INFLATION TO MAKE NO MORE THAN 7% IN ARMENIA IN 2007

YEREVAN, DECEMBER 27, NOYAN TAPAN. By forecast of the Central Bank of
Armenia (CBA), inflation will make no more than 7% in Armenia in 2007.
The CBA chairman Tigran Sargsian stated on December 26 that Armenia has
succesfully overcome the challenge facing the country in 2007 – due to
a rise in prices in international market. According to him, about 4
percentage points of the inflation registered this year was conditioned
by external inflation pressures. Therefore, the inflation conditioned
by domestic monetary factors makes about 3% which is line with the
annual programed index – no more than 4.5%. The CBA chairman stated
that inflation in Armenia is the lowest in the CIS, particularly,
inflation in neighboring countries is twice as high.

T. Sargsian said that 2007 was an unprecedently successful year for the
banking system. The growth of credits made 72%, with the amount of
mortgage credits almost doubling. The growth of banks’ assets and
liabilities has made about 40%, and the banking system ended the year
with a high profit. The growth in non-banking credit institutions is
higher, in particular, their assets have doubled.

In the insurance sector, the year 2007 was marked by adoption of a new
law, as a result of which six companies were closed. Nevertheless, this
year the liabilities in the insurance sector have increased by 40%,
while the profit has doubled.

In the words of the CBA chairman, the most important change in the
securities market in 2007 was the successful completion of the deal
with OMX company (Sweden), as a result of which this company purchased
the Armenian Stock Exchange and the Central Depositary. It is also
important that many enterprises have started issuing their bonds, while
Ararat Bank has also issued shares. There is a hope that 2008 will be a
turning-point year for the securities market.

It was stated that this year Pro Kredit Bank (Germany), Byblosbank
(Lebanon), as well as Gazprom and Troyka Dialog banks (Russia) have
entered the Armenian market. According to T. Sargsian, it means that
henceforth Armenian banks will have no problem with financial resources.

He said that this year Armenian banks have attracted an unprecedented
amount of funds from external market, thanks to which the net foreign
assets have declined by about 80 billion drams (about 262 million
dollars). It is also significant that in 2007 the dramization process
has continued, as a result of which the share of deposits in Armenian
drams has reached 65% in the banking system. In late 2006, this share
exceeded 50% for the first time.