Armenia Shows Impressive Results
World Bank Report Shows Country Made Substantial Progress in Alleviating Poverty
Press Release No:2007/267/ECA

Contacts:

In Yerevan: Vigen Sargsyan (374-10) 524-884, vsargsyan@worldbank.org

In Washington: Steven Jouy (202) 473-4215, sjouy@worldbank.org

WASHINGTON, March 8, 2008—The past two years have been a period of considerable progress for Armenia, including GDP growth rates in the double digits, macroeconomic stability, important policy reforms, and significant progress in combating poverty, according to the Country Assistance Strategy Progress Report (CASPR) for Armenia, discussed today by the World Bank’s Board of Executive Directors.

The Country Assistance Strategy (CAS) is developed every four years between the World Bank and the Government of Armenia, mapping out collaboration for the next four years. The current CAS was prepared in June 2004 and covers the 2005-2008 period. This Progress Report comes at roughly mid-term and reviews progress against agreed and measurable results.

The CAS sets out three broad pillars of engagement: (i) promoting private sector-led economic growth, (ii) making growth more pro-poor, and (iii) reducing non-income poverty. The foundation of the CAS is the policy support provided by a series of development policy loans (PRSCs). Through the PRSCs and other instruments, the Bank is supporting improvements in governance, transparency and good economic management. The Bank has also helped to strengthen the physical and social infrastructure of the country through investment operations in such areas as irrigation, water supply, renewable energy, electricity transmission, and transportation. The Bank has also been active in supporting health and education reforms in the country. Poverty has declined from around 50 to 30 percent in the last few years, with extreme poverty dropping to below 5 percent. Good progress is also being made in social sector spending and reforms.

The CASPR indicates that the Bank has delivered all of the activities included in the CAS, including both annual policy support and investment lending. Investment lending during the first half of the CAS period included the Rural Enterprise and Agricultural Development Project, Yerevan Water and Wastewater Project, Urban Heating Project, Renewable Energy Project, Avian Influenza Control Project, and the third replenishment of the Social Investment Fund. The CASPR also describes the growing involvement of the International Finance Corporation, the World Bank’s private sector arm, in Armenia.

“Armenia has come a long way over the past few years and should be proud of its accomplishments. The Progress Report provides a clear framework for measuring these achievements,” says Donna Dowsett-Coirolo, World Bank Country Director for Armenia. “The World Bank will continue to support Armenia in sustaining growth, creating jobs, and reducing poverty.”

In light of Armenia’s growing GDP per capita and improving creditworthiness, the CASPR confirms Armenia’s eligibility to begin some limited non-concessional borrowing from the International Bank for Reconstruction and Development, in addition to its soft loan funding from the International Development Association. This is a clear sign that Armenia is entering the ranks of middle income countries. At the same time, the transition will have to be gradual in order to avoid a premature buildup of debt.

The Board of Directors also approved three additional operations alongside the CAS Progress Report—the third Poverty Reduction Support Credit, the Health Modernization Project, and the Judicial Reform II Project. Each of these projects contributes to the overall partnership framework and will be an important addition to Armenia’s efforts to sustain strong growth, improve governance, and reduce poverty.

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For more information on the World Bank’s activities in Armenia, please visit:

Iran-Armenia pipeline to start work Monday

YEREVAN, Armenia, March 16 (UPI) -- The Iran-Armenia gas pipeline will begin functioning next Monday, Armenian news reports said Friday.

The Iranian and Armenian presidents will attend the opening ceremony, Sahak Abrahamyan, director of High-Voltage Electric Grids, told Armenpress agency.

Twenty-five miles of the 90-mile pipeline have been built. In the first stage, 300 million to 400 million cubic meters of gas will be transported. Eventually, the pipeline will be able to pump about 2.5 billion cu.m. of gas, the report said.

Work on the $30 million pipeline will end in mid-2008.

Initially, Armenia will receive 1.08 million cu.m. per year from Iran, a figure that is expected to double by 2019, according to the U.S. Energy Information Administration, the Department of Energy's data arm. In exchange, Armenia will provide Iran with 3 kilowatts of electricity per cubic meter of gas.

The pipeline allows Armenia to access Iran's and Turkmenistan's gas exports without having to use Caspian Sea export routes, the EIA says.

Iran-Armenia mutual ties boosted
Mar 21, 2007

Iranian President Mahmoud Ahmadinejad said that any cooperation and joint ventures between Iran and Armenia will develop the relations of two nations. According to a report released by the Presidential Office Media Department, the statement was made during Ahmadinejad's talks with his Armenian counterpart Robert Kocharyan at Nordouz border area on the sidelines of the inaugural ceremony of Iran-Armenia gas pipeline.

The president added that the strong will and firm determination of Iranian and Armenian officials is highly significant in broadening of bilateral relations in all fields.

Turning to Iran and Armenia as neighboring and friendly countries, he said, "Expansion of relations has always been faced by administrative problems and a number of other obstacles. But such a strong resolve will eventually overcome all difficulties."

Expressing his satisfaction with the implementation of one of the joint projects between the two states, he said that Iran's numerous potentials in different fields such as energy, establishment of refinery, railway and power plant as well as cooperation in the domains of communication, telecommunication and export of various products have prepared the ground for transferring the relevant experience to Armenia.

Meanwhile, President Ahmadinejad declared the country's readiness for cooperation in this regard.

ARMENIA'S PRIME-MINISTER POST TO REMAIN WITH RPA

YEREVAN, March 26. /ARKA - Novosti-Armenia/. Armenia's Prime-Minister post will remain with the Republican Party of Armenia (RPA), Chief of the RPA's Press Service Eduard Sharmazanov reported referring to the new political agreement reached between Armenia's president Robert Kocharian and the coalition forces.
"In the next few days RPA will convoke a sitting of the executive body or the party council where it will nominate the party's candidature to the post of Prime-Minister," Sharmazanov said.
Armenia's Prime-Minister, Chairman of the Republican Party died from heart attack at the age of 56 Sunday. He has led the government since 2000. N.V.



Sarkisyan appointed Armenia's acting PM
Mon, 26 Mar 2007 17:23:00
Armenian Defense Minister, Serzh Sarkisyan, has been appointed acting Prime Minister, after Andranik Markaryan died Sunday of a heart attack at the age of 55.

President Robert Kocharyan on Monday accepted the Cabinet's resignation due to Markaryan's death. The Armenian leader charged the Cabinet with continuing their duties until a new Cabinet could be formed.

Parliamentary elections in Armenia are scheduled for May 12, and after the first session of a new parliament, the Cabinet will resign again.

Markaryan was Armenia's prime minister since May 2000. In 1997, he was elected chairman of the Republican Party, which came to head the ruling coalition in Armenia in 2003.

Armenia will put economic development ahead of human rights improvements, its new prime minister said in an interview with the Financial Times.

Serge Sargysan, the defence minister who was promoted on Wednesday after the death of Andranik Margaryan from a heart attack last month, said jobs were more important than rights. Despite double-digit economic growth in the past few years, a third of the 3m-strong population of the landlocked Caucasian republic lives below the poverty line.

"It is hard to talk about democratic and human rights when you need to solve the social and economic needs of the population," the prime minister said during a trip to Brussels. "We would not like to be a state stuck in our transition."

He said the huge Armenian diaspora - estimated at up to three times the native population - should get more involved in the country. Only 1 per cent of investment came from them, he said, and he was looking at ways they could be encouraged.

However, Mr Sargysan said the government in Yerevan would keep pledges made to international bodies after criticism of its rights record and he was hopeful that the May 12 parlia-mentary elections would be the first to be pronounced free and fair by the Organisation for Security and Co-operation in Europe (OSCE), the European security watchdog.

"We have made commitments to different programmes and we think compliance is in our interest. We want to become part of the European family."

Mr Sargysan, who helped organise militias that seized the enclave of Nagorno-Karabakh from Azerbaijan in a three-year war following independence from the Soviet Union in 1991, said his top priority was to conclude a peace treaty with its Muslim neighbour.

The oil-rich state has been rearming recently but Mr Sargysan said that was sabre-rattling. Turkey closed its border with Armenia during the war and the premier said he would strive to restore relations and sign a peace deal. Armenia could grow far faster if rapprochement was reached with its bigger neighbours, he said.

Yet Armenia remains in control of Nagorno-Karabakh and hundreds of thousands of people are still displaced. Turkey - which has been offered talks without conditions - has shown no willingness to compromise.

Mr Sargysan said that, despite ties to influential exiles in the US, Yerevan would remain friendly to Moscow and would not support a US base in the volatile Caucusus. In a swipe at neighbouring Georgia, whose "rose revolution" against Russian domination has endeared it to the west, he said he did not see it as a model to emulate.

"One can either exploit their differences between superpowers or work with them. We prefer to work with them. There are many conflicts in our region."

Mr Sargysan said Armenia would one day like to join the European Union but had no desire to join the Nato defence alliance, although it was working closely with it.

New Armenia-Iran railway to cost $1bln

Sunday, April 08, 2007 - ?2005 IranMania.com
Related Pictures

Archived Picture - The building of the new railway between Armenia and Iran will cost $1 bln, Armenia?s acting Transport and Communication Minister Andranik Manukian said, the Persian service of ISNA news agency reported.

LONDON, April 8 (IranMania) - The building of the new railway between Armenia and Iran will cost $1 bln, Armenia?s acting Transport and Communication Minister Andranik Manukian said, the Persian service of ISNA news agency reported.

There is a strong desire to carry out the project, said the Armenian official, adding, ?We are trying to find an investor to complete the project.?

At present, there exists a railroad between Iran and the former Soviet republic but since it passes through the Nakhichevan, a controversial area between Armenia and Azerbaijan Republic, it is not currently in use, the minister added.

Economic experts believe that given the possible resolution of the dispute between Armenia and Azerbaijan Republic over the Nagorno-Karabakh region, the building of the new railway would be uneconomical.

Iran to pipe gas to Armenia in winter
TEHRAN, June 11 (MNA) – Iran’s gas export to Armenia was postponed to next winter due to a delay in pipe-laying operations.

Iranian President Mahmud Ahmadinejad and his Armenian counterpart, Robert Kocharian, opened the pipeline's first section at a ceremony near the border.

Under the first stage of the project, Iran will annually export some 400m cubic meters of gas, which will be increased up to 3.2 billion cubic meters when the 141km link is completed.

The 100 km Iranian section runs from Tabriz to Iran-Armenia border. The Armenian section runs from Meghri region to Sardarian.

NK/KK http://www.miacum.ru/forum/index.php?showtopic=615

Central Bank Of Armenia To Lay Necessary Groundwork For Banking Sector's 40-Percent Growth
Yerevan, July 9. /Arka/. The Central Bank of Armenia is to lay necessary groundwork for banking sector's 40-percent growth, the Central Bank of Armenia Chairman Tigran Sargsyan said Monday in an interview with Reuters.

"The thing is that financial mediation is underdeveloped in Armenia now because of small market. However, Armenia wants to become the regional financial center", he said.

At the same time, the CBA head said that banking sector grows 25% every year outdoing twice GDP growth.

Sargsyan said that Armenian banking sector with its 21 banks and 50% of foreign participation in the capital, expects seven banks appearance here.

These banks are German ProCreditBank, Austrian Raifaizen, Lebanese Biblos, Russian Gasprombank and Dutch International Post Service.

Negotiations with two other banks are under way now.

Sargsyan also said that the Central Bank intends to develop the insurance market by inviting large insurance companies from the outside and developing securities market.

In his opinion, cooperation with Scandinavian OMX will contribute to that.

According to the Central Bank's quarterly reports, Armenian banks' aggregate assets made 19.57% of GDP by late March 2007 against 20.41% earlier this year.

High technologies needed for further development of Armenia’s economy
09.07.2007
/PanARMENIAN.Net/ In his speech at ArmTech2007 first congress in San Francisco RA Foreign Minister Vartan Oskanian pointed out Armenia’s development, stability of the country and his perspectives. The RA FM underlined the great importance of high technologies for the further development of Armenia’s economy. Vartan Oskanian also stressed the importance to use those technologies in social sphere, including education and healthcare. The Armenian Foreign Minister introduced changes of new generation reforms and perspectives of country’s development conditioned by those reforms. He particularly underlined that the society carries the responsibility both for success and mistakes. In his speech Vartan Oskanian touched upon also regional problems and introduced relations between Armenia and the Diaspora in separate directions.

The next session of the congress is scheduled for 2009. Synopsys, Impeva, PDF Solutions, Virage Logic, chief managers from Morgan Stanley, Mckinsey & Company, as well as Armenian Center of Development participated in works of the congress.

Fuad Siniora: Armenia going to become one of Lebanon’s best economic partners
30.07.2007
/PanARMENIAN.Net/ Lebanese Prime Minister Fuad Siniora said he is one of the initiators of the Lebanese investments into Armenia’s economy. “I am one of those who inspired Lebanese companies, including the well-known Biblos bank, to work in Armenia,” Mr Siniora said in an interview with the Public Armenian Television.

The time will come when Armenia will become one of Lebanon’s best economic partners while the latter will be Armenia’s outlet to the Arab world, he said.

The Lebanese Prime Minister noted that Armenia will be the first country he is planning to visit after the resolution of the internal crisis in Lebanon.

Armenia's GDP grew by 12,1% in Jan. July 2008
2007-08-20 14:01.

The growth of Armenia's GDP in January-July of 2007 totaled 12,1%, as compared to the same period of 2006, making the country an attractive place for new investments. As the press service of the National Statistical Service of Armenia told Mediamax today, the GDP volume in January-July of 2007 totaled 1287363.0mln drams.

The volume of industrial production in Armenia in January-July of 2007 stood at 388117.0mln drams, having increased by 1.3%, as compared to the same period of 2006.

The average monthly salary in Armenia in January-July of 2007 increased by 19.8%, as compared to the same period of 2006, thus making 72249 drams.

The salary of budget organizations has increased by 21.7%, making 53230 drams during the accounting period, and the salary of non-budget organizations stood at 90170 drams (growth – 19.4%).

Armenia’s foreign trade turnover in January-July of 2007 increased by 37,0%

The foreign trade turnover of Armenia in January-July of 2007 totaled 800.5bln drams or $ 2262.9mln, having increased by 37,0% as compared to the same period of 2006.

As the press service of the National Statistical Service of Armenia told Mediamax today, the export volume during the accounting period made 222.9bln drams or $631.1mln, and the import volume totaled 577.6bln drams or $1631.8mln.

The deficit of the foreign trade balance in January-July of 2007 stood at 354.7bln drams or $1000.7mln.

Armenia’s foreign trade turnover in January-July of 2007 increased by 37,0%

Yerevan, August 20 /Mediamax/. The foreign trade turnover of Armenia in January-July of 2007 totaled 800.5bln drams or $ 2262.9mln, having increased by 37,0% as compared to the same period of 2006.

As the press service of the National Statistical Service of Armenia told Mediamax today, the export volume during the accounting period made 222.9bln drams or $631.1mln, and the import volume totaled 577.6bln drams or $1631.8mln.

The deficit of the foreign trade balance in January-July of 2007 stood at 354.7bln drams or $1000.7mln.

BANK INVESTMENT BOOMING IN ARMENIA
8/27/07
A News Commentary by Haroutiun Khachatrian

Fueled by high economic growth rates, Armenia’s banking sector is rapidly expanding, with several new, large-scale multi-million dollar foreign investments expected in the coming months.

Yerevan’s Garegin Nzhdeh Square illustrates the transition involved. The square’s sidewalks are packed with street traders, one of the clearest signs that Armenia’s "shadow economy" lingers. The lines of people at three nearby automatic bank tellers waiting to pay utility bills or get cash, however, suggests a parallel trend: the old Soviet image of banks as just a place where extra money could be stored is beginning to fade.

Armenia’s ongoing high rate of economic growth (12.1 percent for the first six months of 2007, according to official statistics) largely explains the trend. In 2000, average monthly salaries stood at roughly $55, while today they average $205. With incomes rising, residents are turning to bank loans, with interest rates ranging from 15-22 percent, to expand their purchasing power still further.

Since 2004, the banking sector has expanded at a rate of between 10 to 20 percent a year to stand currently at more than $1.6 billion. In the first six months of 2007, banking assets’ value climbed by $244 million, or about 83 billion dram, according to the Central Bank. Nonetheless, in terms of the ratio of total bank assets to Gross Domestic Product, Armenia ranks as an outsider country. This ratio, commonly used by specialists to evaluate the banking sector, was just over 19 percent by the end of 2006. In most post-Soviet countries, it can stand as high as 50 percent.

Central Bank officials put that difference down to relatively strict requirements for issuance of loans and reserve levels, among other indicators, and the Central Bank’s weekly verification of commercial banks’ balance sheets.

Some experts agree. "Indeed, Armenian banks are probably the best among the CIS countries in terms of the quality of assets," commented Tigran Jrbashian, the Armenian director of the Armenian-European Policy Legal Center, a European Union-funded think tank in Yerevan.

With additional investors moving into the field and demand for bank services growing, competition is becoming key. In addition to banks from Russia, the United Kingdom and Iran, new banks have been formed in recent years with capital from the US, Switzerland, Ukraine and Kazakhstan.

The Central Bank announced in July that Russia’s Gazprombank, Austria’s Raiffeisen Banking Group and the Lebanese Biblos Bank have indicated their intention to invest in the Armenian banking sector, either via takeovers or by creating subsidiaries. In addition, Arminfo has reported that the German-based ProCredit Holding AG, an investment company that is the majority shareholder in a bank group for transition and developing economies, and the Russian investment bank Troyka Dialog are also considering entering Armenia through similar routes.

The British-run HSBC Group Holdings, which has been working in Armenia since 1996, has announced plans to make new investments and open several new branches. Details were not available. The expansion plans of ACBA-Credit Agricole, an Armenian-French joint venture, is being backed by a $12 million loan from Citigroup and the European Bank of Reconstruction and Development.

The entrance of GazPromBank, in particular, is thought likely to fuel competition with one of the largest foreign bank players in Armenia’s market -- Russia’s VTB Bank, which took over the Armenian Savings Bank in 2004. In late July, VTB Armenia Chief Executive Officer Valery Ovsiannikov told ArmInfo news agency that the bank is looking for capital to see through proposed projects worth $500 million.

With the expansion, expert Jrbashian hopes that the quality of banking services could improve, too. Already, banks are increasing interest rates for deposits, while some are also venturing into relatively new products for the region – student loans, low-fee credit cards for account holders and cumulative interest-rate accounts that vest to accountholders’ children upon their reaching adulthood.

But more banking activity could mean higher inflation, a situation often seen in rapidly growing economies which consume large sums of money in a short time. The Central Bank has hoped that a stock market, planned for introduction in the coming year or two, could help keep that risk even lower, but, for now, as bank investment grows, the outcome is far from certain.

Bankers say that inflation could provide a clue. Despite earlier fears that inflation for July 2007 compared with December 2006 might be as high as 4 percent, the increase ranked a mere 0.6 percent. This slight jump, despite above-average growth in the banking sector, has suggested that money supplies have not yet outstripped economic activity. For now, the bets are on that the Armenian economy has room to absorb still more.

Editor’s Note: Haroutiun Khachatrian is a Yerevan-based writer specializing in economic and political affairs.

Posted August 27, 2007 © Eurasianet

Armenians gobble up Turkish goods
By Agence France Presse (AFP)
Monday, September 10, 2007

YEREVAN: Turkish trucks loaded with goods are a common sight on the winding highways of Armenia, showing that for many Armenians the desire for a bargain outweighs historic hatred.

"What's important for me are the quality and the price of the goods, not where they come from," said Yerevan resident Suren, 32, who recently bought a Turkish-made washing machine.

Turkish goods are flooding into Armenia despite a long history of antagonism between Armenians and Turks, closed borders and diplomatic tensions between Ankara and Yerevan.

Only 25 kilometers from the Turkish border, Yerevan should be a short drive for the truckers. But with Armenia under a Turkish trade embargo and the border sealed, they instead have to take a circuitous route through neighboring Georgia to haul home appliances, building materials and other goods to Yerevan.

Turkey banned exports to Armenia and closed the border in 1993 in a show of solidarity with ally Azerbaijan, which was at war with Armenian-backed separatists over the territory of Nagorno Karabakh. And angered by Armenia's campaign for international recognition of mass killings of Armenians under the Ottomans as genocide, Ankara has also refused to establish diplomatic ties with Yerevan.

Yet at the main border crossing between Armenia and Georgia, the queue of Turkish trucks headed for Yerevan can often stretch for more than a kilometer. To get around the embargo, the goods officially change hands in Georgia, through middlemen or shell companies established by Turkish exporters.

"There is a huge quantity of Turkish goods today in Armenia," said Gagik Kocharian, the head of the trade department at Armenia's Trade and Economic Development Ministry.

Home appliances, building materials, household goods, clothes and paper products are the most common Turkish items, he said, and sales of those goods rose 40 percent in 2006.

Many consumers, Kocharian said, are indifferent to whether the goods they are buying are Turkish. "People buy brands and very often are not interested or do not know where a product is made," he said.

Many business leaders on both sides are urging the Armenian and Turkish governments to work to end the embargo and re-open the border.


"There is great interest from companies on both sides in doing business with each other. It would be very beneficial for both countries to reopen the border," said Kaan Soyak, the Turkish co-chairman of the Turkish-Armenian Business Development Council.

Re-opening the border would not only give Armenian exporters easier access to Western markets, but also add to export routes for Turkish companies targeting Azerbaijan and Central Asia, he said. "Unfortunately, the political establishments on both sides benefit from the status quo," he said.

Analysts doubt either side will give ground soon.

Winning international recognition of a genocide is one of Armenia's top foreign-policy goals. Armenians say up to 1.5 million of their kinsmen died in deportations and systematic killings on the territory of present-day Turkey in 1915. Turkey categorically rejects the genocide label and argues that 300,000 Armenians and at least as many Turks died in civil strife in what was then the Ottoman Empire during World War I.

Turkey is also unlikely to end its staunch support for Azerbaijan in the dispute over Nagorno Karabakh, an ethnic-Armenian enclave that broke away from Azerbaijan in the early 1990s and now has de facto independence. Azerbaijan has imposed its own economic embargo on Armenia. Despite repeated meetings, Armenian and Turkish diplomats have failed to break the deadlock.

At a meeting in Istanbul in June, Armenian Foreign Minister Vardan Oskanian urged Turkey to open the border, but Turkey insisted on solving the Karabakh dispute first. Turkish Foreign Minister Abdullah Gul also called on Armenia to support a Turkish proposal to set up a joint committee of Turkish and Armenian academics to study the genocide allegations.

And not all Armenians are willing to set political tensions aside in the name of commerce.

"I do not buy Turkish or Azerbaijani goods, and I absolutely don't understand people who don't care," said Robert Sanasarian, an elderly Armenian. "Why can't people just buy locally produced goods, helping Armenian businesses instead of our opponents?" - AFP

Цитата(Moonlight @ 10.9.2007, 2:38)

"I do not buy Turkish or Azerbaijani goods, and I absolutely don't understand people who don't care," said Robert Sanasarian, an elderly Armenian. "Why can't people just buy locally produced goods, helping Armenian businesses instead of our opponents?" - AFP

I do not understand as well! Everyone who is buying their goods has to remember that they are in blood!

UPDATE 1-MTS buys Armenia operator for 310 mln euro
Fri Sep 14, 2007 12:39 PM BST147

(Adds more details, background, comments by CEO)

YEREVAN/MOSCOW, Sept 14 (Russia) - Mobile TeleSystems (MTS) (MBT.N: Quote, Profile , Research), Russia's biggest mobile phone service operator, said on Friday it had acquired 80 percent of Armenia's K-Telecom, which operates under the Vivacell brand, for 310 million euros ($430 million).

MTS, controlled by services conglomerate Sistema (SSAq.L: Quote, Profile , Research), also said it had an option to buy the remaining 20 percent of what is Armenia's biggest mobile network provider.

"This acquisition fully complies with our strategy to capture growth opportunities in the fast growing CIS markets," MTS's chief executive, Leonid Melamed, said in a statement.

Russia's biggest mobile service providers are in fierce competition to expand into post-Soviet countries where fewer people own mobile phones and the markets still have a potential to grow.

Mobile phone penetration in Armenia is around 39 percent, MTS said, while penetration in Russia and Ukraine, MTS biggest markets, already tops 110 percent.

K-Telecom operates under the GSM-900/1800 standard. Its licence, valid until the end of 2019, covers the entire territory of Armenia.

As of July 1 it had a 66 percent market share and provided services to over 986,000 subscribers, MTS said.

MTS said that it would consolidate the financial results of K-Telecom, which it bought from Lebanese investment group Fattouche, into its financial statements from Sept. 14, 2007.

"The option for the remaining 20-percent stake in K-Telecom will take effect not earlier than 2010 and will be effective until 2012," Melamed told reporters.

MTS's key rival in Russia, Vimpelcom (VIP.N: Quote, Profile , Research), bought Armenia's second-biggest mobile provider, Armentel, in 2006 for $488 million. Its client base in the country stands at 530,000.

Цитата(Opium @ 10.9.2007, 15:02)

I do not understand as well! Everyone who is buying their goods has to remember that they are in blood!

i don't say they're right, just to justify.. many ppl in arm do not care where is a product produced, they just go for the cheapest. they have no other option, we can't blame ppl for being so POOR.

Цитата(Moonlight @ 18.9.2007, 11:53)

Цитата(Opium @ 10.9.2007, 15:02)

I do not understand as well! Everyone who is buying their goods has to remember that they are in blood!

i don't say they're right, just to justify.. many ppl in arm do not care where is a product produced, they just go for the cheapest. they have no other option, we can't blame ppl for being so POOR.

I agree. It's much more worse when people don't care going to have rest in Turkey since they don't care if they are supporting turkish economy and therefore their military system that works against their own Armenia.

October 23, 2007, 12:32PM EST
Armenia a Model for Developing Nations

Economic reform and investment by Armenian expatriates have helped the country boost GDP by more than 10% a year for a decade

by S. Adam Cardais

To appreciate just how far Armenia has come in the last 15 years, it helps to imagine yourself living through an Armenian winter in the early 1990s.

It's the middle of January, it's five degrees below zero, and you and your family have only two hours of electricity a day -- such was the abysmal state of the energy sector in a country crippled by the dissolution of the Soviet Union, a traumatic earthquake in 1988, and war with neighboring Azerbaijan.

But Armenia has been "radically transformed," in the words of one World Bank official, since its independence from the former Soviet Union. Today, the average Armenian has electricity around the clock.

An influx of cash and a series of reforms have taken Armenia from economic basket case, with GDP plummeting 50 percent between 1990 and 1993, to "Caucasian tiger," to quote a World Bank report issued earlier this year. It has become a model transition economy that should continue prospering with a second wave of reforms.

GDP has increased more than 10 percent a year for a decade largely thanks to robust investment in a booming construction industry by the Armenian diaspora in Europe and the United States. Sharp growth in the services sector, including the financial sphere, and retail trade are also contributors, according to the European Bank for Reconstruction and Development.

"Given the fact that it doesn't have natural resources, its growth is quite impressive," says Heike Harmgart, country economist for Armenia at the EBRD.

And the most laudable aspect of that growth, World Bank economist Aristomene Varoudakis says, is "that macroeconomic stability has been preserved. Inflation has remained low," between 3 percent and 4 percent. Last year was an exception to this trend, with inflation climbing to 5.6 percent, but the International Monetary Fund forecasts a fall to 4 percent in 2007.

REFORMS REAP REWARDS

This fiscal discipline is an indication the government has backed up the bountiful diaspora remittances, which are more good fortune than anything else, with sound policy. Indeed, remittances alone don't make Armenia a model transition economy. A series of early, sustained governmental reforms enabled the country to capitalize on the cash inflow.

For instance, the government eliminated wage controls and privatized the majority of land and small businesses in the mid 1990s to encourage investment in construction and other sectors. The central bank has also been a key reformer, streamlining its operations and improving supervision over the banking industry to spur a dynamic financial services sector in a short period.

More recently, a new credit bureau to bolster small business lending and a modernized bankruptcy law have further improved the investment climate, two reasons Armenia ranks 39th out of 178 economies in the World Bank's "Doing Business 2008" report.

On all of these reforms, Armenia has been wise to cooperate closely with international institutions such as The World Bank and the IMF.

"The Armenian government has been listening to institutions very well, which is positive," Harmgart says. "The government has always been open minded."

It would be hard to overstate the benefit this economic revolution has brought the population. According to the World Bank report, the poverty rate has fallen from more than 55 percent in the early 1990s to 30 percent. Extreme poverty had dropped to 5 percent two years ago.

GENTRIFYING NEIGHBORHOOD

The good news for the region is that Armenia's prosperity isn't unique. Georgia's economy is growing at just under 10 percent and is one of the leading reformers in the world, at No. 18 on the "Doing Business 2008" report. Azerbaijan posted a whopping 34.5 percent GDP growth in 2006 thanks to its thriving oil industry.

As in these countries, though, there's still a lot of progress to be made in Armenia. Tax evasion remains rampant. It's extremely costly for an individual or business to file taxes, and tax revenues are only 15 percent of GDP, one of the lowest rates in the region, resulting in less money for strengthening the economy or fighting poverty through spending on education or health care.

The government is trying to increase tax compliance by introducing a system that allows payers to submit their returns by post or electronically, publishing a list of the country's largest contributors in a sort of ego-driven motivator, and opening specialized collections units, but more progress is needed.

Corruption, though becoming less pronounced, is also a major concern, as is Armenia's over-reliance on the construction industry. Though analysts predict Armenia will sustain double-digit growth in the short and medium term, it has to begin diversifying its economy by making trade more dynamic and attracting new knowledge-based investments, such as IT companies.

Reforms in corporate transparency, competition, and education will be central to realizing this goal, but "these are more complex reforms than the first round," Varoudakis points out.

Armenia has without a doubt taken great strides, but nothing highlights progress like starting from nothing. If the country wants to remain a "Caucasian tiger," it had better prioritize these difficult reforms now.

These will take a lot longer than turning on the power.

Provided by Transitions Online — Intelligent Eastern Europe

Armenia to Close Nuclear Plant

4 days ago

YEREVAN, Armenia (AP) — Armenia approved a plan Thursday to shut down its lone nuclear power plant, following years of pressure from foreign nations concerned about its Soviet-era design and safety.

The government gave no date for closing the Medzamor reactor, located about 20 miles west of the capital, Yerevan. The 27-year-old plant, which supplies nearly half the country's electricity, halted operations after a 1988 earthquake but was restarted during an energy shortage in 1995.

Since then, Armenia has been under constant pressure to close the plant ahead of its 2016 operational end-life due to safety concerns and possible design flaws. The European Union has pledged loans and other assistance estimated to about cover the cost of closing it.

The shutdown could cost up to $280 million, Energy Minister Armen Movsisian said.

Armenian officials have long refused to shut it without another source of electricity.

Last week, the United States said it would fund a preliminary feasibility study on building a new nuclear plant.

President Robert Kocharian has said that building a new, 1,000-megawatt plant — double that of Medzamor — would cost more than $3 billion.

In 2004, Russia's state-run electricity grid operator, RAO Unified Energy Systems, assumed financial control of Medzamor in a deal struck to relieve Armenia's massive debts to Russian energy suppliers. UES and Armenia now share management of the plant.


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Armenia OKs plan to close nuclear plant

Associated Press
November 30, 2007
YEREVAN, Armenia - Armenia approved a plan yesterday to shut down its lone nuclear power plant, after years of pressure from foreign nations concerned about its Soviet-era design and safety.

The government gave no date for closing the Medzamor reactor, about 20 miles west of the capital, Yerevan. The 27-year-old plant, which supplies nearly half the country's electricity, halted operations after a 1988 earthquake but was restarted during an energy shortage in 1995.

Since then, Armenia has been under pressure to close the plant ahead of the end of its operational life in 2016 because of safety concerns and possible design flaws.