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Armenia facing serious economic threats

01 December 2014 [10:57] - TODAY.AZ


By Mushvig Mehdiyev

The sharp increase in the U.S. dollar's value may seriously threaten the unprotected strata of Armenia if the government fails to take relevant measures soon.

Economist, ex-parliamentarian Vardan Bostanjyan said the devaluation of the Armenian dram could be seen as an advantageous factor for its export, but it could also lead to a price hike for several goods of social significance.

"The government should take care of its 900,000 socially vulnerable residents. Otherwise, nothing will help us get out of the trouble," Bostanjyan added.

The number of vulnerable people in Armenia confirms the recent official report on the poverty rate in the post-Soviet country. The National Statistics Service's data revealed that 32 percent of nearly 3 million population of the country are living in poverty.

The fall of the Armenian dram by over 5 percent since last week remained a main topic of discussions among the politicians. The dram's depreciation is directly linked to devaluation of the ruble amid the skyrocketing dollar value.

Even the government itself acknowledged the challenges caused by dram-dollar dilemma. It is now wondering how to find a way out of the hassle.

Armenian Prime Minister Hovik Abrahamyan admitted that the dram’s fall will negatively affect the standard of living in Armenia.

International Monetary Fund representative Teresa Daban Sanchez said that some goods imported from Russia or other countries may get more expensive due to their higher prices in drams.

The depreciation in dram's value prepares the round for a decline of the cost of the Armenian-made goods in dollar terms.

The former Foreign Minister Alexander Arzumanyan said the Central Bank must be able to carry out a policy, which will forestall the visible crisis in the country.

"Entering the EEU next year, we will bring a serious inflation and serious social problems regardless of the rubles exchange rate," he noted.

Some experts predict that the dram exchange will be stabilized to some degree given the possible boom in export rate fueled by dram's depreciation. But economic expert Artak Manukyan said the stabilization cannot be on the agenda, as the economic laws in Armenia are either inactive or nonworking.

"Mining products take the largest share in Armenia's exports, while there is not a large-scale production of finished goods in our country," he said.

Meanwhile, the Central Bank announced the latest decline rate in the amount of remittances from Russia to Armenia. The total volume of the private money transferred from Russia dropped by 20 percent or $30 million in this October compared to the same period last year, according to the Central Bank.

Recent devaluation misfortune over the Russian ruble pushed Armenia into a deeper deadlock, leaving few chances of escape. Experts and residents say the government will not be able to distance itself from the "ruble disaster" amid the imminent membership at the Russia-led the Eurasian Economic Union, which has been approved by the country's president, Constitutional Court and parliament.


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