WON’T GO TO EUROPE WITH THE RUBLE

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“Our economy is currently disproportionate and the policies on imports and exports are inadequate,” says Deputy-Chair of the NA Committee for Finance-Credit and Budgetary Issues Artsvik Minasyan. “A1+” interviewed Mr. Minasyan today to discuss this and other economic issues.

-Russia is granting Armenia a 500 million dollar loan, but Russia has serious financial issues. How do you explain the 500 million dollar loan during the current global economic downturn?

-From the economic perspective, 500 million dollars is not that much. If we look at the balance of imports and exports, imports exceed exports by 4 times. This means that we need inflows worth 3 billion in order to balance imports and exports. Thus, the 500 million may play a certain role. We also hear about the loans from the World Bank and the International Monetary Fund. It is still not clear as to how much, but I think that it will be as much as Russia’s loan. We are also awaiting loans from China. These loans are necessary to balance the Armenian economy. If we add the remittances from abroad, which are expected to fall, Armenia will need another 1 billion to maintain the dollar and dram rates at a certain level. The Armenian government also needs to undertake structural reforms so that exports rise faster than imports and so that manufacturing substitutes imports. Thus, the government must lead the policy of reducing imports and promoting exports.

-No matter how much the 500 million dollar may help solve short-term issues facing the Armenian economy, there are concerns about the price that the Armenian government will have to pay for the loan. What does Armenia have to give in return?

-I don’t think that we can give more to Russia than we already have. It is not right to wait for Armenia to give something up. We must look at this loan within the framework of strategic alliance. Russia also supports all members of the Collective Security Treaty Organization. Former Russian President Putin has clearly stated several times that the Russian resources that are converted to money must be used for investments in foreign policy and this is one of those manifestations. I think that Armenia will be able to get its foreign policy on track taking into account the loans provided by the Central Bank and the IMF.

-You said that Russia’s promised loan must be viewed as support from a strategic ally, but our strategic ally just recently engaged many expatriate Armenians as the first victims of the global economic crisis. If Russia was so interested in Armenia’s situation, why wasn’t it generous to the Armenians holding temporary jobs in the country?

-Armenia and Russia are drafting a treaty and it is currently being discussed. But there is a verbal agreement according to which Russia is not going to be firm with provisional Armenian migrants.

-Do you know to what extent remittances have been reduced after the return of our fellow Armenians from Russia?

-There is an inconsistency that the government, particularly the Central Bank, must explain with regards to the remittances transferred through the bank. In 2008, personal remittances through the bank were 30 percent more than in 2007. They are not the remittances that the people who returned to Armenia brought with them, rather the remittances sent by relatives. What I don’t understand is Russia’s 10 percent economic growth and the 30 percent rise of transfers. This is disproportionate.

-How do you explain that disproportion?

-I am still looking into that and can’t find an explanation. I must also mention that those transfers are aimed towards the real estate market and construction, but construction and real estate sales are low in Armenia. Thus, transfers coming to Armenia solve the issue of daily purchases. Remittances make up nearly 2-3 billion of the 4 billion in imports and the government makes up the remaining 700 million on the account of the Central Bank. If the flow of transfers goes down, the Central Bank’s balance will be critical. In this sense the loan from Russia is a savior, but short term.

-There are rumors flying around that Armenia may move to the ruble zone. Is that true?

-Declaring any rate zone must not only pursue political goals, but must be a result of analyses of the economy. In other words, political goals must be substantiated by analyses of the economy. If Russia makes such attempts, it will weaken its economy. On the other hand, Armenia doesn’t have a satisfying explanation for entering any rate zone. We rank fourth in trade relations with Russia, but we must have trade relations ranking first with any country in order to enter the zone.

-Mr. Minasyan, we have clearly stated that we are moving towards Europe. Is European integration possible with the ruble?

-Of course not. You can’t enter Europe with the Russian ruble. We may be deprived of EU integration and as a result, we will try to acquire small shares in Russian markets. It is not serious to talk about entering the ruble zone today. We have adopted the course to Europe and if there are any talks about the ruble zone, it must first be discussed with the EU. The EU must know who it is dealing with.

-Average citizens are the ones sending remittances to Armenia to help their relatives, while the ones taking large amounts of money abroad are government officials or their close friends. What do we get from that?

-It is profitable to export dollars from Armenia because our dram is rather weak. A dollar is surely not 305 or 308 drams. Those with large resources win by purchasing rates and exporting them, making investments in different places and buying actives.

-Is there any information on who exports money from Armenia and how much?

-I personally don’t have any information and there is no official number. But we have an index that shows the percentages that the individual or organization receives by making an investment and how much the foreigner gets by making an investment in your country. If we take a look at the index, we see that it does not benefit Armenia. It turns out that our investments abroad are larger than within the country. This is an official index, but it must be studied to find out how much of those investments belong to people who have monopolies in Armenia and export the potential of our economy to get their profits.

-You attach importance to manufacturing and investments in the country. Meanwhile, it is evident that today there are more investments being made abroad by citizens and organizations. As a result of what happened to the “Bjni” and Copper Molybdenum factories, 1,000 people lost their jobs. How do you rate the policies of the corresponding bodies or people?

-With regards to “Bjni”, I have said several times that I don’t praise that. If “Bjni” was really in a desperate situation, it had to declare bankruptcy and not be terminated. The alienation of “Bjni” in that way had a negative effect on the economy. As for the mining industry, the global crisis had a negative impact on our economy.

-Mr. Minasyan, do you believe that the global economic downturn is circumventing Armenia? Our authorities continue to claim that the economic crisis is circumventing Armenia.

-I have said it before and I repeat-the global economic crisis cannot circumvent Armenia. It is already in Armenia. We see that by the increasing number of unemployed. The next impact will be the decrease of foreign investments because it is dangerous to make investments in a country with closed borders and there are other reasons for that as well.

Interview by Victoria Abrahamyan