Armenia Diamond Sector Declined in 2004

IDEX Online, Israel
Feb 15 2005

(February 15, ’05, 10:14 IDEX Online Staff Reporter)

Armenian government plans to advance the country’s diamond cutting
industry, which suffered a major setback last year with an almost 20
percent slump in production when measured in the Armenian currency,
the dram.

The fall in production is largely due to the decline of the U.S.
dollar on international money markets according to government
officials, the eurasianet.org website reported.

Armenian officials remain optimistic, however, saying the industry,
which employs around 4,000 workers, will bounce back this year.
Diamonds are Armenia’s top export item, accounting for close to 40
percent of exports.

There are more than 50 diamond cutting firms in Armenia, although the
sector brings little benefit to the government since most companies
are owned by foreign investors meaning it is exempt from excise and
value-added taxes.

At the end of 2003, Armenia approved a multi-year plan with a target
of almost doubling annual cut-diamond production to $500 million and
creating about 10,000 new jobs. Government estimates suggest diamond
production last year fell back from the 2003 level in dollar terms
to about $280 million last year.

Deliveries of rough diamonds from Russia that fell short of
expectations have also compounded Armenia’s problems. Most rough
supplies came from Israel and Belgium.