CHAIRMAN OF CBA: INTEGRATION PROCESSES WITH RUSSIA WILL GROW AT A QUICKENED PACE

arminfo
2008-03-25 17:03:00

ArmInfo. Integration processes with Russia will grow at a quickened
pace, Chairman of the Central Bank of Armenia (CBA) Tigran Sargsyan
said in his interview with "Rossiyskaya gazeta" (Russian newspaper).

According to him, time and confidence are the important elements
of modern economy. If there is mutual understanding, the economic
contacts are established quickly. Mentality, traditions, the huge
cultural layer, which have always unified Armenia and Russia are
becoming a strong stimulus for new business opportunities. It is
much more complicated with Europe and America: establishment of new
economic relations needs time, and time is money. The integration
processes with Russia will leave behind the integration processes
with other countries.

Commenting upon the possible suspension of the Millennium Challenge
Program in Armenia, Sargsyan said that this program would greatly
help the country, though the country mostly relies on its own
economic potential. "Armenia will go forward along the path of market
reforms. Those indices, which already exist and those which will by
all means be, will allow our American colleagues to reconsider the
decision and renew the project. Due to the strong basis of relations
with Russia, we’ll manage to overcome a number of problems, including
the temporary suspension of the financial support under the Millennium
Challenge Program. The relations with Russia, which have become more
intensive over the past three years, prove that the financial and
economic problems in Armenia are overcome", he said.

The CBA chairman said that actually being isolated from the foreign
world by transport blockade and having no serious natural resources,
Armenia demonstrates sustainable rates of economic growth. In 2007,
the growth rate made up 13,7%, with inflation rate being 6,6%. This
is the lowest inflation index among the CIS countries. The real
incomes of the population annually increase by 19-20%, the poverty
level decreased twice over the past three years. To a large extent,
this is the result of the economic policy conducted the Armenian
government headed by Armenian President Robert Kocharyan and Armenian
Prime Minister, newly-elected President Serzh Sargsyan.

Russia traditionally maintained good relations with Armenia. After the
disintegration of the Soviet Union, the cooperation dropped abruptly:
the former plan schemes went out of date, and the new ones were not
created yet.

Cooperation on market bases became possible over the past five years
when the economy of both states consolidated to the extent possible.

In 2007 the Russian-Armenian trade turnover grew by 65% to $700mln
against just $300mln in 2005. Last year Russia had the biggest 16.1%
share in Armenia’s foreign trade. Besides, Russia is home to a very
big Armenian community and almost 80% of all private money transfers
from Armenia are sent to Russia.

Presently, Russia and Armenia are implementing a whole number of joint
projects. In 2008 they are planning to complete the construction of
the second section of Iran-Armenia gas pipeline, a project financed
by AromRosgazprom (joint venture of Gazprom, Itera and Energy Ministry
of Armenia).

The company has started to modernize the Sevan-Hrazdan Water Power
Plant and is building Kajaran-Ararat gas pipelines. In 2008-2010
AtomRosgazprom is planning to invest almost $30mln in the Armenian
economy, particularly, in the restoration of Yerevan and Azrni water
power pants, modernization of Argel, Sevan and Kanaker WPPS. Presently,
Armenia buys Russian gas at a preferential price – $110/1,000 c m,
while for its neighbors the price is no less than $230/1,000 c m.

In the nuclear sphere, Rosatom and Ecology Ministry of Armneia have
signed an protocol for establishing a JV for prospecting, mining
and processing of uranium in Armenia. The JV is planning to spent
several hundreds of millions of US dollars on this project. In early
Feb 2008 the foreign ministries of Russia and Armenia exchanged notes
on Armenia’s joining the International uranium Enrichment Center,
set up by Russia and Kazakhstan in May 2007.

Rosatom is going to take part in the tender for the construction of
new nuclear power plant in Armenia. The Russian business is active
in Armenia’s banking sector. In late 2007 Gazprombank bought 80.09%
stake in Armenian-Russian Export-Import Bank (Armeximbank).

Such big players as Troika-Dialogue, Unibank, Gazprombank, VTB have
come to Armenia. Russian companies control a big part of Armenia’s
telecoms and manufacturing sectors. MTS OJSC owns 80% of the mobile
telecom operator K-Telecom (VivaCell), while VimpelCom owns the
fixed and mobile telecom operator ArmenTel. Rusal owns Armenal foil
rolling plant.

Rostekhnologies State Corporation has specific investment plans
in Armenia’s engineering and machine-building sectors. Since 2002
RosDefenseExport has supplied Armenia with military products worth
$25mln. Russian Railways manages Armenian Railways Company and has
promised by 2010 to restore the railway communication with Turkey and
by 2009 with Azerbaijan. The Russian company is planning to invest
$570mln in Armenian railways. If the transport blockade of Armenia
is lifted and the Abkhazian section is opened, this figure may grow
to $2.132bln. The development of the transport infrastructure will
help us to more effectively use our economic capacities.

Armenia’s legislation is rather liberal, so, the Russian business
has no problems on the Armenian market. International experts say
that the Armenian economy is much more open and attractive than the
economies of the other CIS countries.

The Armenian authorities are working hard to turn Armenia into the
financial center of the region. Armenia is a place where different
banking cultures can work in harony and dialogue.