Armenia’s international reserves see drastic fall

By: Mushvig Mehdiyev

Armenia’s declining economy continues to take its toll on the country’s international currency reserves, proved the statistical data as demonstrated by a sharp drop.

Volume of Armenia’s international reserves stood at $1.351 billion late this January, according to a statistical data published by the Central Bank.

It was reportedly registered as a new anti-record in the history of the post-Soviet nation’s economy – foreign reserves hit their lowest point over the last six years.

Armenia’s international currency reserves have slipped below the red economic line back in 2009 when the country found itself in a deadlock over the overwhelming fall of its industry sectors.

The Bank announced that it doesn’t exclude the possibility of the current anti-record’s renewal in the upcoming years considering the existing pace of decrease in reserves.

For instance, Armenia’s gross international reserves were calculated at $1.489 billion in last December, that is to say the reserves dropped by $138 million or 10 percent in just over a month.

The tragic indicator is observed while comparing the international reserves this January to the same month last year – the reserves lost $90 million or 40 percent of its volume over a year, noted Haykanak Zhamanak, a local newspaper.

Year-on-year statistical data on Armenia’s foreign exchange reserves reveal that the country has fallen way past its red line over the past years, as Armenia has failed to follow suit on already internationally proven and accepted monetary policies in view of the negative balance between its international reserves and national imports.

Foreign reserves suffered a loss of some $500 million in November last year when a 25 percent decrease slashed one four of the gross reserves.

Through 2014, Armenia’s international gross reserves shrank by 33.8 percent or $762.3 million to $1.489.3 billion, wrote the local media outlet Arka.

Some experts, including Vaah Khachatryan, believe that it is a serious blow on Armenia’s credibility. Eventually, Armenia will be recognized as an insolvent county, which could force the international organizations or countries, which are in a financial relations with Armenia, to cut their ties with the country.

Sergey Gerasimchuk, a Ukrainian economic analyst, said Armenia could avoid a deep crisis in a short-term perspective inspired by its partnership with Russia under the Eurasian Economic Union.

“But the Russian and Eurasian integration projects are not guaranteed to be successful as Russia is facing such a tough economic crisis. Moreover, serious disagreements within the EEU pose an overt threat to Yerevan’s interests,” the expert noted.

The Bank of America’s Merill Lynch reported that since Armenia has joined the Russia-led EEU trade bloc, its economy faces increased exposure. Any negative economic development in Russia, the flagman of the union, will directly impact other member-states, including Armenia.

Alongside the shrinking international reserves, Armenia is also grappling with a skyrocketing public debt, the latest report by the National Statistical Service showed. Government debt of the post-Soviet nation surged to $4.44 billion in 2014, according to a very recent report of the National Statistics Service.

SOURCE: Azer News