Category: 2023

YEREVAN. May 15 (Interfax) – Armenia wants to avoid falling under anti-Russian sanctions imposed by the West and is directly telling this to Russia, Armenian Prime Minister Nikol Pashinyan said.

"We gladly meet the Russian demand wherever there is a vacant spot. Sanctions are our red lines. And we are clearly telling this to Russia: we don't want to hurt you but we cannot afford coming under sanctions ourselves. There is no secret here," Pashinyan said in an interview with the Czech magazine Respekt, the Armenian state-run news agency Armenpress said.

Owing to the Ukraine situation, logistic chains of freight traffic have been disrupted or are not functioning, many goods that used to be shipped directly to Russia are now traveling there via Armenia, Kazakhstan and other countries, he said.

"For example, drinks, which aren't subject to sanctions, are no problem. Before February 2022, they were shipped via Poland and Belarus, now they travel via Armenia. It's not just about the change of routes, most of the European freight forwarders are refusing to directly cooperate with the Russian market. And Russian freight forwarders cannot deliver them to Poland. Thus, entirely new logistic routes were created, including across Armenian territory. But, in terms of sanctioned goods, we are trying to be as transparent as possible, we are cooperating with the EU, U.S., even with Russia itself. We are a member of the EAEU and we have very close economic ties with Russia, and Armenian businesses like participating in the recently created programs," the Armenian prime minister said.

A majority of people who recently relocated to Armenia from Russia have dual citizenship, as they hold both Russian and Armenian passports, he said.

"Almost 30,000 people with only Russian citizenship have arrived in Armenia. They have made their contribution to our economic growth, because most of them are highly qualified and often work in the field of innovative technology, which translates into economic activity. We are happy that they are here," Pashinyan said.

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During the European Bank for Reconstruction and Development’s (EBRD) 32nd Annual Meeting and Business Forum in Samarkand, Uzbekistan, Trade Finance Global spoke with several industry leaders to learn more about the particulars of a first-of-its-kind transaction. 

For several years, FCI has supported EBRD in various areas, including education and legal framework support. 

Recently, a significant step FCI has taken to help facilitate cross-border transactions has been to develop a state-of-the-art, high-secure electronic data interchange (EDI) platform called EdiFactoring, which allows financial institutions (FI) to communicate and participate in risk distribution.

The EdiFactoring platform is a risk distribution system that allows FIs to distribute the risk of an open account transaction. The messaging system has facilitated over €1 trillion in transactions to date. Still, now the system has been used to facilitate a real-world trade between Armenia and Georgia for the first time.

This first transaction involved an Armenian chocolate factory importing confectionery products from a Georgian confectionery distributor with the help of the EBRD, TBC Bank, and ArmSwissBank.

Tamar Gugushvili, head of trade finance and documentary operations unit at TBC Bank, said, “We are very happy and proud that this transaction is the first international inter-regional factoring deal supported by EBRD’s standby letter of credit.”

While the transaction structuring was challenging because there was no precedent, EBRD, ArmSwissBank, and TBC Bank collaborated to develop a secured payment scheme, which was also adapted to the FCI platform and structure. 

ArmSwissBank issued a payment guarantee in favour of TBC Bank, which secured the obligations of data for the payment of all account receivables assigned to TBC Bank and the factoring contract. 

This payment guarantee was then backed by EBRD’s standby letter of credit (SBLC), enabling TBC Bank as an export factor to book the risk on ArmSwissBank.

Anzhela Barseghyan, trade finance and correspondent relationship department director at ArmSwissBank, said, “One serious challenge we faced was the price. We had to keep the price affordable, and the fact that ArmSwissBank issued a payment guarantee in favour of TBC Bank, which was backed by EBRD’s SBLC, allowed TBC Bank to offer low-cost financing solution to the exporter.”

While notable in its own right, the novel structure successfully provided several other long-term benefits. It demonstrated a practical blueprint for structuring cross-border factoring transactions with counterparties that may otherwise need help to do business together.

Moreover, the transaction helped to deliver improved receivables and payables cycles for small- and medium-sized enterprises (SMEs)  – which are the most affected by the trade finance gap – at an affordable rate. 

It also served as a catalyst to encourage private sector import and export growth in Georgia and Armenia and established a corresponding relationship between the banks, which is anticipated to lead to cooperation in other forms of products in the future.

Peter Mulroy, secretary general at FCI, said, “This is the very first transaction where a development bank had provided a guarantee within the EdiFactoring environment. It really enhanced the transaction and as a result of its uniqueness and the many benefits that the transaction resulted in, it was one of the top winners of the Best Deal of the Year award at the FCI annual meeting in Washington, DC last year.”

From a high level, there are certainly more opportunities for multinational development banks or other development finance institutions to facilitate trade on FCI’s factoring platform. 

Development finance institutions play a crucial role in mitigating cross-border trade risks, especially in countries with a lack of confidence between counterparties or where the financing gap is significant. 

By establishing guarantee mechanisms, these institutions can protect banks in one country and allow them to fund receivables from buyers in high-risk countries, which would otherwise not be possible.

Promoting innovative financing solutions can have further benefits down the road for the many smaller firms that may not currently have access to traditional financing mechanisms.

Nana Khurodze, associate director, senior banker of the Trade Facilitation Program at EBRD, said, “Unlike a traditional lending relationship, factoring and supply chain finance allows suppliers with weak credit ratings to access funding based on the value of their receivables or approve the invoice in the case of supply chain finance.” 

It is a promising indication that factoring and supply chain finance are fast-growing sources of short-term financing for micro, small, and medium-sized enterprises. 

However, with any financial transaction, there are potential risks involved, one of which is the potential risk of currency volatility which can lead to fluctuations in the exchange rate and can ultimately affect the transaction’s profitability. 

Another risk is the possibility of political instability or conflict in the buyer’s country, which can disrupt the supply chain and impact the ability to collect receivables.

By identifying potential risks and implementing appropriate risk mitigation strategies, these institutions can help ensure the transaction’s success and benefit both the corporates and SMEs involved, as well as the partner banks.

FRESNO, Calif. (KSEE) – Valley Children’s Hospital is hosting a special delegation for the next two weeks: three pediatricians and one hospital administrator from Yerevan, Armenia.

The delegation comes from Wigmore Hospital for Children in Armenia’s capital city.  A 220-bed pediatric hospital that opened in December of 2022 serving a population of 1.5 million people. The visiting pediatricians say they came to Valley Children’s so they can learn to provide the best care for their patients at home.

“All the system, how it’s working here, and how I can use this system and make it more flexible in my hospital, ” says Armenian pediatrician Dr. Mariam Ghukasyan.

The day began with introductions and some background on the medical challenges facing the people of Armenia.

“The lack of high quality and advanced education is one big challenge for sure, and you may train your staff and invest in your own staff, but again the hospitals grow, and they need more staff.  You need a system working in a country, an education system that provides the quality that is needed,” says Wigmore Hospital’s Chief Development Officer Tatevik Koloyan.

Valley Children’s staff and administrators welcomed the visiting doctors with open arms.

“We’re really excited to host them here, show them what we do here in terms of both clinical care as well as quality, marketing, communications, some of our specialty services,” says Dr. Jolie Limon of Valley Children’s Hospital.

The visiting doctors got a tour of the hospital but will soon get a more hands-on look at state-of-the-art healthcare for children in the Central Valley, that they hope may someday be the standard of care in their home country of Armenia.

“I believe in my country.  If you want to change something, first, you have to start with yourself,” says Dr. Ghukasyan.

The doctor’s two-week visit is funded by donations to Fresno’s Advance Armenian Foundation and the medical mission of local doctors that visit Armenia every year.

 Faizan Hashmi  Published May 16, 2023 | 07:34 PM