Armenian Economic News
Armenian-Russian Loan Deal `Finalized'
By Emil Danielyan
Armenia and Russia have finalized an agreement on the release of a $500
million Russian loan aimed at helping the Armenian government minimize
the fallout from the global economic crisis, the Finance Ministry in
Yerevan said on Tuesday.
Russian Finance Minister Aleksey Kudrin announced his government's
decision to disburse the `stabilization credit' on February 4 after
weeks of Russian-Armenian negotiations. Yerevan reportedly sought up to
$1 billion in Russian assistance during the talks.
A short statement by the Armenian Finance Ministry said the loan will be
repayable in 15 years, with a 4-year grace period, but gave no other
details of the deal. With ministry officials unavailable for comment, it
remained unclear just how the government plans to use the sum equivalent
to more than 15 percent of its projected budget for this year.
The statement clarified only that the finalized agreement does not place
any `non-financial obligations' on the Armenian side. It was an apparent
assurance that the government will not repay the loan with more
industrial assets.
Armenia had handed over its largest thermal-power plant and four other
enterprises to state-run Russian companies in payment for its $100
million debt to Moscow in 2003. Its leadership's decision to turn to
Russia for financial support has fueled speculation about more
Russian-Armenian equities-for-debt agreements are possible in the
future.
Large-scale external assistance is vital for the success of the
government's efforts to mitigate the global downturn's impact on the
Armenian economy. The World Bank announced last week that it will
provide Armenia with up to $800 million in loans in the next four
years.
The government hopes to use the promised funds for implementing
infrastructure projects in rural areas of the country and providing more
cheap credit to local small and medium-sized enterprises. Officials say
these measures will at least partly offset the loss of many jobs in
export-oriented industries as well as an anticipated drop in large-scale
remittances from Armenians working abroad.
Vartan Bostanjian, deputy chairman of the Armenian parliament's economic
committee, described the government's anti-crisis plan as `almost
faultless' but admitted that its implementation will be an uphill task.
`Every person, including myself, can wonder if we will manage to
implement that program in full,' he told journalists.
But Bagrat Asatrian, a former governor of the Armenian Central Bank
highly critical of the government, insisted that the authorities still
lack a clear-cut strategy of dealing with the global economic slump. He
also strongly criticized their ongoing crackdown on tax evasion, saying
that it is forcing many small businesses and self-employed Armenians
into bankruptcy.
`The world would not collapse if they delayed their tax crackdown by a
year,' Asatrian said during a public debate with Bostanjian. `Up to
5,000 people would keep their jobs.'
Ashot Khurshudian, an economist at the Yerevan-based International
Center for Human Development, called for urgent government support for
agriculture, saying that cash-strapped Armenian farmers could be the
first casualties of the crisis. `If farmers fail to get credit resources
to buy seeds and fertilizers in time for the spring planting period we
will feel the consequences at the end of this year,' Khurshudian warned.
`I would urge our decision-makers to think about helping the
agricultural sector as early as this spring.'
by Venla Sipila
World Markets Research Centre
Global Insight
February 11, 2009
According to figures from the Armenian Ministry of Finance, the state
budget of the country (excluding financing through external assistance
programmes) registered a deficit of 1.4 billion dram ($4US.6 million)
for the whole of last year, ARKA News reports. This result comes below
the targeted annual deficit of 25.3 billion dram. Including external
financing, the budget posted a surplus of 24.4 billion dram, which
compares to the planned amount of 24.9 billion dram and to the 2007
result of 15.4 billion dram. Budget revenues reached 759.2 billion
dram for the year, rising by 16% from 2007 and overshooting the
annual target by 0.4%. Specifically, tax incomes increased by 18.8%
over the year, their total of 598.8 billion dram over-performing the
originally budgeted amount by 0.3%. Revenue from the value-added tax
(VAT) accounted for over 53% of the total tax intake. At the same
time, expenditures amounted to 760.6 billion dram, gaining 21.2%
from the previous year and remaining 0.6% short of the budgeted total.
Significance:The nearly balanced budget was achieved although, at 6.8%,
annual GDP growth last year came in clearly below the expansion rate
of 10% projected in the fiscal plan. This year's budget projects a
deficit of 40 billion dram, or 1.0% of GDP (seeArmenia: 1 December
2008:). As opposed to last year's fiscal results, this year is not
likely to see the targets overshot as the GDP growth projection used
as a basis for the budget seems overly ambitious. In light of slowing
growth and the connected increased pressure on the fiscal balance,
as well as the budget's continued reliance on foreign assistance,
additional progress in improving tax administration remains as vital
as ever.
ARKA
Feb 11, 2009
YEREVAN, February 11. /ARKA/. Official Yerevan proposes signing an
agreement with the United Kingdom on ending bilateral double taxation,
Chief of the RA Presidential Staff Karen Karapetyan today told UK
Ambassador to Armenia Charles Lonsdale.
Karapetyan expressed a hope that eliminating double taxation would
boost bilateral trade and economic cooperation, the RA president's
press service reports.
Karapetyan and Ambassador Lonsdale greatly appreciated the political
dialogue between both countries. They touched upon bilateral
cooperation issues, as well as the current negotiations over the
Karabakh conflict and ways to tackle the global financial crisis.
PanARMENIAN.Net
12.02.2009 17:11 GMT+04:00
/PanARMENIAN.Net/ Tamara Fruit Armenian company has requested the
Armenian government for a $3.4 million budget guarantee, RA Minister
of Economy Nerses Yeritsyan said during a government sitting today.
"Such a guarantee will secure some 120 job opportunities and purchase
of 3 tons of organic substance, thus ensuring export of its output
to the amount of 8,6 - 8,8 billion AMD.
Tamara Fruit, which possesses international certificates, will be
able to export production to international markets where prices are
by 40%-50% higher than in Armenia.
Tamara Fruit was founded in 2002. It specializes in freezing
vegetables, fruits and berries. It also produces juices, jam and
vegetable cans.
A1+
[01:04 pm] 13 February, 2009
Armenian students face difficulties in paying tuition fees because
of the global economic crisis. Most of them say the fees are sent by
their relatives working abroad.
"We no longer receive money. I wonder what is to become of us. We
have to pay the tuition fee before the interim exams otherwise we
shall be denied participation," said Varduhy Petrosyan, who studies
at the Department of Sociology, Yerevan State University.
Future physicist Arthur Abrahamyan is also concerned. His father hasn't
sent money this year. "He says he's not paid for his work. The employer
promises to pay salaries when he has money. My father is between two
fires as he doesn't know whether to return to Armenia or stay there,"
says Arthur.
Many students say the university administration had better meet them
halfway and extend the deadline for payments.
We know that we are obliged to pay fees. But what can our parents do
if they have been made redundant?" said future philologist Varditer
Ghazaryan.
A1+ was informed at the university that the issue of extending the
terms of payments hasn't been put under consideration, as they think
the economic crisis is not perceived in Armenia and students can pay
tuition fees in due time.
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