Pension reform to help create demand for liquidity tools in Armenian capital market – head of central bank

TSAKHKADZOR, February 7. /ARKA/. The pension reform will facilitate creating a stable demand for high-quality liquidity tools in the capital market, the head of the Central Bank of Armenia Artur Javadyan said.

The aim should be to attract high-quality issuers and new instruments to the capital market, Javadyan said at the opening of “Armenian capital market: New opportunities and challenges” in Tsakhkadzor Friday.

Javadyan said leading international organizations invited to Armenia for efficiency of the pension reform will, along with their experience, share also the management culture and help strengthen confidence in financial markets.

As from January 1, 2014, Armenia’s government introduced a new mandatory funded pension system and obliged some 250,000 people born later than January 1974 to pay 5% of their salaries every month saying that another five percent, but not more than AMD 25,000 ($61), AMD 300,000 ($740) for entrepreneurs, will be added by the government. On January 24 Armenia’s Constitutional Court suspended several provisions of the law about funded pension system for a detailed inquiry into constitutionality of the law to be completed on March 28.

Javadyan said effective cooperation helped bring global financial institutions – EBRD and IFC – to the Armenian capital market.

The head of the Central Bank said placement of the first AMD bonds created high-quality investment tools, a favorable investment climate, which is important for efficient management of pension funds in particular. Javadyan said they are confident such placements will occur on a continuous basis.

On the other hand, the head of the Central Bank said, these bond placements may make companies consider the capital market as an alternative source for attraction of investments.

The European Bank for Reconstruction and Development placed its first issue of AMD coupon bonds worth a total of 2 billion drams (about $5mln) on January 31, 2014. The EBRD was the first global financial institution placing bonds on NASDAQ OMX Armenia stock exchange. Apart from this, the floating rate note bonds placed by the EBRD are a new financial instrument that may become a key liquidity management tool for various financial organizations.

The IFC issued a 2 billion dram (approximately $5 million) bond in Armenia on December 23, 2013. It was the first placement by a non-resident issuer and the first foreign corporate bond issued in Armenia’s capital markets.

Conference entitled “Armenian capital market: New opportunities and challenges” started in Armenia’s Tsakhkadzor resort town Friday. The conference is attended by head of the Central Bank of Armenia Artur Javadyan, minister of finance David Sargsyan, EBRD head of department for local forex and capital markets Andre Kuusvek, director of NASDAQ OMX Armenia stock exchange Konstantin Saroyan, IMF resident representative in Armenia Teresa Daban Sanchez, heads of Armenian banks and representatives of leading financial organizations. –0--