Armenia’s Banking Legislation Conforms to IMF Requiremen’s

YEREVAN (Noyan Tapan)–Armenia’s banking legislation has been brought to conformity with Article 8 of the Rules of the International Monetary Fund–which means that the operations on current capital accounts have been liberalized in Armenia–President of the Armenian Central Bank Tigran Sargssian said at a business forum held as part of the Armenia-Diaspora Forum–while presenting Armenia’s banking system. Sargssian pointed out that relative progress has been observed in macroeconomic stability in Armenia. A favorable atmosphere has been created for investors–he said–but if the tax policy is toughened foreign investors will find themselves in the former tax atmosphere.

Currently–more than 175 branches of 18 private corporations–seven major companies–five public corporations and one cooperative bank are operating in Armenia–including four subsidiary banks–their capital being totally foreign. The banking capital–which currently totals 29 billion drams–has increased 3.8 times since 1996. But–when compared with the GDP–the banking capital should be increased ten times for service of real economy to be possible. For this goal to be achieved–the requirement set to the banks which will be established after 2000 is the authorized capital at least $5 billion.

According to Sargssian–long-term credit deposits increased from 1-2 percent to 10 percent thanks to international programs–and their interest rates decreased and made up 20-24 percent. Pointing out an 80 percent increase of bank deposits–the CB president said that the banking system does not meet the requiremen’s of economy.

To eliminate the consequences of the Russian financial crisis–the banking norms were tightened. Obligatory reservation was carried out in terms of Armenian drams–balanced currency position policy was maintained. The CB president urged the forum participants to make investmen’s both in the banking capital and in the real sector of the economy–as Armenia’s economy is impossible to recover by means of credits alone.

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