Armenian Economic News
RFE/RL Armenia Report
Recession Cuts Armenian Property Prices
By Lilit Harutiunian
By Lilit Harutiunian
30 March 2009
Real estate prices in Armenia have plummeted by at least 30 percent this
year because of a worsening economic situation and decreased cash
inflows from abroad, private realtors said on Tuesday.
The Armenian government reported a far more modest drop, however.
According to the State Real Property Cadastre, the average home prices
in the country last month were only about 6 percent below the February
2008 level.
Ashot Muradian, a senior official there, told RFE/RL that they even rose
by up to 14 percent in some areas outside Yerevan. He said the
nationwide number of property transactions was down by 20 percent year
on year in February.
Private real estate agencies in the capital painted a different picture
in separate interviews with RFE/RL, estimating the price fall at between
30 and 40 percent. Vahan Danielian, director of the Kentron agency,
suggested that it was even more drastic in downtown Yerevan, the by far
the most expensive part of the country.
`A one-room apartment in the city center was valuated at between $80,000
and $100,000 last fall. We've just sold it for $40,000,' said Danielian.
In his words, a two-bedroom apartment in the city's northern Nor Nork
suburb was worth at least $70,000 a few months ago but would now sell
for no more than $50,000.
According to Vartan Ayvazian of Cascade Realty, the prices of office and
other commercial space in the capital have also gone down by up to 40
percent. `Quite a lot of commercial space is now vacant in the city
center,' said Ayvazian.
Armenian property prices skyrocketed in the years preceding the economic
crisis, fueling a construction boom that helped the Armenian economy
expand at double-digit rates from 2002 through 2007. The local
construction sector contracted by 1.5 percent in January-February 2009.
Torgom Hovannisian, deputy director of another real estate firm, AS,
linked the price collapse with decreased cash inflows from Diaspora
Armenians and Armenian nationals working abroad that have financed a
large part of apartment purchases in the country. `Because there is a
crisis abroad ¦ few people from the Diaspora buy homes in Armenia,' he
said.
`Another factor is that [real estate] prices were inflated. They would
fall sooner or later,' added Hovannisian.
Andranik Tevanian, an economist running the Politeconomia private
think-tank, said the fact that Armenian banks have substantially cut
back on mortgage lending since October has also played a role.
`Commercial banks understand that until the mortgage market is
stabilized they can't make quick decisions and take risks,' he said. `So
their lending policy will be quite cautious in the coming year.'
Vahe Avetisian, head of the Shen property valuation agency, said
apartment sales are further curtailed by potential buyers expecting real
estate to become even cheaper in the coming months. `When they start
making transactions the prices will go up again,' he said.
Realtors disagreed just when that could happen. Cascade Realty's
Ayvazian said that the prices will likely stay unchanged at least until
this fall, while Kentron's Danielian predicted their further decline.
RFE/RL Armenia Report
Real estate prices in Armenia have plummeted by at least 30 percent this
year because of a worsening economic situation and decreased cash
inflows from abroad, private realtors said on Tuesday.
The Armenian government reported a far more modest drop, however.
According to the State Real Property Cadastre, the average home prices
in the country last month were only about 6 percent below the February
2008 level.
Ashot Muradian, a senior official there, told RFE/RL that they even rose
by up to 14 percent in some areas outside Yerevan. He said the
nationwide number of property transactions was down by 20 percent year
on year in February.
Private real estate agencies in the capital painted a different picture
in separate interviews with RFE/RL, estimating the price fall at between
30 and 40 percent. Vahan Danielian, director of the Kentron agency,
suggested that it was even more drastic in downtown Yerevan, the by far
the most expensive part of the country.
`A one-room apartment in the city center was valuated at between $80,000
and $100,000 last fall. We've just sold it for $40,000,' said Danielian.
In his words, a two-bedroom apartment in the city's northern Nor Nork
suburb was worth at least $70,000 a few months ago but would now sell
for no more than $50,000.
According to Vartan Ayvazian of Cascade Realty, the prices of office and
other commercial space in the capital have also gone down by up to 40
percent. `Quite a lot of commercial space is now vacant in the city
center,' said Ayvazian.
Armenian property prices skyrocketed in the years preceding the economic
crisis, fueling a construction boom that helped the Armenian economy
expand at double-digit rates from 2002 through 2007. The local
construction sector contracted by 1.5 percent in January-February 2009.
Torgom Hovannisian, deputy director of another real estate firm, AS,
linked the price collapse with decreased cash inflows from Diaspora
Armenians and Armenian nationals working abroad that have financed a
large part of apartment purchases in the country. `Because there is a
crisis abroad ¦ few people from the Diaspora buy homes in Armenia,' he
said.
`Another factor is that [real estate] prices were inflated. They would
fall sooner or later,' added Hovannisian.
Andranik Tevanian, an economist running the Politeconomia private
think-tank, said the fact that Armenian banks have substantially cut
back on mortgage lending since October has also played a role.
`Commercial banks understand that until the mortgage market is
stabilized they can't make quick decisions and take risks,' he said. `So
their lending policy will be quite cautious in the coming year.'
Vahe Avetisian, head of the Shen property valuation agency, said
apartment sales are further curtailed by potential buyers expecting real
estate to become even cheaper in the coming months. `When they start
making transactions the prices will go up again,' he said.
Realtors disagreed just when that could happen. Cascade Realty's
Ayvazian said that the prices will likely stay unchanged at least until
this fall, while Kentron's Danielian predicted their further decline.
RFE/RL Armenia Report
Armenian Cash Remittances Fall
By Ruben Meloyan
Hard currency inflows to Armenia from its citizens working abroad, which
benefit a large part of the country's population, fell significantly in
the first two months of this year, the Armenian Central Bank (CBA) said
on Tuesday.
According to the latest CBA data made available to RFE/RL, the total
amount of cash transfers processed by Armenian commercial banks in this
period was down by almost 20 percent at $169.3 million. A similar sum is
believed to have entered Armenia through non-bank wire transfer systems
and in the form of cash.
External remittances sent home by Armenian migrant workers for
`non-commercial purposes' accounted for over two-thirds of the figure
reported by the CBA. The drop in these remittances was even steeper at
30 percent.
The remittances, which totaled at least $2.3 billion last year, have
been a key driving force of Armenia's economic growth, supporting
domestic consumption and enabling the country to finance its massive
trade and current-account deficits. After more than a decade of rapid
growth they began shrinking with the onset of the global economic crisis
last fall.
Russia, the main source of the cash transfers, has been hit particularly
hard by the downturn. Its economy is on course to contract this year for
the first time since the late 1990s.
Armenia's Gross Domestic Product likewise shrunk by 3.7 percent in
January-February 2009. In a quarterly policy report released on Tuesday,
the CBA forecast a full-year GDP drop of about 3 percent.
The report said that the outflow of cash from Armenia halved to $86.2
million in January-February and pushed up the net cash inflow by almost
64 percent. Still, it said the full-year total will likely fall by at
least 10 percent because of the `unfavorable' economic conditions in
Russia.
Gagik Minasian, chairman of the Armenian parliament committee on finance
and budget affairs, also downplayed the decreased remittances, saying
that they are slightly above the 2007 level. `We have simply lost the
increase in transfers registered in 2008 and returned to the level of
2007,' Minasian told RFE/RL.
By Ruben Meloyan
Hard currency inflows to Armenia from its citizens working abroad, which
benefit a large part of the country's population, fell significantly in
the first two months of this year, the Armenian Central Bank (CBA) said
on Tuesday.
According to the latest CBA data made available to RFE/RL, the total
amount of cash transfers processed by Armenian commercial banks in this
period was down by almost 20 percent at $169.3 million. A similar sum is
believed to have entered Armenia through non-bank wire transfer systems
and in the form of cash.
External remittances sent home by Armenian migrant workers for
`non-commercial purposes' accounted for over two-thirds of the figure
reported by the CBA. The drop in these remittances was even steeper at
30 percent.
The remittances, which totaled at least $2.3 billion last year, have
been a key driving force of Armenia's economic growth, supporting
domestic consumption and enabling the country to finance its massive
trade and current-account deficits. After more than a decade of rapid
growth they began shrinking with the onset of the global economic crisis
last fall.
Russia, the main source of the cash transfers, has been hit particularly
hard by the downturn. Its economy is on course to contract this year for
the first time since the late 1990s.
Armenia's Gross Domestic Product likewise shrunk by 3.7 percent in
January-February 2009. In a quarterly policy report released on Tuesday,
the CBA forecast a full-year GDP drop of about 3 percent.
The report said that the outflow of cash from Armenia halved to $86.2
million in January-February and pushed up the net cash inflow by almost
64 percent. Still, it said the full-year total will likely fall by at
least 10 percent because of the `unfavorable' economic conditions in
Russia.
Gagik Minasian, chairman of the Armenian parliament committee on finance
and budget affairs, also downplayed the decreased remittances, saying
that they are slightly above the 2007 level. `We have simply lost the
increase in transfers registered in 2008 and returned to the level of
2007,' Minasian told RFE/RL.
RFE/RL Armenia Report
Armenian Budget Deficit Soars Amid Tax Shortfall
By Emil Danielyan
The Armenian government's tax revenues continued to drop significantly
in February, pushing up the state budget deficit to the highest level in
years.
In a monthly budgetary report released at the weekend, the Finance
Ministry said the government's overall revenues fell by 14.6 percent to
84.6 billion drams ($230 million) in the first two months of this year.
Proceeds from value-added tax (VAT), the number one source of public
funds, were down by almost 22 percent at 33 billion drams. Two-thirds of
them were levied from imported goods. Armenia's net imports tumbled by
21 percent in January-February 2009 as the global credit crunch dragged
the Armenian economy deeper into a recession.
The recession explains why proceeds from corporate profit tax fell by 21
percent to almost 9 billion drams. Even before the economic crisis the
20 percent flat tax accounted for a very modest share of the
government's tax revenues, highlighting widespread tax evasion in the
country.
The decreased revenues contrasted with a 5.3 percent year-on-year
increase in government expenditures registered by the Finance Ministry
during the two-month period. This translated into a budget deficit of
14.3 billion drams, equivalent to 5 percent of Gross Domestic Product.
The government posted a virtually zero deficit last year. Its projected
budget for 2009 is also essentially balanced.
The worsening economic situation in Armenia is making the record-high
spending and revenue targets set by the 2009 budget increasingly
unrealistic. In what may well have been a prelude to their downward
revision, the government last week rescheduled 131 billion drams ($359
million) in planned expenditures until the fourth quarter of the year.
The figure is equivalent to 14 percent of the full-year spending
target.
It is still not clear whether the Armenian authorities will use more
than $1 billion in emergency loans promised by the International
Monetary Fund (IMF) and Russia's government for budgetary purposes. The
IMF has already disbursed nearly half of its $540 million loan package
primarily designed to bolster the recently devalued Armenian currency,
the dram. The authorities in Yerevan expect to receive the $500 million
Russian loan in late May or early June.
By Emil Danielyan
The Armenian government's tax revenues continued to drop significantly
in February, pushing up the state budget deficit to the highest level in
years.
In a monthly budgetary report released at the weekend, the Finance
Ministry said the government's overall revenues fell by 14.6 percent to
84.6 billion drams ($230 million) in the first two months of this year.
Proceeds from value-added tax (VAT), the number one source of public
funds, were down by almost 22 percent at 33 billion drams. Two-thirds of
them were levied from imported goods. Armenia's net imports tumbled by
21 percent in January-February 2009 as the global credit crunch dragged
the Armenian economy deeper into a recession.
The recession explains why proceeds from corporate profit tax fell by 21
percent to almost 9 billion drams. Even before the economic crisis the
20 percent flat tax accounted for a very modest share of the
government's tax revenues, highlighting widespread tax evasion in the
country.
The decreased revenues contrasted with a 5.3 percent year-on-year
increase in government expenditures registered by the Finance Ministry
during the two-month period. This translated into a budget deficit of
14.3 billion drams, equivalent to 5 percent of Gross Domestic Product.
The government posted a virtually zero deficit last year. Its projected
budget for 2009 is also essentially balanced.
The worsening economic situation in Armenia is making the record-high
spending and revenue targets set by the 2009 budget increasingly
unrealistic. In what may well have been a prelude to their downward
revision, the government last week rescheduled 131 billion drams ($359
million) in planned expenditures until the fourth quarter of the year.
The figure is equivalent to 14 percent of the full-year spending
target.
It is still not clear whether the Armenian authorities will use more
than $1 billion in emergency loans promised by the International
Monetary Fund (IMF) and Russia's government for budgetary purposes. The
IMF has already disbursed nearly half of its $540 million loan package
primarily designed to bolster the recently devalued Armenian currency,
the dram. The authorities in Yerevan expect to receive the $500 million
Russian loan in late May or early June.
ARMENIA TO START $30.4MLN WORTH LOAN PROGRAM FOR
REHABILITATION OF RURAL ROADS IN APRIL 2009
ARKA
March 30, 2009
YEREVAN, March 30. /ARKA/. As from April 2009 Armenia is to start
implementation of a $30.4mln worth loan program for rehabilitation of
rural roads, the country's Minister of Transport and Communications
Gurgen Sargsyan told journalists Saturday.
Of this amount, $25mln will be provided by the World Bank (WB) with
the remaining funds to be allocated by the government in a form
of co-financing.
Sargsyan stressed that the WB met the wishes of the country and
approved the loan promptly - within two months.
Under the program, a total of 100 kilometers of rural roads are to
be rehabilitated.
"The global financial crisis had an impact on Armenian economy,
including the fields of transport, road construction and
communication. In this respect, we plan to use all financial
opportunities available for rural construction to somehow mitigate
the crisis effects," the Minister said.
Sargsyan pointed out that the negotiations with some financial
organizations have already produced results. The programs under
discussion may provide serious financing for road construction in
Armenia in particular.
The World Bank will extend $25mln to Armenia for repair and
modernization of vitally important roads in rural areas (total length
of 100 kilometers). The funds are to be allocated in the scope of an
$86.5mln wo rth WB assistance program in Armenia.
ARKA
March 30, 2009
YEREVAN, March 30. /ARKA/. As from April 2009 Armenia is to start
implementation of a $30.4mln worth loan program for rehabilitation of
rural roads, the country's Minister of Transport and Communications
Gurgen Sargsyan told journalists Saturday.
Of this amount, $25mln will be provided by the World Bank (WB) with
the remaining funds to be allocated by the government in a form
of co-financing.
Sargsyan stressed that the WB met the wishes of the country and
approved the loan promptly - within two months.
Under the program, a total of 100 kilometers of rural roads are to
be rehabilitated.
"The global financial crisis had an impact on Armenian economy,
including the fields of transport, road construction and
communication. In this respect, we plan to use all financial
opportunities available for rural construction to somehow mitigate
the crisis effects," the Minister said.
Sargsyan pointed out that the negotiations with some financial
organizations have already produced results. The programs under
discussion may provide serious financing for road construction in
Armenia in particular.
The World Bank will extend $25mln to Armenia for repair and
modernization of vitally important roads in rural areas (total length
of 100 kilometers). The funds are to be allocated in the scope of an
$86.5mln wo rth WB assistance program in Armenia.
HAYASTAN FUND CONTINUES REBUILDING WATER-SUPPLY
SYSTEM OF ARTSAKH'S BERDASHEN VILLAGELRAGIR.AM
11:13:11 - 30/03/2009
The Hayastan All Armenian Fund announced that reconstruction of the
water-supply system in Berdashen, a village in Nagorno Karabakh's
Martuni Region, continues on schedule.
The project, worth 210 million drams (U.S. $555,000), is financed
jointly by the Hayastan All Armenian Fund's Argentinean affiliate
and the government of Artsakh. Major support for the initiative,
which was launched in late 2008, was provided by Argentinean-Armenian
benefactors Alicia Vosgerichian de Magarian, Hovsep Magarian, and
Varujan Panossian, in honor of Takvor Magarian and Nvart Terzian
Magarian.
Berdashen's water-supply system, which was built in the 1960s,
has long been in a state of disrepair. Through the Hayastan
All Armenian Fund project, the pump station has been renovated,
cancer-causing asbestos pipes have been replaced with plastic ones, and
a 3.6-kilometer pipeline has been built, already supplying Berdashen
with water. Currently the next phase of the initiative, the building
of the internal water-distribution network, is underway. When this
leg of the project is completed by autumn 2009, all 1,500 residents
of Berdashen will receive a regular supply of water. To date, the
Hayastan All Armenian Fund's Argentinean affiliate has sponsored some
20 vital projects in Artsakh, mainly in the educational sphere. The
affiliate's most recent initiatives include the construction, in 2008,
of an eight-kilometer water pipeline for Spitakashen, another village
in the Martuni Region.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
No comments:
Post a Comment