Armenia's economy deteriorates amid domestic, foreign challenges

/AzerNews/

By Mushvig Mehdiyev

Armenia's foreign exchange reserves dropped below the red line over the last years. The country failed to follow the international experience since there is a negative balance between the international reserves and national imports.

Foreign exchange reserves are the assets held by central bank in different reserve currencies, mostly in the U.S. dollar. The bank uses those money to back its liabilities.

Levon Zurabyan, the head of the Armenian National Congress's parliamentary fraction said Armenia has spent its international reserves to ring the alarm bells. "The volume of Armenia's national imports was nearly $4.5 billion in 2013, in the other words; it was about $2.3 billion for six months. At the same time, its foreign exchange reserves was slightly over $2,1 billion in early 2014, nonetheless, it dropped to $1,6 billion in September," Zurabyan noted.

The economic crisis in Armenia is seemingly inflicting the country's external reserves after it pushed its domestic reserves into a disastrous condition. The former Soviet country's economy is well-known for the lack of competitiveness. Internal economic troubles have not bypassed Armenia's foreign exchange reserves amid the considerable decrease.

"The Central Bank's international reserves decreased by $550 million only in six months. Current amount of the reserves is $557 million below the recognized red line which is an important factor for Armenia's economy," Zurabyan said.

The situation in Armenia's domestic economy is not good, as well. The price of oil and oil products in the country is not inclined to drop on the backdrop of oil's decreasing price in the world markets.

Analysts say the unchanged price of oil in Armenia is the result of monopolistic economy. Moreover, local media reports that Russia's giant oil company Rosneft controls the current oil price in the country.

Though today's oil price is roughly $86 per barrel in the world markets, the importers of the oil products in Armenia are not willing to change the prices.

Vahan Khachatryan, economist and the member of the Armenian National Congress Party, said the oil prices in Armenia didn't change because of the monopolistic rule in this field. "There is only explanation for that trend: monopoly. If there is not competitiveness in the economy, then the events in the world markets are unable to affect it," he noted.

Armenia continues to see its economy dependent on foreign companies and money. Unlimited privileges possessed by the overseas companies including the businesses from Russia, Britain, the U.S. and etc. is depriving the country of the ability to rule the economic developments.