YEREVAN—In an interview with Tert.am, Armenian Revolutionary Federation (ARF) Member of Parliament Artsvik Minasyan commented on the recent developments in Armenia’s financial markets, namely the tumbling of the dram in value that occurred last week.
According to Minasyan, the Armenian government should draw lessons from the incident that caused a great deal of anxiety in the country.
One of Minasyan’s proposed solutions is for Armenia and Russia to use Armenian drams and Russian rubles when conducting trade with each other, as opposed to using the US dollar as they currently do.
“Solution one: we all have established that it is the Russian ruble that caused the greatest shock. It means that we should use drams and rubles for the greater part of our trade with Russia. Specifically, with respect to gas import, it is obvious that our intergovernmental agreement must envisage deals in ruble and dram terms, not in US dollar terms,” Minasyan said in his interview.
“Secondly, in the case of essential products for Armenia, we must look to settling accounts in ruble terms,” Minasyan said.
“Gas imports are anchored to the US dollar, which must be replaced with the ruble, which will not have any effect inside our country. Gas-filling stations settle accounts in USD terms, which affects ordinary Armenian citizens. And since an amount of currency comes to Armenia, it can be predictable. But when we arrange deals in terms of a third currency – the US dollar or euro – we actually shift the global economic burden onto our economy,” Minasyan said.
Asked to comment on Gazprom Armenia’s earlier promise to ask the Public Services’ Regulatory Commission to revise tariffs, Minasyan said he expects such a move to prevent a possible hike in gas prices. “With this, we’ll prevent a hike in the natural gas price, at least in the short run. Gazprom has to nonetheless raise the gas price for Russia to justify the reasons behind the increased price for Armenia. We are, after all, in the same economic area. And that means Gazprom cannot raise the price on its own because of changes in the dollar rate. This offers advantages to our country and state,” Minasyan said.
Addressing the need to recover the economy, Minasyan stressed the need for investments as a sustainability tool. “Our country has to create an investment protection committee to make foreign currency investments possible. Stock companies today cannot release shares in a foreign currency. As a result, a foreign investor who wants to make a payment for a share in euros or dollars in the frameworks of an investment project has to exchange with drams in order to pay the money. He or she thus actually incurs the risk and has to either insure it by paying more for the investment or remain in the risk zone. All two scenarios result in a negative decision in terms of investments. We have sectors which we have artificially restricted. And those restrictions have caused a 70 percent dollarization, which means 70 percent of our economy is based on a foreign currency. This implies that we ourselves have weakened the dram. So it fulfills no function as a matter of fact. And if a currency fulfils no function at all, it easily loses value,” Minasyan said.