Armenian News‏

The Armenian Weekly
Finding Common Ground: Armenians Cope with a Floating Currency Rate

18 March 2009

YEREVAN (A.W.)—The dram saw its first depreciation in nearly 12 months two weeks ago, sending

Armenian consumers into a frenzy.

On March 3, the dollar devalued 80 dram within the time span of an hour. At noon, the panic that would

throw consumers into a whirlwind

of uncertainty and confusion had blossomed.

What followed was a mad rush by many consumers to grocery stores where they purchased large

quantities of basic foodstuffs like flour,

sugar, and cooking oil—which had spontaneously increased 200 dram—out of sheer panic. By day’s

end, store shelves were bare of

essentials. Dollars were either in short supply or were completely unavailable.

In response to the depreciation, some businesses reacted to the point of desperation. The entire chain

of Star Supermarkets closed entirely for two hours to adjust prices. Some stores closed altogether,

like the newly opened Nike franchise on Hanrabedutyan Street, which removed merchandise from

display windows and shut its doors for nearly a week. Consumer goods became more expensive

because distributors were deliberately raising prices in expectation of further devaluation and

increased short-term demand. At one point during the first week in March, one dollar bought 400 drams

on the street.

The dollar-to-dram exchange rate had held steady at around 305 for a year. The Central Bank of

Armenia repeatedly denied that it had fixed the rate. Despite the slight strengthening of the dollar

during the last half of 2008, the dram’s worth would not drop.

The shortage of dollars was first evident on Feb. 27 when the currency could not be bought in exchange

kiosks and banks. But as of this report’s filing, the situation had already normalized.

Perhaps the catalyst of the nationwide panic revolving around the exchange rate fiasco was the dismal

forecast presented in late February by the World Bank representative in Armenia, Aristomene Varoudakis,

who predicted zero economic growth for 2009.

Yet the dollar-to-dram rate has maintained steady at around 370 dram, with a margin of five dram.

Depending on the day and place of currency exchange, between 368 to 378 dram buys one dollar.

However, a well-known economist loyal to the opposition, Hrant Bagratian, believes that there is the

possibility of the national currency falling to a rate of 850 dram against the dollar by year’s end.

The nationwide panic of March 3 is mainly due to the stipulation by the International Monetary Fund

that the Central Bank allow the dram to have a floating exchange rate so that it would provide $540 million

in loans to Armenia repayable in 28 months. The plan was approved only six days after the dram was devalued.

Despite the concern that the price of food would drastically increase, the opposite has happened. For

instance, a kilo package of lavash bread only one month ago sold for 350 dram at Star Supermarket, or

about $1.15. That same bread with the current rate of 370 dram to the dollar sells for 290 dram, or about $0.78.

Yet with the drop in price for wheat comes a decrease in domestic production, which is expected to taper off

this year. Furthermore, farmers will have a harder time this year raising crops with a 75 percent increase in

fertilizer. A 50 kilo container has increased to 7,000 dram from just 4,000 dram a year ago.

The Armenian economy has been largely dollar-based since independence. The Central Bank primarily relies

on dollars in its vaults to prop up the national currency, although it has recently also invested in the Euro.

Some economic analysts believed that the eventual crash of the dram was inevitable, putting the Armenian

consumer at blame, as the demand in foreign currencies has been on the increase. The Armenian Economist

blog, which publishes commentary and analytical data related to the Armenian economy, made a connection

between the dram’s depreciation and a steady loss of faith in the currency.

The blog writes that “…depositors seem to have developed a preference for foreign exchange and shifted

away from the dram. In January, demand deposits denominated in drams fell by 26 percent. In contrast,

foreign exchange (FX) denominated deposits grew by 34 percent.”

Much of Armenia’s economy is dependent on money transfers made by family relatives living abroad. In the

last quarter of 2008, the Armenian economy saw a sharp decline in foreign remittances. From January to

November 2008, just under $1.5 billion had been transferred in cash to Armenia, according to statistics provided

by the Central Bank. Yet in November, only $102 million was transferred, a seven percent drop from the same

period in 2007. With people returning from Russia jobless in recent months and more expected due to the

country’s own economic woes, the amount of remittances is expected to drop even further in 2009.

“We don’t know what’s going to happen from one day to the next,” said Sergey Hovsepyan, who supports his

wife, two daughters and mother with the help of nearly $600 collected every month in rent payments. He rents

out his three-room apartment in central Yerevan where he was raised and now lives in the home of his wife’s

parents who reside in Moscow.

“Prices are going up, and people say they’ll keep increasing. Some say they won’t,” Hovsepyan said. “With the

things the way they are in the world, we don’t know who to believe.”

Panorama.am
14:24 21/03/2009
UNEMPLOYMENT RATE INCREASED IN ARMENIA

The rate of unemployed people in Armenia increased by 4,6% in
January-February and formed 75,7 thousands people, reports the
National Statistical Service of Armenia. According to the source, the
salary rate increased by 13,8% and formed 94,6 thousands AMD. The
Service also reports that the salaries of budgetary employees
increased by 18,6% and formed 80 thousands AMD and non-budgetary
employees ` 116,2 thousands AMD.

GRANT THORNTON INTERNATIONAL: WOMEN HOLD 29% OF SENIOR MANAGEMENT POSITIONS

IN ARMENIA
ARKA
March 18, 2009

YEREVAN, March 18. /ARKA/. New research from Grant Thornton
International reveals that in Armenia 29% of senior positions are held
by women, being the 9th country in the league, Grant Thornton Amyot
(GTA) reports.

Lilit Arabajyan, partner in Grant Thornton Amyot, the Armenian
member of Grant Thornton International, says, "During the past
decade we have seen a significant increase in women's role in
various organizations. Today many women occupy managerial positions
in businesses. The results of this survey only show that there has
been an increase of 7% in women's managerial share in 2009 in Armenia,
as compared to 22% of the year 2007.

As an audit partner in the leading audit and advisory company in
Armenia, I work with many large enterprises every year and have
hardly met a management team composed of only men. In our firm, 51%
of staff are women, among whom 11 persons occupy managerial positions".

The report says women still hold less than a quarter of senior
management positions in privately held businesses globally. 24% of
senior management positions are currently held by women - a figure
identical to 2007 and only a marginal improvement from 2004 when only
19% of senior level positions were held by women. 34% of privately
held businesses globally have no women in senior management.

" The greatest percentage of women in senior management is in the
Philippines where women hold 47% of senior positions. They are followed
by Russia (42%) and Thailand (38%).

The lowest percentage continues to be in Japan (only 7%). Also
appearing low down the league table are Denmark (13%) and Belgium
(12%)."

Women have become most successful in increasing their share of senior
management roles in Turkey (up from 17% in 2007 to 29% in 2009)
and Mexico (20% in 2007 to 31%). The biggest falls were in Brazil,
where the figure fell from 42% in 2007 to 29% in 2009, and Hong Kong
(falling from 35% in 2007 to 28% in 2009).

RFE/RL Armenia Report

Armenian Court Annuls Sale Of `Opposition' Firm
By Hovannes Shoghikian

Armenia's Administrative Court on Thursday annulled the controversial
sale of a company that was effectively confiscated by the government
from an opposition-linked businessman for alleged tax evasion.

The Bjni mineral water bottling plant was put up for sale late last
year after its refusal to pay 5.2 billion drams ($14 million) in
fines imposed by tax authorities. It was auctioned off for 4.44
billion drams last month.

The Administrative Court declared the auction, administered by the
Service for the Mandatory Execution of Judicial Acts (SMEJA), null
and void on the grounds that the sell-off price was below the sum
demanded by the authorities from Bjni's owners. The court also cited
bankruptcy proceedings sought against Bjni by some of its contractors
that claim to be owed money by the company.

`The court ruled that under Armenian law the SMEJA had no right to
put the company's property up for sale because that would infringe on
the rights of its creditors,' Ara Zohrabian, a Bjni lawyer, told RFE/
RL. He said this means the SMEJA can not forcibly sell the company
and must instead ask another court to declare it bankrupt.

`The SMEJA is discussing whether or not to appeal against the
ruling,' said Ruben Grdzelian, a spokesman for the law-enforcement
body. He said the decision will be announced `in the coming days.'

Ruben Hayrapetian, a government-linked tycoon who bought Bjni, also
refrained from criticizing the unexpected verdict. `Every citizen of
Armenia must humbly obey court rulings,' he told RFE/RL.

Bjni was until now owned by Khachatur Sukiasian, another millionaire
businessman holding a parliament seat. Sukiasian supported opposition
leader and former President Levon Ter-Petrosian in the February 2008
presidential election and went into hiding to escape arrest following
the disputed vote. He is wanted by the authorities for his part in
what they call an opposition plot to seize power.

Sukiasian has strongly denied the coup charges through his family
members and lawyers. They insist that tax authorities' crackdown on
Bjni and other businesses making up Sukiasian's SIL Concern group,
launched in late 2007, was also politically motivated.

The company, based in Charentsavan, a town 40 kilometers north of
Yerevan, employed more than 400 people before it was raided by tax
and police officials and forced to suspend its operations in October.
It has stood idle since then.


SERGEY KHACHATRYAN AT WIGMORE HALL
Neil Fisher
The Times
March 20, 2009
UK

It's the hardest lesson to master, because it can't be taught. Sure,
the musician has found out how to play Bach, Brahms or Beethoven,
but has he found his own voice, too -- the one that ultimately draws
the audience to come back to him?

When it comes to Sergey Khachatryan, the answer is a huge, huge yes.

There's a big, glossy heap of talented violinists at the moment,
but what separates this young Armenian from the pack isn't just the
rich sound of his Strad (the 1708 "Huggins", if you're interested in
such things); it's how forcefully, how individually he deploys it. By
the end of this recital, delivered with another Khachatryan (Lusine,
his sister) at the piano, I felt so convinced that his way was going
to be the right way that what the critical pen was scribbling on the
critical notebook seemed pretty irrelevant.

Perhaps the biggest surprise about Khachatryan is that his choices
aren't the obvious ones: he's not one of those firecrackers who
confuse pace and volume with energy and intensity. Opening with Bach's
unaccompanied D minor Partita he shirked anything to do with lean,
limber Bach and went for old-fashioned, spacious Romanticism. But there
was a wealth of expressive detailling here: the Courante was driven and
tense; an intimat e Sarabande breathed into life like a whisper in the
dark. And then that mighty Chaconne, in Khachatryan's hands a restless
search for beauty that felt like an epic but never felt overwrought:
it drew you in, rather than reaching beyond Bach's natural austerity.

Brahms's Violin Sonata No 1 came next, introducing a sibling
partnership that clearly thought the same way: reflection over
showmanship. Violinist and pianist handled it with rapt affection and
the sort of noncholant, natural charm that could only mean hours in
the practice room.

Then, another demon of the repertoire, Beethoven's Kreutzer sonata,
and another surprise. Its obsessive rhythms and repeated refrains
normally scream high-octane drama, but it was the soulful tang of
Khachatryan's Strad that led the way, and what stayed in the mind was
actually the soft, middle movement, a tender set of variations served
up with sprung, silken elegance. A spell-binding encore, an arrangement
of Rachmaninov's Vocalise, rounded things off. By then, the notebook
had long been abandoned: one for the personal archive instead.

PRESS RELEASE
Mother See of Holy Etchmiadzin, Information Services
Website: www.armenianchurch.org
March 17, 2009

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