Strengthening dram causes economic catastrophe- Mantashyants Entrepreneurs Union
YEREVAN, November 11. /ARKA/. A considerable strengthening of Armenia's national currency, the dram, has caused an economic catastrophe, Vahram Mirakyan, head of Mantashyants Entrepreneurs Union, says in a Facebook post.
According to him, export-oriented companies are incurring heavy losses on a daily basis. Some of them have stopped exports; others have cut export volumes, while the third cannot stop, because lack or shortage of financial flows will "blow them up." The stronger dram has also forced many companies to freeze their new projects.
Mirakyan says processing companies producing canned goods, wine, cognac, dried fruits, etc., which used to sell bulk of their products outside the country, have bought less from farmers this year or seek to buy cheaper, because they have to reduce the cost of the product.
This in turn has hit about 1 million farmers who grow agricultural products. Their living standards are deteriorating. 'If the bureaucrats, disconnected from reality, keep thinking in their slow mode, the processing companies will start going bankrupt one by one. The process has already begun,' he says.
He says the chain bankruptcy of processing companies will throw the agriculture back another 10-20 years. In addition, in recent years, the government has "poured" huge sums of money into the agricultural processing sector, and these sums will be wasted.
'I already know producers who are planning to close their plants in Armenia and move them to Russia, because their sales market is there,' Mirakyan says.
Besides, according to Mirakyan, after the Crimean Bridge was blown up, Armenian exporters got into trouble on the Upper Lars border checkpoint on the Georgian-Russian border. Without force majeure, it takes an Armenian truck 20-30 days to go through the Lars customs now instead of 8 hours because it undergoes a thorough inspection by Russian security agencies. Because of this, it is impossible to export a number of goods because of the short timeframe, and another part is no longer economically viable.
"As a result of the devaluation of the dollar, other sectors are also suffering: inbound tourism, construction, IT sector. A global disaster is looming. Positive dynamics, created by temporary re-exports or Russians, who moved to Armenia in recent months will turn into a disaster as a result of mismanagement," Mirakyan argues.
He names several steps that need to be taken urgently by the government.
1. To give about 20% cashback to all exporters, except re-exporters, due to the devaluation of the US dollar.
2. To subsidize shipping costs to compensate for problems faced by Armenian companies at Upper Lars border crossing.
3. To subsidize and invest in air transportation.
If the government doesn't do this, it will incur much greater losses.
The latest S&P Global Ratings study says that Armenia's currency has appreciated against the dollar by 30% since March as a result of the Russians, who have moved to Armenia after the start of Russian-Ukrainian conflict. On November 10, the USD traded at 395.27 Armenian drams.-0-
