BLACK ECONOMY MAY LEAD TO ECONOMIC REDISTRIBUTION

Lragir, Armenia
Nov 1 2006

The Union of Producers and Entrepreneurs of Armenia invited November 1
the president of the Central Bank, the minister of trade and economic
development, and the economic adviser to president to the ring. The
"fight" was on the dollar-dram exchange rate. The Union of Producers
and Entrepreneurs of Armenia made an attempt to explain to the
president of the Central Bank Tigran Sargsyan that the unpredictable
revaluation of the dram can stifle industry in Armenia because it is
becoming less competitive. Meanwhile, Tigran Sargsyan was trying to
persuade the businessmen and economists that even a policy of a fixed
exchange rate of the dollar would not solve the problem of competition,
because in that case prices would soar, which would affect the volume
of consumption. Tigran Sargsyan said the exchange rate of the dollar
is an inevitable consequence of the economic growth, and such countries
like Japan, Songapore and China have encountered this problem.

The president of the Central Bank advised the businessmen to focus
on technology and modernization, corporative management, involve
additional capital through shares and stop working in the shade to
become competitive rather than seek excuses in the exchange rate of
the dollar. The president of the Central Bank even announced that
there is not a group of businessmen in Armenia, who could help the
government battle black economy.

Answering Tigran Sargsyan, the president of the Union of Producers and
Entrepreneurs Arsen Ghazaryan first said that the Armenian businessmen
are intelligent enough to understand the necessity of modernizing
production. This is what they have been doing over the past three or
four years, stated Arsen Ghazaryan. However, the fluctuations of the
exchange rate of the dollar in Armenia does not allow for considering
competition. We sign a deal abroad, and before we get to Armenia,
the exchange rate changes, says Arsen Ghazaryan.

He says they can understand that the revaluation fo the dram is
inevitable and they can understand the objective reasons, the problem
is that this process is unsteady and abrupt, which complicates decision
making, because there is no way to predict the situation.

Besides, Arsen Ghazaryan announced that there are a number of Armenian
businessmen, who are against the black economy, and make efforts to
battle it, yet there are others who get immense profit, and operate
in the shade, and do not suffer losses from this exchange rate or
whatever juggling, whereas the ones who work legally suffer.

Arsen Ghazaryan also announced that the same businessmen operating in
the shade prevent corporative management and the policy of involvement
of additional assets. There is so much black capital that they can
change the economy in a day buying one company or another created
for years.