Opposition MP blames economic downturn on central bank
08.06.2016,
10:23
Parliament member from the oppositional Armenian National Congress (HAK) Hrant Bagratyan, who served as prime minister in the administration of Armenia’s first post-Soviet president Levon Ter-Petrosyan, disagreed Tuesday with official data which say that Armenian economy expanded last year by 3 percent, claiming it in fact fell and blamed it on the country’s central bank.
YEREVAN, June 8. /ARKA/. Parliament member from the oppositional Armenian National Congress (HAK) Hrant Bagratyan, who served as prime minister in the administration of Armenia’s first post-Soviet president Levon Ter-Petrosyan, disagreed Tuesday with official data which say that Armenian economy expanded last year by 3 percent, claiming it in fact fell and blamed it on the country’s central bank.
Speaking at a parliament discussion on the execution of the 2015 state budget, Bagratyan noted that the budget revenue collection rate last year was 7% less than projected, and the official economic growth was registered due to growth in agriculture and services.
"In my opinion, last year was a period of economic downturn and one of the main culprits was the Central Bank, which introduced in late 2014 foreign currency reserve requirement for the banks, hindering expansion of lending. The reserve requirement contains the exchange rate of the dram, while the reduction of refinancing rate from 10% to 7.75% means actually nothing," Bagratyan said.
To stabilize the situation on the currency market and to curb currency speculation the regulator raised reserve requirement in foreign currency from 12% to 24% in 2014 December. The next day the Armenian dram began to gain value. On December 24 the Central Bank lowered the reserve requirement in foreign currency from 24% to 20%.
According to the ex-prime minister, as a result, lending in 2015 decreased by 3.6% from the previous year with a slight increase of 11% in deposits.
"This situation has also led to a reduction in investments,’ Bagratyan said.
According to the National Statistical Service, Armenian economy expanded by 3% in 2015, down from the projected 4.1%. Armenia's GDP amounted to over 5 trillion drams or about $10.56 billion. (the USD exchange rate in 2015 was 481.94 drams). -0-
Speaking at a parliament discussion on the execution of the 2015 state budget, Bagratyan noted that the budget revenue collection rate last year was 7% less than projected, and the official economic growth was registered due to growth in agriculture and services.
"In my opinion, last year was a period of economic downturn and one of the main culprits was the Central Bank, which introduced in late 2014 foreign currency reserve requirement for the banks, hindering expansion of lending. The reserve requirement contains the exchange rate of the dram, while the reduction of refinancing rate from 10% to 7.75% means actually nothing," Bagratyan said.
To stabilize the situation on the currency market and to curb currency speculation the regulator raised reserve requirement in foreign currency from 12% to 24% in 2014 December. The next day the Armenian dram began to gain value. On December 24 the Central Bank lowered the reserve requirement in foreign currency from 24% to 20%.
According to the ex-prime minister, as a result, lending in 2015 decreased by 3.6% from the previous year with a slight increase of 11% in deposits.
"This situation has also led to a reduction in investments,’ Bagratyan said.
According to the National Statistical Service, Armenian economy expanded by 3% in 2015, down from the projected 4.1%. Armenia's GDP amounted to over 5 trillion drams or about $10.56 billion. (the USD exchange rate in 2015 was 481.94 drams). -0-
