REDUCTION OF DOLLARIZATION IN TERMS OF HUMANISM
Lragir.am
06 June 06
The Central Bank of Armenia is likely to reduce dollarization in the
country. To put it more clearly, the Central Bank has decided to have
the population of Armenia keep their savings in drams rather than in
dollars. Frankly speaking, Tigran Sargsyan deserves a Nobel Prize for
this decision. Actually, the president of the Central Bank wants to
protect the population from the consequences of depreciation of the
dollar in Armenia. However, there is no need to hurry. However, the
humanism of Tigran Sargsyan, who is also the president of the Diocese
Council of the Ararat Diocese, seems disinterested only at first
sight. What does a cut of dollarization mean? Whatever instruments are
used, there is only one way out. Either the population should exchange
dollars for drams or the Central Bank should change everything,
so as the population of Armenia earn their income in dram amounts.
Armenia annually receives transfers of over one billion dollars,
which comprises about a quarter of the GDP of Armenia. Moreover,
this is the part of transfers that is counted, in other words, these
are transfers through banks and other systems of transfers. Transfers
in cash are also significant in amount but these are not covered in
these calculations. A significant share, or rather the greater part
of this huge amount of transfers goes to the population as income.
Hence, about a quarter of the GDP of Armenia or even more, which mostly
reflects the income of people, is accrued in drams. It appears that in
order to dramize this income the Central bank has to return economic
migrants to Armenia. But economic migrants are not an exchange rate
to be made to drift in any direction. Even if we outdo the vision for
an Armenia extending from sea to sea, and imagine economic migrants
return to Armenia and earn an income here, we cannot be sure that
this income will be in drams. Many companies in Armenia pay their
workers in dollars for different reasons. In fact, only salaries of
state enterprise workers and pensions are paid in drams, as well as
salaries of workers of some private companies. And it means that the
income of a major part of the population of Armenia is in dollars;
it is another issue whether this is legal or illegal.
At least, it is fair to get a sum in dollars earned honestly than
drams which come nobody knows from where. But this is another problem,
which is not the competence of the Central Bank. It is the duty of
law-enforcement agencies, however, it does not mean that the Central
Bank will never have to deal with it.
In the meantime, we are concerned with what the Central Bank is
concerned. It is almost certain that there is one way of reducing
dollarization of people’s savings (if there are such) in Armenia:
people will save their dollars after exchanging them for drams. It
is a surprise that the Central Bank has set such a goal, because
people anyway hurry to exchange their dollars for drams because the
exchange rate of the dollar is dropping daily. And the Central Bank
is merely trying to persuade, make or encourage those citizens, who
still are likely to keep their dollars until everything is settled,
including the exchange rate of the dollar. Moreover, this step of the
Central Bank also means that they also fear that everything will be
settled soon and little time is left, and it is necessary to collect
the remaining dollars. It is not bad. More importantly, it is not
dishonest. People will know from whom to demand the money back.