Wednesday, May 18 2016 20:14
Emmanuil Mkrtchyan

CBA Chairman: High expectations for world economy growth rates and geopolitical situation create more and more challenges for financial system of the country

CBA Chairman: High expectations for world economy growth rates and geopolitical situation create more and more challenges for financial system of the country

ArmInfo. High expectations for the world economy growth rates and geopolitical situation in the region create more and more challenges for the country's financial system, Chairman of the Central Bank of Armenia (CBA) Arthur Javadyan expressed this opinion in the parliament today, answering to the MPs questions about the level of stability of the country's financial system.

According to Javadyan the consequences of the financial-economic crisis of 2008-2009 have not been overcome yet and the factor of geopolitical tension is another challenge, which makes the CBA to take preventive measures for maintaining the stability of the financial and particularly, the banking system.  According to the CBA Chairman one of such measures is the decision of 2014 to raise the requirement for the banks' minimal capital to 30 bln AMD by Jan 1 2017. "We were harshly criticized for this decision but the reality has shown that it was quite justified. As of today 9 banks have already successfully refilled their capitals, some of them by merging and I have no doubts that by the end of this year all the commercial banks of the country will meet this challenge", Javadyan stressed.

According to his forecast the economic activity in Armenia will grow, financial system will respond to this by attracting new resources from abroad and stable ensuring of high liquidity, however it will not manage to overcome objective difficulties related to reduction of lending market. In Javadyan's opinion the situation on the credit market is related to the fall of the population's consumption because of drop of private transfers and reduction of aggregate demand. The borrowers have suffered high level of debt burden and creditors in their turn conduct conservative credit policy justified in such situation. As a result of these difficulties the share of non-performing loans grows in the banking sector and this process will continue.  That is why the Chairman of CBA thinks that the requirement to increase the capital was aimed at creating a safety cushion for the current situation. Javadyan stressed that the banking sector of Armenia is reliable and brought as an example the policy of HSBC international holding, which has closed its offices an branches in all the post soviet countries and even in Turkey, however decided not to leave Armenia.

At the same time Javadyan emphasized that judging from the data of the first months of this year the rates of Armenia's economic growth most likely will be high on the level 3-3.2% and will exceed the initial forecasts also due to further growth of industry in the agricultural field and agro business. According to him due to absence of inflation expectations CBA will further stimulate economic activity in the county by gradually reducing the key interest rate and other measures of monetary policy.

To recall, Central Bank of Armenia forecasts slackening of economy growth in 2016 to 1.5-2.6% versus previously forecasted 1.6-2.7%. This forecast is given in the monetary policy program of the CBA for Q1 2016. However starting from 2017 the CBA expects acceleration of economy growth rates due to efficient implementation of the governmental program on stimulating the investments and export, gradual improvement of external economic situation and influence of the conducted structural reforms, as a result of which the economy growth may reach 3-4.5% by the end of 2017. To note the inflow of transfers of physical entities to Armenia dropped by 24% in 2015 to 1.6 bln USD, which influenced the level of incomes of households and lead to drop of aggregate demand by 8-10% according to various estimates.  Since November 2015 CBA has several times reduced the refinancing rate from 10.25% to 7.75%. 

POST A COMMENT
Input digits     


News
Wine output records 32.6% y/y decline in Jan-May Wine output records 32.6% y/y decline in Jan-May 
ICC NCA to assist organization of WCIT2024 in Armenia ICC NCA to assist organization of WCIT2024 in Armenia 
New social vulnerability assessment system to be introduced in  Armenia New social vulnerability assessment system to be introduced in  Armenia 
Armenia`s government to provide AMD 2.2bln to construction  organizations Armenia`s government to provide AMD 2.2bln to construction  organizations 
AMD 4․046․161  to the Strong Mind NGO. July`s beneficiary is the SIA Armenia programAMD 4․046․161 to the Strong Mind NGO. July`s beneficiary is the SIA Armenia program
Wine-filled days of DILIJAN WINE FEST 2024 will take place on August 3 and 4Wine-filled days of DILIJAN WINE FEST 2024 will take place on August 3 and 4
Ardshinbank was again Named Best in Two Categories by Asian Banking & Finance MagazineArdshinbank was again Named Best in Two Categories by Asian Banking & Finance Magazine
Some 20,000 Nagorno-Karabakh Armenians employed in Armenia - official Some 20,000 Nagorno-Karabakh Armenians employed in Armenia - official 
China Southern Airlines launches Urumqi - Yerevan - Urumqi flights China Southern Airlines launches Urumqi - Yerevan - Urumqi flights 
Get 3000 idcoins by synchronizing your Idram and IDBank accountsGet 3000 idcoins by synchronizing your Idram and IDBank accounts
Armenia`s involvement in regional projects emphasized Armenia`s involvement in regional projects emphasized 
Armenian Airlines launches Yerevan-Ufa-Yerevan flightArmenian Airlines launches Yerevan-Ufa-Yerevan flight
Unemployment up in Armenia Unemployment up in Armenia 
Armenia`s economy vulnerable to external shocks - EFSDArmenia`s economy vulnerable to external shocks - EFSD
EAEU Industrial Council considers robotics development programme EAEU Industrial Council considers robotics development programme 
Smart Place: smart solutions for comfort and energy-savingSmart Place: smart solutions for comfort and energy-saving
Russia among Armenia`s major trade partners - Gevorg Papoyan  Russia among Armenia`s major trade partners - Gevorg Papoyan  
Armenia, UAE discuss possibilities of agricultural cooperation Armenia, UAE discuss possibilities of agricultural cooperation 
Expert on `blank spots` of budget planning in Armenia Expert on `blank spots` of budget planning in Armenia 
Armenia`s economy minister to take part in 6th meeting of EAEU  Industrial Policy CouncilArmenia`s economy minister to take part in 6th meeting of EAEU  Industrial Policy Council
No payment via Idram? More than 21,000 points of sale accept payment via IdramNo payment via Idram? More than 21,000 points of sale accept payment via Idram
<Gazprom Armenia> will conduct a survey of underground gas pipelines  with a total length of over 335 km will conduct a survey of underground gas pipelines  with a total length of over 335 km
WB to issue grant to Armenia for environmental protection programmes WB to issue grant to Armenia for environmental protection programmes 
JFPR to issue $3mln grant to improve rural household resilience JFPR to issue $3mln grant to improve rural household resilience 
EBRD to issue EUR 2mln grantfor Syunik customs center  EBRD to issue EUR 2mln grantfor Syunik customs center  
Armenia, Georgia discuss possible implementation of regional  high-tech projects Armenia, Georgia discuss possible implementation of regional  high-tech projects 
Ameriabank and COAF Pool Efforts to Develop Beekeeping in Lori RegionAmeriabank and COAF Pool Efforts to Develop Beekeeping in Lori Region
Deputy Minister of Economy: 58% of Armenia`s agro-food products are  exported to Russian marketDeputy Minister of Economy: 58% of Armenia`s agro-food products are  exported to Russian market
Armenia`s scores are the worst in the Energy Transition Index for the  last decade: LUYS FoundationArmenia`s scores are the worst in the Energy Transition Index for the  last decade: LUYS Foundation
Features of Armenian offshore: SRC assesses lossesFeatures of Armenian offshore: SRC assesses losses
Trend of shadow economy is reducing; Rustam Badasyan assuresTrend of shadow economy is reducing; Rustam Badasyan assures
Tax revenues on schedule in Armenia Tax revenues on schedule in Armenia 
Ball is in US court - Armen Grigoryan on NPP construction Ball is in US court - Armen Grigoryan on NPP construction 
The construction of the Pullman International Hotel complex in Armenia will cost 100 million US dollarsThe construction of the Pullman International Hotel complex in Armenia will cost 100 million US dollars
World Bank does not change Armenia`s status as upper-middle-income  countryWorld Bank does not change Armenia`s status as upper-middle-income  country
Armenian banks` delegation visits OVIO Data Processing CenterArmenian banks` delegation visits OVIO Data Processing Center
In-country tourism recorded 20% average annual growth since 2020 In-country tourism recorded 20% average annual growth since 2020 
Araratbank allocates $10 million in funding to women entrepreneursAraratbank allocates $10 million in funding to women entrepreneurs
State Revenue Committee reminds taxpayers of tax bill deadline State Revenue Committee reminds taxpayers of tax bill deadline 
Powers of Armenia`s Economic Competition Protection Commission to be  expanded Powers of Armenia`s Economic Competition Protection Commission to be  expanded 
Viva-MTS announces rebranding Viva-MTS announces rebranding 
Opinion: project to operate Chabahar port  in medium term will  increase Armenia`s transit capacityOpinion: project to operate Chabahar port  in medium term will  increase Armenia`s transit capacity
Based on preliminary estimates, construction of Ajapnyak metro  station will be completed by 2030-2032Based on preliminary estimates, construction of Ajapnyak metro  station will be completed by 2030-2032
Armenia takes over BSEC chairmanshipArmenia takes over BSEC chairmanship
Outage continues at ANPPOutage continues at ANPP
WB provides $110 million loan to support Enabling Universal Health  Coverage Program for ArmeniaWB provides $110 million loan to support Enabling Universal Health  Coverage Program for Armenia
Wizz Air launches Budapest-Yerevan-Budapest flights Wizz Air launches Budapest-Yerevan-Budapest flights 
Armenia sincerely committed to finalizing negotiations and signing  peace agreement within one month - Vahan KostanyanArmenia sincerely committed to finalizing negotiations and signing  peace agreement within one month - Vahan Kostanyan
New Golden Palace hotel owner allowed to re-mortgage hotel New Golden Palace hotel owner allowed to re-mortgage hotel 
Share of domestic debt exceeds 50% in Armenia`s public debt - expert Share of domestic debt exceeds 50% in Armenia`s public debt - expert 
AMD 1.2 billion bonds of AMD 1.2 billion bonds of "Pharm Credit Armenia" UCO CC have been  listed at Armenia Securities Exchange
Araratbank to pay 26.7% dividends per nominal share  Araratbank to pay 26.7% dividends per nominal share  
Armenian winemakers participate in Vinexpo New-York 2024 for the  first timeArmenian winemakers participate in Vinexpo New-York 2024 for the  first time
North-South road corridor of double importance for ArmeniaNorth-South road corridor of double importance for Armenia
No serious progress in construction of new underground station No serious progress in construction of new underground station 
EDB could invest $500mln projects in Armenia - Denis IlyinEDB could invest $500mln projects in Armenia - Denis Ilyin
The Moody s international rating agency has upgraded IDBank s ratingThe Moody s international rating agency has upgraded IDBank s rating
Slower tax collection rate could affect budget performance - Luys  Foundation Slower tax collection rate could affect budget performance - Luys  Foundation 
Amulsar mine development could start next spring - EBDAmulsar mine development could start next spring - EBD
EDB ready to attract new stockholders, including Turkiye - Nikolai  PodguzovEDB ready to attract new stockholders, including Turkiye - Nikolai  Podguzov
Read more
Exchange rates
12.07.2024
RUB4.41-0.01
USD388.00-0.45
EUR422.531.06
GBP502.892.72
CAD284.960.05
JPY24.380.33
CNY53.500.04
CHF433.080.60