreign remittances has a higher impact on Armenia, which is a more complicated issue and must be viewed in a larger perspective. In my opinion, in near future the inflow of monetary transfers will drastically decrease in Armenia. Last year, however, reduction of shady money inflow was registered, which I think will continue in this year as well. Besides that we know that a drastic number of our counterparts leave for Russia for a seasonal work and most of them will not be able to do so this year. And they usually don’t transfer the money they earn via banks and instead bring it over to Armenia in their pockets. Thus, this fact is not counted in the total calculation process. The reduction of exportation rates will also play a significant role. The rate amounted to 1 billion USD last year, which I think will remain the same if the general state policy stays stable.
– At present the CB continues keeping the currency rate stable.
– As a matter of fact when the AMD was revaluating even in the conditions of the complaints of the exporters the CB would say that it’s implementing a policy of a floating currency and that the main objective of the CB is keep the prices of goods stable. The CB was saying that it cannot possibly follow two objectives. However, they are doing the exact opposite, which in my opinion is wrong. The policy of the floating currency is a tool, which enables to relieve the gaps that originate in the economy. The fixation of the currency is also a form of policy however our economy is really built on a floating currency and it turns out that we are applying some foreign tools without certain systematic policy. Such a behavior cannot stay without consequences, moreover the consequences will be quite hard. I assume that there will be a major inflow of currency to Armenia as claimed by the Armenian executive that they are initiating foreign investments in Armenia. However, the monetary-credit policy cannot be built on such expectations especially when the issue of management of reserves is unique by itself. The reserves are guarantees for the investments. We should review the issue from this angle. At the end of 2007 the foreign reserves of Armenia amounted to 1.65 billion USD. It means they were considered a coverage of over a 6-month investment. The level of reserves may also be assessed in relation to the deficit of balance, and difference between exportation and importation. At the end of 2008 the reserves amounted to 1.4 billion USD. On the other hand if we take into account the fact that investment rates in Armenia in 2008 amounted to 4.4 billion USD compared to 3.3 billion of 2007 it turns out that the reserves may provide less than 4 months of the annual investment. It means that the pay-ability of the country is jeopardized.
– You mentioned that perhaps the government is expected certain inflow of currency. Do you think the 500-million USD credit project planned for Armenia from the WB also is considered as an expectation?
– We have always received loans from the World Bank and perhaps will still be receiving. Here the important thing is the volume. 500 million USD is not a very large number for 4 years.
– What are the purposes of wasting the reserves?
– Here I can only make assumptions. The CB didn’t make this decision alone. The crisis didn’t affect our economy too much last year. The first demonstrations of the crisis were the drastic decrease of cooper and molybdenum prices (decreased approximately 2.5 times) in the international markets. However, these goods make only 20% of our exportation or 200 million USD. In the last quarter of the year the construction rates have drastically fallen. Indeed the main factor was the political situation, which caused certain worries among potential and actual investors. It means this process caused the decrease of the AMD demand and pressure on part of the government to keep the AMD rate high. But I think the factors, which affect the currency market have more of psychological issues. People wish to convert their savings into some stable monetary unit – USD. I think the CB is trying to pacify this psychological panic. Do you remember last year right after elections major numbers were declared as though our counterparts in the Diaspora are planning to make major investments here? The invention of such tales is characteristic to our government. They constantly try to bring up some tales, financial centers are being established, etc. I think even they are not serious about these statements but indeed there were certain expectations. We shouldn’t also exclude the fact that our country is oligarchic. Another important factor is that the government is not able to stabilize prices due to the existing monopolies. In the event when prices are going down all over the world our country tries to solve this issue here through currency inflow.
– The recent tax amendments have caused major complaints around the mandatory use of receipt printing machines as well as the increase of the amount fines in this regard. The ones, who use receipt printing machines, will from now on demand certain documents from the distributors of goods. By doing this the government is trying to bring the major businesses to the tax zone as well. Do you find this approach convincing?
– Of course, it’s not convincing. Of course it would be good if the transparency of a type of activity is provided but the receipt printing machines are not the only way. For example, in developed countries there is certain freedom and people have to choose. It’s not mandatory for small businesses to apply receipt printing machines. But it’s absurd to think that it will be possible to bring the major businessmen to the tax field at the expense of the small businesses. The major businesses are part of the government. Let them seek the culprits amongst themselves. Let them demand from the rich MPs legally pay their taxes. Why would they bother the ones, who trade in fairs or taxi drivers? Let them solve the issue of bringing the owners of fairs and managers of minibus lines to the tax field. Registration is a good thing but not the only way and plus they shouldn’t solve other issues through the small businesses.