Armenia must settle accounts in AMD-RUB terms – Artsvik Minasyan

In an interview with Tert.am, Armenian Revolutionary Federation Dashnaktsutyun (ARF-D) parliamentary group member Artsvik Minasyan commented on the latest developments on Armenia’s financial market last week.

According to him, the government should draw a number of lessons. He proposed certain solutions.

One of the solutions is that, with 70% dollarization of Armenia’s economy, should use AMD-RUB principle in effecting payments for a number of products, including gas, which could prevent a rise in the gas price on the border.

“Solution one: we all have made sure that it is the Russian ruble that caused the greatest shock. It means that we should use AMD-RUB principle in the case of substantial part of our trade with Russia. Specifically, with respect to gas import, it is obvious that our intergovernmental agreement must envisage deals in RUB and AMD terms, not in USD terms.

“Secondly, Armenian-Russian trade turnover. In the case of essential products for Armenia, we must achieve the aim of settling accounts in RUB terms,” Mr Minasyan said.

“Gas imports are anchored to the USD formula, which must be replaced with the RUB formula, 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.”

Asked to comment on Gazprom Armenia’s earlier promise to ask the Public Services’ Regulatory Commission to revise the tariffs, Minasyan said he expect such a move to prevent a possible hike. “With this, we’ll prevent a hike in the natural gas prices, 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.

Addressing the need to recover the economy, Minasyan stressed the need of investments as a sustainability tool. “Hence, 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 [US] 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 been artificially restricted. And those restrictions have caused a 70% dollarization, which means 70% 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 assumes the function of a weak means of overturn,” he explained.