Minister: Dram revaluation may lead to repeated "destruction" of the  industry

ArmInfo. Dram revaluation may lead to the repeated "destruction" of the industry. Armenian Minister of Economy Vahan Kerobyan expressed a similar opinion in an  interview.

In this regard, he recalled his experience as the head of a  supermarket chain in the early 2000s, when a sharp revaluation of the  dram was registered on the market. "I witnessed how our producers and  exporters suffered during this period, how locally produced products  on store shelves were replaced by goods from Russia, Ukraine, Turkey,  etc.," he said.

Consequently, Kerobyan stated that as long as he holds the post of  Minister of Economy, he cannot allow the repetition of past  scenarios, referring in this context to the industrial development  policy adopted by the government.

Noting that the indirect beneficiaries of the processing industry are  farmers, the Minister noted that the latter should be kept in the  spotlight, given their level of income.

Giving an assessment of the policy of the Central Bank in the current  realities, the official noted: "We live in a non-trivial time, and as  of today it is necessary to use all the tools so that the economy  reaches high growth rates." At the same time, he pointed to the large  amount of work that the Ministry of Economy is doing to share control  over inflation with the Central Bank, in particular, through  subsidizing the import of various goods and activities.

Earlier, Head of the Central Bank 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.  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.  

In particular, it was noted that the financial authorities of the   country benefited from this situation. <They are afraid of incurring   reputational damage due to inflation, because in order to stop the   revaluation of the dram, it will be necessary to buy the currency,  which in turn will spur inflation. In short, to create the impression   of short-term gain, officials are sacrificing long-term development   and growth>, the statement 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.  

It should be noted that in the foreign exchange retail market of  Armenia from October 2021 to June 22, 2022, the dram revalued against  the dollar by 14% (from 485 AMD/$1 on average), against the euro - by  22% (from 563 AMD/1EUR on average), while devaluing against the ruble  by 6% (from 6.7 AMD/1RUB on average).  It is appropriate to note that  the unprecedented western sanctions imposed on Russia account for the  highly volatile market since this March. In particular, this year,  from February 24 to June 22, in the retail currency market of  Armenia, the dram devalued against the Russian ruble by 19% - to 7.1  AMD/1RUB on average. At the same time, during this period, the dram  revalued both against the US dollar - by 13% to 417 AMDs / $ 1, and  against the euro - by 19% to 439.5 AMD / 1 EUR.