GLOBAL FINANCIAL CRISIS "COULD HURT ARMENIA"

AZG Armenian Daily
18/10/2008

Armenia – Global Financial Crisis

The deepening global financial crisis poses no immediate threat to
Armenia’s banking sector but could potentially hold back its economic
growth, Prime Minister Tigran Sarkisian said on Thursday, according to
"Azatutyun" radio-station. Sarkisian argued that Armenian banks and
other finance institutions have sufficient liquidity to weather the
storm sending shockwaves through the world markets. "In that sense,
the reliability of our financial sector is extremely high and gives us
no reason to worry," he told a news conference. Sarkisian cautioned
at the same time that the crisis could ultimately hurt the Armenian
economy if it continues to deepen in the European Union and especially
Russia, Armenia’s main trading partners. A recession in Russia "could
immediately affect us" by slashing multimillion-dollar remittances
sent home by hundreds of thousands of Armenians working there, said
the former longtime governor of the Armenian Central Bank. According
to Sarkisian, the Armenian government believes the best way to reduce
the country’s dependence on the cash transfers is to "drastically
increase" lending to small and medium-sized businesses. "We have
a relevant understanding with the World Bank and need to attract
additional resources to neutralize possible negative effects," he
said without going into details.