MONOPOLIZATION OF ECONOMY INTENSIFIES, FORMER ARMENIAN PRESIDENT SAYS
January 23, 2015 14:21
Former President of Armenia Robert Kocharyan
Yerevan/Mediamax/. Former President of Armenia Robert Kocharyan said
that current Armenian economy gives no cause for optimism.
Robert Kocharyan stated it in an interview with 2rd.am website
commenting on the December devaluation of national currency (dram)
and the overall economic situation.
“There should not be such correlation of dram and the Russian ruble.
However, given the moods and downbeat expectations, even the minor
speculations might result in panic among people and play a critical
role, irrespective of the seemingly stable financial situation.
Pro forma, the Central Bank of Armenia is accountable for the dynamics
of the national currency and it committed a series of efforts to
stabilize dram within its areas of competence. However, the December
situation showed that those efforts were apparently insufficient –
urgent and coordinated measures of all governmental institutions as
well as employment of monetary, fiscal and administrative tools to
address the situation were required. Judging by the results, those
measures were piecemeal and late”, said the former Armenian President.
He noted that “dram rate reflects Armenia’s overall economic situation
and balance of payments”.
“Their deterioration will depreciate dram, while their improvement
will enhance it. Dram cannot exist all by itself in isolation from
the economy. In any case, sharp currency fluctuations putting the
country’s financial system in jeopardy, undermining trust to the
national currency and hitting our citizens in their pockets are
inadmissible”, said Robert Kocharyan.
He noted that the “downgrade of Armenia’s sovereign rating by Moody’s
will lead to an increase in the external borrowing cost, especially
considering that the external debt has already gone off-scale”.
“The EEU economy will be in recess in the mid-term, which means it
will be harder to occupy a significant niche in it. The strongly
cheapened ruble will considerably change the trade structure with
Russia but not in favor of our goods. Serious Russian investments are
less likely – the sanctions have caused them to face issues related to
the refinancing of Western loans. Our EEU membership has made us less
attractive for Western companies. It’s yet not clear what will happen
with our trade volumes with Iran. World market prices on non-ferrous
metals are predicted not to grow, rather on the contrary. The
recent tighter regulations for Armenian banks will result in rise
in the cost of borrowed money, thus loans to businesses will also
go up. The monopolization of economy intensifies, the investment
volumes constantly decline and the investment activity degrades”,
said Robert Kocharyan.
Answering the question on ways to overcome this situation, the former
President said:
“First off, the authorities should admit there are fundamental issues
and should dispose themselves to a frank dialog with the society
and business on the current situation in the country and ways to
overcome the crisis. Trust is the most important condition for the
success of any action of the authorities, and it is virtually absent
today. The country needs shakedown and for sure, it does not refer
to the constitutional reforms. I will not list the set of overt and
necessary steps. In my opinion, there are enough people in Armenia,
and in the government as well, who at least understand what should
be done in the first place. The biggest obstacle to success will be
the conflict of the political elite’s economic interests with the
country’s long-term interests”.