POLITICAL COALITION COMES TO PRELIMINARY AGREEMENT ON COMPENSATION PRINCIPLES AND INDEXATION OF DEPOSITS

Noyan Tapan News Agency, Armenia
Oct 13 2005

YEREVAN, OCTOBER 13, NOYAN TAPAN. The issue of deposit compensation
was discussed tt the October 12 meeting of the Political Coalition
Board. The government confirmed its position and is ready to allocate
1 bln drams (about 2.2 mln USD) to compensate, within the framework
of the Poverty Reduction Strategy Paper, for the deposits of those
depositors who have been put on the list of beneficiaries. RA Prime
Minister Andranik Margarian stated this on October 12 at the joint
sitting of the National Assembly standing committes to discuss the
state budget. He assured that the process will be a continuous one,
but it is not yet clear how long it will take. It was noted that the
government will include the issue of paying compensation to depositors
in its future medium-term expenditure programs.

Prime Minister said that the examination of relevant information,
including international expertise, allowed the coalition to come to
an agreement on indexation. It is envisaged to pay a sum in drams
equivalent to 200 US dollars against 1 thousand Soviet rubles;

– for 1-3 thousand rubles, the basic sum of 200 US dollars plus 70%
of the basic sum (i.e 140 dollars) for each next thousand rubles
above 1,000 rubles

– for 3-5 thousand rubles, the basic sum of 200 US dollars plus 40%
of the basic sum (i.e. 80 dollars) for each next thousand rubles
above 1,000 rubles

– for 5-10 thousand rubles, the basic sum of 200 US dollars plus 20%
of the basic sum (i.e. 40 dollars) for each next thousand rubles
above 1,000 rubles

– for a sum exceeding 10 thousand rubles, the basic sum of 200 US
dollars plus 10% of the basic sum (i.e 20 dollars) for each next
thousand rubles above 1,000 rubles.

At the same time the government requested that it be given 6 months to
clarify the data base on beneficiaries and depositors. Neither the NA
ad hoc commission that examined the issue nor the working group set
up by RA President have informatiom about it, so the government has
not been provided information either. According to the preliminary
agreement, pensioners over 70 (later also pensioners under 70),
single pensioners, the families of the servicemen killed during the
Great Patriotic War and the Artsakh freedom war, disabled persons,
as well as citizens living in the disaster zone and border areas will
be the first to receive compensation. A. Margarian said that the
principles of compensation will be stipulated more clearly in the
2006 draft state budget to be submitted at the NA 4-day session to
start on October 24. The order of compensation will be defined later.

A. Margarian considered it inexpedient to discuss the draft laws
on deposit compensation currently in circulation at the National
Assembly. He noted that the present government is resolute to deal with
the problem of beneficiaries-depositors, and the future governments
will identify other vulnerable groups entitled to compensation. He
added that the experience of 14 countries that have paid such
compensations shows that there is no common principle regarding this
issue and the process has not been completed in any of these countries.