Economy

And this, when the Central Bank has intervened and bought huge quantities of Dollars at the marketplace. For now, let us not bring up the operations of the Central Bank from the point of view that apart from making simplistic interventions, it also has other tools to stabilize the market and to prevent the rapid devaluation of the Dram. Now let’s see what the evaluation of the Dram causes and how it impacts our lives.

The basic reason for the evaluation of the Dram is that the amount of money that our relatives and friends send from abroad, especially transfers, has increased. At first glance it seems that, as a result, the purchasing power of our people has increased. But this is only in appearance. In the large graphics above one can see the changes in the exchange rate of USD1 in March, April, May and June in RA Dram. The small graphics, however, show the price change in a number of consumer goods, presented in US Dollar. These are all imported goods. If there is standard competition in the country, then the evaluation of the national currency, in this case the RA Dram, should result in the equivalent reduction of prices. But as we see from the graphic presentations, petrol, rice, granulated sugar, vegetable oil, butter, chicken and ham prices presented in USD have, to put it mildly, increased significantly. According to official statistics, consumer prices have even increased by 1 percent. So what do we have here? When the Dram is evaluated, prices increase not only in Drams, but in Dollars as well. It follows from this that the profit of the major importers from undetermined origins, is increasing. The increase is not only in Dram, but in Dollar as well. A question rises: is it possible that prices have increased abroad as well, from where those products are imported? Since in preparing the graphics, we used information from official sources exclusively, the Central Bank and the National Statistical Service, let us then answer the question from an official statement. Let us quote just one sentence from the records of the board meeting of the Central Bank held on June 10: “External signals are price reductive which is conditioned by the reduction of the international prices of raw products and food items.” That is to say, the Central Bank, which is obliged to follow the international prices of goods, and does, has registered that “international prices of raw products and food items” are dropping.

We have presented the prices of raw product (petrol) and food items (rice, granulated sugar, butter, vegetable oil, chicken, ham) in Armenia. And here is the summary: international prices are dropping, the Dram is evaluating and the prices of goods are increasing in Armenia. It follows that despite the fact that the volume of transfers has increased, people’s expenditures have increased faster. And this means that the authorities, along with their oligarch importers, are openly and unabashedly gorging on the hard work of our fellow citizens who have gone abroad to work. This is the goal and meaning of “Onward, Armenia!”

Hayk Gevorgyan

It was not possible to find out the reason for such a conduct on the part of Varoudakis. Until now, the head of WB Yerevan office had been more transparent. It should be noted, however, that at yesterday’s press conference, Varoudakis made some noteworthy statements: “At this moment I don't’ have exact numbers to give you, but what I hear from different analysts is that the shadow economy in Armenia could comprise as much as 35 to 40 percent of the GDP. This is one of the most serious challenges facing the authorities… The shadow economy should be made taxable,” he said. Let us note that Varoudakis is completing his mission in Armenia that had started in April 2007. As to who will replace him in that position is still unknown.

As it is known, the RA Administrative Court had refused to deliberate the “Gas Appeal” in a verbal proceeding, stating that it is impossible to have a verbal proceeding with 7230 claimants. Hovsepyan, in an interview with our reporter said that by rejecting his appeal, the Administrative Court would prove that in reality they are avoiding a public hearing and intend to conceal the appeal. Yesterday, Vahe Hovsepyan also submitted his objections against the response from the Public Services Regulatory Commission with regard to the “Gas Appeal” to the Administrative Court and once again demanded to void PSRC’s decision to increase gas prices.

According to Manucharyan, preliminary forecasts indicate that this year’s apricot harvest will be 30-35 thousand tons. High quality apricot harvests will insignificant, one might even say, non-existent. This year’s apricot harvest will be the smallest of the last four years. In 2007 the apricot harvest was 60 thousand; in 2008, about 80 thousand; and in 2009, approximately 90 thousand tons. Apricot is already being sold in Yerevan markets at the cost of 300-3500 AMD for one kilogram. It is assumed that during the main harvest, one kilogram of apricot will cost about 500 AMD. This means that apricot will be of inferior quality and expensive. Manucharyan explained the situation, namely, the poor quality of the apricots protected from frostbite, by the constant rainfalls in the month of May.

Clean up day at Hrazdan gorge began with the unambiguous report that “The equipment is ready and the clothing has been distributed”. The effort was organized by state funds and the public was informed of the effort as early as two weeks ago at the governmental session. It was then that Tigran Sargsyan had announced that the initiative known as “Together” had launched a program entitled “Clean Fatherland” and that all departments of the government should support the realization of that program. We’ve seen the support: working cloths, hats, jerseys, etc. were handed out, the equipment of state organizations were brought to the site. And, of course, “impartial” TV channels with their drivers and service staff were brought to the site; and thus was launched “Clean Fatherland”.

Our government seems to be unwell in the head: if one provides even the poorest vagrants with such financial backing, they, too, would realize a program that would not only be called clean, but “Spotless Fatherland” and wouldn’t make а big deal out of it. No, if this initiative has the connotation of social assistance, that is, food in exchange for work or something along those lines, whereby the young members of the initiative of “Together” make a living because they’re not in a position to earn higher wages, then it is understandable and acceptable. But even then a question rises: why are state resources being wasted to provide these young people with new jerseys and hats while they’re cleaning. Let them first do the work in their old cloths and when they’re done with the cleaning, have them wash up, clean themselves and only then, have them put on their clean cloths. Have you ever seen people doing cleaning chores in new cloths? No reasonable person does that, not even the members of “Together”. But if that’s how they do things, then it means that their purpose, headed by their komsomol prime minister, is to wash out the brains of the passersby and television audiences rather than clean the city.

Let us note that the day before, at the Stock exchange, the closing exchange rate for 1USD had been 376.25AMD. Actually the Dram depreciated by 1 percent in a day. Let us underscore that the Central Bank did not interfere. Furthermore, only 600,000 USD was recorded in purchase and sale. This means that the Dollar was not in great demand at the Stock exchange, but for some reason the Dram depreciated abruptly. This is noteworthy since the continuous appreciation of the Dram had already begun from April 2. Thereafter depreciation of the Dram has been recorded little by little, but depreciation of 1 percent during a day had not been recorded yet. For now it is difficult to say what the reason for this is and if this is the beginning of the future depreciation of the Dram.

As of May 3 of this year, according to the RA Government decision 1498 of October 19, 2006 companies that provide collection services must
transport cash money by armored vehicle. But we have received information that the “Armcollection” (Hayinkasatsia) company, which belongs to the Central Bank, is also using regular vehicles for the transportation of cash. “That’s not possible. We have 38 armored vehicles and we are transporting cash by armored vehicles. The information you have is not correct.” This was the clear and definite response of Lyudvig Sargsyan, the director of the “Armcollection” company, to our reporter who had called the company to check the information. But as the information we have is in the form of photographs, it means that, shall we say, the information Lyudvig Sargsyan has is wrong. Why is this noteworthy? The fact is that the RA Central Bank has direct control over the companies providing collection services. The only owner of “Armcollection” is the very same Central Bank. And so it seems that the Central Bank is creating favorable conditions for the activities of the company that it owns. Let us add that just 4 years ago, on February 3 of 2006, the non-armored vehicle of “Armcollection” underwent armed attack during which the driver was killed. Had it been an armored vehicle, he would not have been killed.

Yesterday at the exchange agencies, the selling rate for one Euro was 461-463AMD, and the buying rate was 469-473AMD. In fact, it is only during the last two months that the Dram has appreciated by 6 percent. But the prices for imported goods, except for a few of them, have not decreased. Perhaps it is already pointless to note that the devaluation of the Dram in this way is irreversibly damaging the economy, simultaneously impeding the producers and exporters, and favoring the increase of importing. Only major importers are benefiting from this situation. But the ruling authorities are trying to present the devaluation of the Dram as being the result of economic growth. However, in reality, the devaluated is not at all related to do with growth, not even remotely.

Yesterday, according to the decisions made by the Prime Minister, Karine Minasyan (pictured) was released from the position of the First Deputy Chairman of the State Revenue Committee, and was appointed to the position of Deputy Minister of Economy. Behind this news, which at first glance seems not at all strange, and even normal, there lay hidden an issue of great proportions. Everyone who is more or less familiar with the current situation in the higher echelons of the authorities knows that there is, to put it mildly, a serious conflict between Prime Minister Tigran Sargsyan and State Revenue Committee Chairman Gagik Khachatryan. The conflict has become more intense especially during the last half year, and the Prime Minister had set a goal of freeing himself of Gagik Khachatryan. The now former SRC Deputy Chairman Karine Minasyan was considered one of the most trustworthy members of Tigran Sargsyan’s team, and through Minasyan’s presence, Tigran Sargsyan was ensuring his own presence in Khachatryan’s office. It is not clear if Tigran Sargsyan will manage to free himself of Gagik Khachatryan, but it is obvious that the latter is methodically getting rid of the members of the Prime Minister’s team. Just two months ago, on March 2, Khachatryan’s Deputy chairman Artak Shaboyan was released and appointed to the position of the President of the RA State Commission for the Protection of Economic Competition. It is hard to say for sure whether the unexpected release of Karine Minasyan is the Prime Minister’s defeat in his struggle against Gagik Khachatryan, but that is how those in the business world interpret what has happened. Especially since Karine Minasyan has now joined the crowded army of deputies of the Minister of Economy Nerses Yeritsyan, another team-mate of the Prime Minister, who are “working” on fantastic projects. The latter already has five deputies.