WB: AMD DEPRECIATION HELP ARMENIAN PRODUCERS

ARKA
March 4, 2009

YEREVAN, March 4. /ARKA/. Aristomene Varoudakis, WB Country Manager,
believes that the AMD depreciation will help Armenian producers.

The exchange rate corrections will help Armenian companies increase
their exports and help the ones affected by the situation increase
their profits, Varoudakis told reporters.

He pointed out a decrease of 24.5% in Armenia’s exports this January,
ones of the causes being the worse economic situation in the world,
particularly in the Commonwealth of independent States (CIS) and
European Union (EU), which are Armenia’s major trade partners.

This is going on against the forecasts of a decrease in the world
trade this year.

Another problem is that the world prices for the products exported
from Armenia – furniture and molybdenum – have fallen, which affected
the companies’ profits.

On the other hand, the new exchange rate will help the companies
competing on the market – imported products will be more expensive,
which will help the Armenian companies ensure competition. Varoudakis
finds it difficult to make accurate forecasts of an increase in
exports as a result of the exchange rate corrections.

He pointed out that the WB advised the CBA to return to the floating
rate regime long ago.

Yesterday morning the CBA Board took into account the gradually
worsening trade conditions amid the present global eco nomic and
financial crisis, as well as lower capital flow rates, and decided to
restrict its interventions in the currency market thereby reverting
to its floating exchange rate policy. CBA experts believe that the
USD average exchange rate will be 360-380 AMD/$1 this year.

This January Armenia’s foreign trade turnover showed an annual decrease
of 24.5% and reached 77.9bln AMD or $254.3mln.

Armenia’s exports totaled 10.4bln AMD ($34.2mln) – a decrease of
43.9%. Imports totaled 67.5bln AMD ($220.1) – a decrease of 20.2%.

Thus the unfavorable foreign trade balance reached 57.1bln AMD
($185.9mln), or 56.7bln AMD ($184.1mln) without humanitarian
cargoes.