Armenia’s Convert Savings as Dram Gains Strength

YEREVAN (RFE/RL)–The chairman of Armenia’s Central Bank–Tigran Sarkisian–said Tuesday that the renewed strengthening of Armenia’s national currency–the dram–against the US dollar has led to Armenia’s converting their dollar savings into drams because they have finally begun to trust their currency.

The dram has gained almost 9 percent in additional value against the dollar in less than a month and is now worth over 30 percent more–in dollar terms–than it was right before the start of its dramatic appreciation in late 2003.

The Central Bank attributed this to a sizable increase in multimillion-dollar remittances from hundreds of thousands of Armenia’s working abroad.

Sarkisian said a further rise in their amount this year has boosted demand in the dram and pushed up its value as a result.

Last week–the Armenian Government’s mid-term economic outlook said that the Government expected the economy to continue its robust growth and enable a further increase in public spending on education and social programs in the next few years.

The document presented by Deputy Finance and Economy Minister Pavel Safarian forecasts that Gross Domestic Product will rise at an annual rate of at least 6 percent from 2007 through 2009.

Official statistics show that the Armenian economy expanded by 12 percent in the first four months of this year–putting it on track to register a double-digit growth for a sixth consecutive year. Safarian said continued growth is expected to raise the country’s GDP per capita–a key indicator of living standards–from the current $1,600 to $2,300 by 2009.

Armenia’s macroeconomic performance in recent years has been repeatedly praised by the International Monetary Fund and the World Bank. Both financial institutions have endorsed the government’s assertions that the growth has considerably reduced widespread poverty.

The dram’s strengthening–for example–has hit hard a large part of Armenia’s population which is dependent on cash regularly sent by their expatriate relatives.

Some analysts say it is stifling the country’s modest exports. Official statistics show their total volume falling by nearly 8 percent to $253.7 million in the first four months of this year. Armenian imports–by contrast–rose by 13 percent to $584 million during the same period.

However–Safarian said the anticipated economic growth will enable the Armenian Government to raise the average salary of civil servants and school teachers by 40 percent to 124,000 drams ($295) and 82,500 drams respectively in the next three years. He said the Government will also raise its tiny monthly pensions and poverty benefits by 2,000 drams each year.

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