WILL ARMENIA’S FINANCIAL SYSTEM RESIST THE CRISIS?
Arthur Hovhannisyan
Hayots Ashkhar Daily
17 Oct 2008
Armenia
During the press conference yesterday Prime Minister Tigran Sargsyan
gave information regarding his meetings in the USA and answered the
questions of the journalists.
What influence does the world crisis have on Armenia or what impact
can it have in the future? What does the government do to avert
the possible crisis in our country? Before touching upon the main
questions the Prime Minister firstly said that the financial crisis
is conditioned by the mistrust towards the financial institutions.
"Trust is the most important factor in the temporary financial
and economic systems and financial crisis usually intensifies
due to mistrust, the Prime Minister said and added, "The financial
institutions usually refuse to function in concert with one another,
they usually try to freeze their active functions, guarding themselves
against additional risks which in its turn contributes to the
intensification of financial crises.
This is the most important circumstance, because it formulates
expectations also among the citizens. And if those negative
expectations are formulated by negative tendencies naturally
these tendencies contribute to the intensification of the financial
crisis. In this regard the state interference in settling that problem
is aimed at averting those negative expectations and creating trust
among the participants of the market to improve the financial indexes."
The second problem is the level of the liquidation of the financial
institutions, which means they have enough financial means to realize
their current interferences.
Tigran Sargsyan detailed the level of the capitalization of the
financial institutions, which is also a matter of concern. It is very
important also to jointly realize the before mentioned events. Touching
upon the situation created in Armenia the Prime Minister said:
"Do we have indexes in our financial sector, which give reasons for
concern? We must firstly be attentive towards the information given to
the public by the Mass Media. We must avoid false information, which
is aimed at creating panic, negative expectations, mistrust, and all
this as you remember from the first message is very important for us.
"Naturally we understand that there are politicized assessments,
which are far not aimed at ensuring financial stability, or helping
the government overcome all the difficulties, just the contrary,"
Tigran Sargsyan said.
"In this respect our economic team is ready to give operative answers
to all the issues of concern and allocate operative information about
the situation.
Touching upon the second problem the Prime Minister brought several
arguments to state that our financial institutions have enough
liquidation to realize their payments. Moreover the exist ing indexes
demonstrate that our financial system has got even extra liquidation.
Tigran Sargsyan says the indexes characterizing the reliability of
our banks are much higher than the similar indexes of CIS countries,
as well as the indexes of the banks of the developed countries. The
Prime Minister brought numbers and facts to assure that the next index
of the capitalization of the banks also doesn’t give any grounds for
negative expectations.
"Because the level of capitalization is on a very high level in
Armenia, in this regard as well we can say that the reliability of the
financial sector is on a very high level and there is no reason for
concern. If we look at the other indexes of the financial system,
particularly deposits and active functions, the specific weight
of the credits, then we will see that we have tendencies of stable
development in 2008.
The Prime Minister said the government has powerful tools and even in
case of the worst scenario, taking into consideration the lessons of
the developed countries, can operatively interfere in the financial
field to avert any risk."
"Can we say that our financial system is under stable indexes?"
Tigran Sargsyan also touched upon the problems that we can face in
2009 and have negative impact on economic indexes he also pointed
out the work that the government has to do in this regard.
The high prices recorded in Armenia in 2008 are conditioned by the
high prices of the imported goods.
In case these high prices drop and our harsh monitory-credit and
tax-budgetary policy provide opportunity to resist the pressure of
the mounting prices, this will give an opportunity to the Central
Bank to reduce the percentages and take corresponding actions to
improve favorable conditions for the economic growth.
Not excluding that the reduction of the prices of power-generating
substances in Russia can lead to the reduction of the economic growth
in the country, which will naturally lead to the reduction of the
incomes of our compatriots in that country and the money transfers
to Armenia will of course trim down. The Prime Minister said it can
have a bad impact on our financial sector and in general the level
of consumption, because 80% of the money transfers are directed to
the consumption.
"This means we must increase the volume of the credits of small and
average businesses," Tigran Sargsyan said and assured that for that
purpose they have corresponding arrangement with the World Bank.
According to the Prime Minister the increase of the volumes of credit
allocated to the small and average businesses will be an additional
buffer, which will defend our average consumer, giving them possibility
to neutralize the before mentioned possible negative consequences.
From: Emil Lazarian | Ararat NewsPress
