Monetization of Armenia’s economy hit 33,8% in 2012
29.04.2013,
17:50
Monetization of Armenia’s economy rose by 11.9 p.p. throughout 2007-2012 to 33.8% in 2012.
YEREVAN, April 29./ARKA/. Monetization of Armenia’s economy rose by 11.9 p.p. throughout 2007-2012 to 33.8% in 2012.
Monetization of economy is a key indicator of money supply in the economy against the GDP. It indicates how well the economy is saturated with money as well as macroeconomic solvency of the economic entities.
According to the Central Bank of Armenia, the economy monetization inched up by 4 p.p. in 2012 from 2011. Notwithstanding the growth tendency, the monetization level in Armenia stays behind the recommended by the experts 70-80% for transition economies so as they could support the necessary growth and balance between inflation and GDP growth.
A number of experts believe the monetization of Armenia’s economy lags because of a non-balanced structure of money supply, high dollarization rate and one-sided development of the financial sector.
Particularly, Bagrat Asatryan, the former chairman of Armenian Central Bank, says the economy monetization growth rates over the recent years are not satisfactory, and as a whole, the monetization level is quite low.
“Higher level of economy monetization would open more opportunities for Armenia,” he notes.
Asatryan believes today’s official monetization index of Armenia doesn’t reflect the real monetary turnover in the republic, as the monetary market is sunk in the shadow factor which is much higher than that in the other sectors of economy.
Dollar turnover plays the major role in the shadow aspect, that is why dollarization is much higher than it is stated in the official data.
“Annually, inflow of private transfers to Armenia exceeds $1.5 billion, according to official statistics, the same amount arrives, as stated by the Central Bank, from non-official sources. Thus, we have about $3 billion,” he highlights.
Asatryan points out the shadow turnover of cash dollars exceeds 1 billion, and this figure will be growing year over year. He believes immense shadow turnover hinders improving economy monetization in the republic.
In general, according to the expert, monetization growth rates in the states like Armenia should outpace nominal GDP growth rates. In that case only, it is appropriate to talk about successful economic development.
According to the National Statistical Service of Armenia, the GDP stood at 7.2% in 2012.
The Central Bank of Armenia reported the money supply in 2012 was 1.346.3 trillion drams versus 691.3 billion drams in 2007 (94.8% upturn). Deposits in foreign currency accounted for the biggest share in money supply in 2012- 45.1%, or nearly 608.3 billion drams against 18.8% or 130.3 billion in 2007. It indicates the fact that dollarization in Armenia rose from 35.7% (2007) to 63% in 2012.
Cash turnover in AMD accounted for 28.5% (384 billion drams) in 2012 versus 47.1% (326 billion drams) in 2007. Here, we see the positive tendency : decrease of cash in economy that, in turn, curbs inflation amid the simultaneous growth of economy monetization.
AMD demand deposits accounted for 12% or 161.7 billion drams (19.2%-2007 or 132.5 billion drams), and AMD time deposits –14.3% or 192.2 billion drams (2007-14.8% or 102.4 billion drams).
Money supply valued at 1.363.8 trillion drams as of 31 March 2013: 650.4 million drams –foreign currency, nearly 344 million drams-AMD cash, about 211.3 million-time deposits, 158.1 million-demand deposits. ($1-411.33 drams). -0-
