ArmInfo. The higher level of dollarization and slow decrease of deposit rates restrict the shunt of the Central bank in respect to the further softening of monetary-loan term, but the main task of the regulator is to provide the prices sustainability. Such a statement was made by Arthur Djavadyan, the Chairman of the Central Bank of Armenia, while commenting on the margins of his interview to ArmInfo the possibility of review of refinancing rate decreased on February 14 this year from 6,25% to 6%. He reminded that in the beginning of the stage of monetary loan terms softening it formed 10,5 %, after which, starting with August 2015 the Central Bank started to decrease step by step the key interest rate, to give a pulse to inflation and consumer demand. He clarified that the consumer prices in Armenia have been decreasing in Armenia recently due to economic crisis in Russia, affecting the consumer demand for the reason of Armenian nationals money transfers decrease from Russia.
"The Central Bank of Armenia is not intended to continuer softening the monetary policy, aimed at step by step increase of inflation, because considers that too low rates may generate risks. The rates lower than those of current level might negatively impact the real and financial sectors of economy. That is why the Central Bank will be more careful while reviewing the options of those further decrease," Djavadyan stated accentuating as follows: " We evaluate the depreciation of monetary-loan terms as sufficient." Another decision on the rate level is to be taken by the Central Bank of Armenia on March 28 this year. In annual view ( February 2017 versus February 2016) the consumer market shows a deflation - at 0,2% (versus that of 1,7 for the same period of last year), but in this case the nonfood products and services tariff prices show almost equal step of decrease - for 3,5 and 3% respectively, while the foodstuff prices flew up for 3,1 %.
In January-February 2017 the consumer prices increased for 1,7% being caused by foodstuff prices increase for 5,5 %, within the nonfood products price decrease for 1,2% and services tariffs drop down for 1,6. In comparison to January-February 2016 the deflation at the consumer market formed 0,4% due to the 3,4% dropdown of nonfood products prices, as well as of services tariffs decrease for 2,5%, while the foodstuff prices grew for 2%. According to the information shared with ArmInfo by the National Statistics Service of Armenia, the consumer prices in Yerevan decreased in February for 1% versus that for 1,5 % a year ago.
If the Central Bank estimates that the targeted indicator derivation risks in respect to the inflation do increase, it will respond in a proper manner using all the appropriate tools to secure the sustainability in the country," Djavadyan said, adding that in the average-term prospective the prices will remain at the same level, and the inflation fastening up to 4% indicator by the end of 2019 should be gradual. " We think that this (gradual reaching the key indicator of inflation) will provide the general balance of the economy with minimal negative consequenses," the general banker mentioned.
According to CBA forecast, the inflation in 2017 will form 0,6%, in 2018 - 2,2%. Djavadjyan said also that the Central bank could increase the country economy growth forecast, but for the year of 2017 it will remain in the range of 2,2 - 2,3 %. "The growth is preconditioned mainly with recovery of internal demandaqnd effective implementation of government projects aimed at the improvement of export and investments, as well as with the structure reforms in progress," the Central bank Chairman mentioned. The Central Bank Head thinks that the commercial banks with their number decreased in 2017 by 4 down to 17, have demonstrated a good resistance to shocks and risks. " The ability of banks to cover the risks has increased, and, as the consequence, the liquidity grew as well, creating a potential for funding new business projects," he said, informing also that the sufficiency of the banking sector capital forms 20%, the share of non-working assets in 2016 decreased for 1 percent based point - down to 6,2%, and the foreign investors share makes 62 % of Armenian banking system capital.
To note, as of the year of 2017 the financial network of Armenia comprises 17 banks, 33 lender companies and 6 insurance entities. In 2016 the Procredit Bank (unified with INECOBANK), BTA Bank (unified with ArmEconomBank), Areximbank-Gazprombank Group (unified with Ardshibank), and Armenian Development Bank (unified with Ararat bank) dropped off the market due to dissolution and restructuring mentioned.
As of January 1, 2017 the assets of banking system formed AMD 4.05 trln ( annual growth at 22,9%), loan exposures formed AMD 2,6 trln, exposures in stae securities - AMD 423.4 bln (growth for 76,9%), time deposits - AMD 1,6 trln (growth for 29,2%), call liabilities - AMD 692,1 bln (growth for 28%). The summarized total capital OF Armenian banks in 2017 reacherrd AMD 648,6 bln, within one year view increasing for 29,3% in annual view in general due to the growth of statutory capital, which growth form 38,3%. The year of 2016 has been completed by the banking system of Armenia with net profit forming AMD 18, 3 bln ( the forex exchange rate as of 31.12.2016 formed AMD 483,94/USD 1)