By Ruzanna Stepanian
The chairman of the Armenian Central Bank (CBA) acknowledged Friday that buying U.S. dollars in Armenia is now considerably more difficult than it was in the past, raising more questions about the official reason for the dramatic strengthening of the dram.
The Armenian authorities maintain that the national currency has gained more than 30 percent in value against the dollar since December 2003 because of robust economic growth and increased cash remittances from Armenians working abroad.
However, the official theory about Armenia being awash with dollars seems at odds with the fact that many local currency retailers now routinely refuse to sell dollars to individual buyers, citing a lack of the U.S. currency in their coffers. The shortages again came to light with the dram’s renewed surge against the greenback which began a month ago.
Tigran Sarkisian, the under-fire CBA chief, blamed the bizarre phenomenon on currency traders. “We are now carrying out inspections at currency exchange offices and are finding widespread violations,” he told RFE/RL. “The problem raised by you does exist, and that problem is created by currency exchange offices. We will try to sort it out in the course of this year.”
“They are catering for the shadow economy, which is illegal,” Sarkisian said without elaborating.
The CBA has already controversially shut down many exchange offices in Yerevan in the last two years. Sarkisian would not say why buying dollars was not a problem even before the stabilization of the macroeconomic situation in Armenia in the mid-1990s.
Opposition politicians and other government critics, who dismiss the official theory, claim that the Armenian authorities themselves buy “cheap” dollars and thereby siphon off a considerable part of hundreds of millions of dollars in cash sent home by migrant workers each year. Hundreds of thousands of Armenians rely on those transfers to make a living.
Large-scale importers of fuel, wheat and other key commodities, all of them closely connected with the government, are seen as the prime beneficiaries of the stronger dram. Conversely, many Armenian exporters have been hit hard by the increased cost of their products. Some of them, including Armenia’s main tobacco manufacturer, have threatened to move their production operations abroad if the dram appreciation continues.
Sarkisian made it clear that he is untroubled by possible job losses. “Those enterprises that are not competitive must either close or file for bankruptcy or move to territories where they can operate,” he said. “We are creating an environment for competitive businesses.”
“We always tell our entrepreneurs that in the conditions of economic growth, exchange rates inevitably change and their salvation lies in a growth in productivity,” he added.
Official statistics show the volume of Armenian exports falling by nearly 8 percent to $253.7 million in the first four months of this year. Net imports, by contrast, rose by 13 percent to $584 million during the same period.
(Photolur photo: Tigran Sarkisian.)