By Anush Martirosian
Hrant Bagratian, a prominent opposition figure and economist, predicted on Friday a further sharp depreciation of Armenia’s national currency, the dram, citing falling worker remittances from abroad and what he sees as inadequate government policies.
The Armenian authorities allowed a nearly 20 percent drop in the dram’s value on March 3 after months of heavy intervention in the local currency market. The dram has since traded at approximately 370 per U.S. dollar. The Central Bank of Armenia (CBA) has said this exchange rate will not change significantly in the course of this year.
Bagratian, who had served as prime minister from 1993-1996, claimed that the dollar will be worth from 400 to 850 drams by the end of 2009. “Why so much? Because we don’t know how much [money] will come from Russia,” he told reporters, referring to large-scale dollar remittances from hundreds of thousands of Armenians working abroad.
The vital cash transfers began falling in November after years of rapid growth that helped the Armenian economy expand at double-digit rates. The CBA and the government say the remittance growth has also been chiefly responsible for the near doubling of the dram’s value against the dollar between 2003 and 2008.
Bagratian claimed, however, that CBA artificially boosted the dram and thereby “destroyed” many export-oriented Armenian firms during that time. He also said that the authorities will not pursue “the right economic policy” to reduce the effects of the global crisis because it would seriously hurt government-linked “oligarchs.”
The International Monetary Fund gave a far more positive assessment of the authorities’ anti-crisis measures as it approved a $540 million loan to Armenia late last week. “The Fund is confident that the policy package put in place by the authorities is appropriate and strong,” the IMF’s deputy managing director Murillo Portugal, said in a statement.