Wednesday, June 15 2022 00:17

ArmInfo.The impressive inflow of foreign currency into the Armenian market, which exceeded last year's level by several times, became one of the reasons for the  revaluation of the dram. Armen Nurbekyan, Head of Macroeconomic  Directorate at Central Bank of Armenia, stated this during a press  conference on June 14.

In particular, he said that in April the inflow of funds (transfers  through banks, ed. note) amounted to $357 million, which is 2-fold  higher than the amount of a year ago. According to Nurbekyan, a  significant increase in May was also registered.

At the same time, he noted that the growth was mainly due to  transfers of a commercial and other nature. In addition,  international visitors, who have been in Armenia for several months,  provided the inflow of foreign currency.

It should be recalled that yesterday, during the meeting of the NA  Standing Committee on Financial- Credit and Budgetary Affairss,  Chairman of the Central Bank of the Republic of Armenia Martin  Galstyan, in response to calls for the need to artificially enter the  market, devaluing the existing exchange rate by the Regulator, which  may help a certain segment of the business - exporters - he drew  attention to the fact that as a result, the general public will pay  for such actions. "If we go against our mandate, artificially devalue  the dram, then we will face a new wave of inflation which will affect  everyone," the head of the Central Bank said.

In the current conditions, he noted the importance of the state's  sectoral policy, on the basis of which the most affected sectors that  have lost their competitiveness will receive assistance from the  state in the form of additional subsidies, tax cuts, etc.  A few days  earlier, Armenian entrepreneurs issued a statement in which they  indicated that the exporters of agricultural products, beverages, as  well as the tourism sector, the IT sector and developers, suffered  the most from the strengthening of the national currency.

It should be noted that according to the Central Bank of the Republic  of Armenia, the net inflow of transfers from individuals accelerated  the y-o-y growth in  January-April 2022, jumping to 94% from 80% a  year earlier, exceeding  $394.3 million, which was greatly  facilitated by the multiple  increase in remittances from Russia,  while a year ago, in the same period, the driving force of growth was  remittances from the United  States. The inflow of transfers from   individuals to Armenia accelerated the y-o-y growth in January-April  2022 to 60.2% from 29.1% in January-April 2021, amounting to $918.6   million. A similar acceleration of the uptrend was observed in the   outflow of transfers - from 11.8% to 41.6%, with a volume of $524.2   million.  The net inflow of transfers from individuals accelerated  the y-o-y growth in  January-April 2022, jumping to 94% from 80% a  year earlier, exceeding  $394.3 million, which was greatly  facilitated by the multiple  increase in remittances from Russia,  while a year ago, in the same  period, the driving force of growth  was remittances from the United  States.  

At the same time, the inflow of transfers of individuals to Armenia  from Russia in January-April 2022 sharply accelerated y-o-y  growth  from 9.4% to 2.2-fold, reaching $471.6 million. The net inflow of  transfers from Russia amounted to $306.1 million over this period,  with a sharp acceleration y-o-yl growth from 5.2% to 3.2-fold. And  the inflow of transfers from individuals to Armenia from the United  States in January-April 2022 significantly slowed down the y-o-y  growth from 2-fold to 20%, amounting to $199.1 million, which was  also observed in the dynamics of the net inflow of transfers from the  United States - a sharp slowdown in growth from 3-fold to 5.8 %, with  a volume of $115.2 million.

The share of Russia in the  inflow in January-April 2022 increased to  51.3% from 37.9% in  January-April 2021 (against 51% in January-April  2019), and began to  decrease in the outflow - from 32.7% to 31.6 %  (against 38.7% in  January-April 2019). And the share of the United  States in the  inflow, on the contrary, decreased year-on-year from  28.9% to 21.7%  (against 15.3% in January-April 2019), while  increasing in the  outflow from 15.4% to 16% (against 18.8% in  January-April 2019).

It should be noted that the March forecast of the Central Bank of the   Republic of Armenia foreshadowed a decline in the net inflow of   remittances in dollar terms by 20% for 2022 (against 54% growth in   2021). The Central Bank conditioned its forecast on the foreseeable   economic downturn in Russia and a tangible decrease in the dollar   income of seasonal workers. The Central Bank also worsened its   forecast for GDP growth for 2022 from the previous 5.3% to an updated   1.6% (against 5.7% growth in 2021). According to the March forecast   of the Central Bank of the Republic of Armenia, the ratio of   transfers of individuals to GDPwill decrease in 2022 from 8.9% to   6.7%, continuing to decline further to 4.8% in 2024.The Central Bank   in this forecast report reiterated that remittances from the United   States will slow down growth.