By Ruben Meloyan
Hard currency inflows to Armenia from its citizens working abroad, which benefit a large part of the country’s population, fell significantly in the first two months of this year, the Armenian Central Bank (CBA) said on Tuesday.
According to the latest CBA data made available to RFE/RL, the total amount of cash transfers processed by Armenian commercial banks in this period was down by almost 20 percent at $169.3 million. A similar sum is believed to have entered Armenia through non-bank wire transfer systems and in the form of cash.
External remittances sent home by Armenian migrant workers for “non-commercial purposes” accounted for over two-thirds of the figure reported by the CBA. The drop in these remittances was even steeper at 30 percent.
The remittances, which totaled at least $2.3 billion last year, have been a key driving force of Armenia’s economic growth, supporting domestic consumption and enabling the country to finance its massive trade and current-account deficits. After more than a decade of rapid growth they began shrinking with the onset of the global economic crisis last fall.
Russia, the main source of the cash transfers, has been hit particularly hard by the downturn. Its economy is on course to contract this year for the first time since the late 1990s.
Armenia’s Gross Domestic Product likewise shrunk by 3.7 percent in January-February 2009. In a quarterly policy report released on Tuesday, the CBA forecast a full-year GDP drop of about 3 percent.
The report said that the outflow of cash from Armenia halved to $86.2 million in January-February and pushed up the net cash inflow by almost 64 percent. Still, it said the full-year total will likely fall by at least 10 percent because of the “unfavorable” economic conditions in Russia.
Gagik Minasian, chairman of the Armenian parliament committee on finance and budget affairs, also downplayed the decreased remittances, saying that they are slightly above the 2007 level. “We have simply lost the increase in transfers registered in 2008 and returned to the level of 2007,” Minasian told RFE/RL.