The government submitted to the NA bills on amending the code on Administrative legal violations and the laws on Currency regulation. In those mentioned laws the punishments for the violators were restricted. According to the current law in the territory of Armenia the entrepreneurs are not allowed to label prices in currency. It means goods and services cannot be sold in currency. However, if in past the violators of this requirement would be fined in the amount of 100 times of the minimum rage for the first attempt and 200 times of the range in the event if the violation is repeated second time in the same year then now according to the submitted draft the entrepreneurs will be fined in the amount of 2000 times of the minimum rage (2 million AMD) and 4000 times (4 million AMD) if repeated for the second time. According to the chairman of the Central Bank of Armenia Artur Javadyan this is a method of fight against dolarization, which of course doesn’t relate to the exporters and importers. The level of dolarization in Armenia is 73% and in banks only 23% of the money is saved in AMD. According to him in 2008 65% of the savings were in AMD and 35% in USD. However according to Javadyan in the neighboring countries the situation is sadder and the level of dolarization reached 90%. Chairman of the Central Bank of Armenia does not expect any serious fluctuations of interest rates on the market. “To stimulate the demand for AMD deposits, Armenian banks had to raise interest rates to have necessary funds for AMD crediting,” Javadyan told reporters. He pointed out that this approach is practiced in many countries. Specifically, in Russia the annual interest rate on deposits averaged 16-17 per cent, and in Armenia it ranges from 10.5 to 14 per cent,” Javadyan said. Javadyan believes that this rise cannot influence interest rates on credits. He pointed out that, according to the Armenian law, interest rates on credits cannot exceed a double of the bank interest rate, that is, 24%. “Under the circumstances I do not expect any serious fluctuations of interest rates in Armenia. The banks will just assess the market and economic risks, which will influence their rates,” Javadyan said. Despite forecasted inflationary pressures, Armenia posted a 1.4% inflation in March, “We expected inflationary pressures in March due to the Central Bank’s exchange rate adjustments,” the CBA chairman said, adding the 1.4% inflation in Armenia last month was due to global inflationary pressures and slowing demand. Citing a 1% year-on-year inflation in March 2009, Javadyan said this week CBA decided to decrease interest rates by 0.25% to 7.5%. “This was an attempt to give an impetus to financial organizations and public,” he said, adding the Central Bank had launched an expansion policy. According to the Central Bank’s quarterly report on monetary and credit policy, a 3% GDP reduction and 5.9% inflation is forecast in Armenia by end-2009. On March 3, CBA officially returned to the floating exchange rate policy. Shortly afterwards, AMD/USD exchange rate dropped 66.36pct to AMD 372.11 compared to March 2. According to the CBA specialists, the average weighed AMD/USD exchange rate is expected to range from AMD 360 to AMD 380 per $1 this year. “We declared a competition for the head of the bank, but, we could not find an appropriate head; 170 applications were selected and this question was discussed by the board of the competition and none of them was picked”, stated the CB president. Now, they turned to special agencies, who are engaged in headhunting. “We turned to 5 worldwide known best agencies and selected one of them, with the help of which we will be able to get a head soon,” says Artur Javadyan. Then they will negotiate with the international experts to write the business plan. “We will get the business plan along with the experts, we will have the head of the bank, the staff will be selected, the building will be procured, the technical means will be provided and by the end of this year the bank will launch its activities”, says Artur Javadyan. Javadyan stated that that 5 billion drams will be allocated to set up a mortgage fund. “At the present stage, we are negotiating with the government, I think the government will get involved and we will boost financing. Besides, we are negotiating with the representatives of the private sector. I hope the funds will go over 30 billion drams by the end of the year and it will be a stimulus to our markets,” stated Javadyan, noting that a tangible increase in construction will result. Artur Javadyan said they are negotiating with the German KFW Bank and probably in June Armenia will get 20 million euros for mortgage lending. Javadyan noted that on the whole banks issue lesser loans. “Compared with last March when loans totaled 78 billion, this year there was only 52 billion. But the bank has to set tougher conditions in the situation of the global crisis, and they should be more conservative and cautious,” says Artur Javadyan. Javadyan mentioned another index, according to which Armenia is in a more favorable state compared to neighboring countries. He means the provision of unfavorable and non-standard loans. According to him in Ukraine and Russia this amounts to 20%, while in Armenia it is only 8% (4% in past). He denied the rumors that there is a special order not to sell the mortgaged property. “They may and they will sell with pleasure,” stated Javadyan.
