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ARMENIAN GOVERNMENT TURNS TO RUSSIA FOR ANOTHER LOAN
By Naira Hayrumyan
ArmeniaNow
08.06.11 | 13:10
Despite the fact that Armenia's external debt will have exceeded
the level of 50 percent of its Gross Domestic Product by 2012, the
country's government still has to borrow again. This time the matter
concerns half a billion dollars to be provided by the Eurasian Economic
Community, or EurAsEC, a Russia-dominated international organization.
Remarkably, in Armenia, as it is in Belarus, a sort of struggle for
creditors is taking place, with the choice being between the West
and Russia. Belarus leader Alyaksandr Lukashenka admitted that the
conditions of Russian loans are tougher - in return Moscow demands
the transfer of major assets. But apparently, the West no longer
provides loans, and countries have to turn to Russia.
Russian Finance Minister Alexei Kudrin stated about the possibility of
providing Armenia with a loan of $400 million. The credit is expected
to be directed at restructuring a number of branches of the Armenian
economy. "We have determined several conditions that are required
for the provision of this loan," Kudrin said without elaborating.
Earlier, the EurAsEC Anti-Crisis Fund approved the allocation of
a $3-billion loan to Belarus on condition of the privatization of
Belarus assets worth approximately $7.5 billion within three years.
Among the priority objectives of privatization are Belarus' shares
in major companies, such as VTB, Sberbank, Rosneft and some others.
The EurAsEC loan to Armenia may be directed at the reconstruction of
a Yerevan chemical giant, Nairit. "It is not excluded that the loan
will be provided directly to Nairit and the government of Armenia
will act as a mediator, as in this case the terms of the loan will
be substantially improved," the government press service said.
As Armenian Minister of Energy and Natural Resources Armen Movsisyan
stated earlier, the modernization of the Nairit plant will require an
investment of approximately $400-500 million. In 2006, 90 percent of
the shares of the Nairit Company were sold to the British consortium,
Rainoville Property Limited, for $40 million, the remaining 10-percent
stake is held by the government of Armenia.
It is still unclear what conditions for the loan have been put forward
to Armenia by Russia, which plays a key role in EurAsEC. The conditions
for the acquisition of a loan from the EurAsEC Anti-Crisis Fund are
acceptable to the Armenian side, said Aram Ananyan, an aide to the
Armenian prime minister.
At the same time, an Armenian government delegation led by Prime
Minister Tigran Sargsyan on June 7 left to Vienna, Austria, with
a working visit to attend a regional summit of the World Economic
Forum on Europe and Central Asia affairs. The head of the Armenian
government is due to visit the headquarters of the OPEC Fund for
International Development (OFID) where he will attend the ceremony
of signing the Loan Agreement for the Rural Capacity Building Program
between Armenia and the Fund.
So far Armenia has been mostly unsuccessful in attracting foreign
investments for the modernization of production. According to the
National Statistical Service, the inflow of foreign investment to
the real sector of Armenia's economy in January-March decreased by
19.5 percent, down to $130.6 million, compared with the same period
in 2010, whereas the country's state debt as of March 31 this year
increased by 2.8 percent compared to December 31, 2010 - the entire
debt of the Republic of Armenia (including domestic debt) amounted
to $3.884 billion.
In terms of bilateral credit facilities Armenia's largest lender
is Russia - $500 million, or 14.8 percent of the country's total
external debt. Armenia owes $371.9 million (11 percent of its total
external debt) to Japan, $143 million (4.2 percent) to Germany, $31.8
million (0.9 percent) to the United States, $4.3 million (0.1 percent)
to France.
By Naira Hayrumyan
ArmeniaNow
08.06.11 | 13:10
Despite the fact that Armenia's external debt will have exceeded
the level of 50 percent of its Gross Domestic Product by 2012, the
country's government still has to borrow again. This time the matter
concerns half a billion dollars to be provided by the Eurasian Economic
Community, or EurAsEC, a Russia-dominated international organization.
Remarkably, in Armenia, as it is in Belarus, a sort of struggle for
creditors is taking place, with the choice being between the West
and Russia. Belarus leader Alyaksandr Lukashenka admitted that the
conditions of Russian loans are tougher - in return Moscow demands
the transfer of major assets. But apparently, the West no longer
provides loans, and countries have to turn to Russia.
Russian Finance Minister Alexei Kudrin stated about the possibility of
providing Armenia with a loan of $400 million. The credit is expected
to be directed at restructuring a number of branches of the Armenian
economy. "We have determined several conditions that are required
for the provision of this loan," Kudrin said without elaborating.
Earlier, the EurAsEC Anti-Crisis Fund approved the allocation of
a $3-billion loan to Belarus on condition of the privatization of
Belarus assets worth approximately $7.5 billion within three years.
Among the priority objectives of privatization are Belarus' shares
in major companies, such as VTB, Sberbank, Rosneft and some others.
The EurAsEC loan to Armenia may be directed at the reconstruction of
a Yerevan chemical giant, Nairit. "It is not excluded that the loan
will be provided directly to Nairit and the government of Armenia
will act as a mediator, as in this case the terms of the loan will
be substantially improved," the government press service said.
As Armenian Minister of Energy and Natural Resources Armen Movsisyan
stated earlier, the modernization of the Nairit plant will require an
investment of approximately $400-500 million. In 2006, 90 percent of
the shares of the Nairit Company were sold to the British consortium,
Rainoville Property Limited, for $40 million, the remaining 10-percent
stake is held by the government of Armenia.
It is still unclear what conditions for the loan have been put forward
to Armenia by Russia, which plays a key role in EurAsEC. The conditions
for the acquisition of a loan from the EurAsEC Anti-Crisis Fund are
acceptable to the Armenian side, said Aram Ananyan, an aide to the
Armenian prime minister.
At the same time, an Armenian government delegation led by Prime
Minister Tigran Sargsyan on June 7 left to Vienna, Austria, with
a working visit to attend a regional summit of the World Economic
Forum on Europe and Central Asia affairs. The head of the Armenian
government is due to visit the headquarters of the OPEC Fund for
International Development (OFID) where he will attend the ceremony
of signing the Loan Agreement for the Rural Capacity Building Program
between Armenia and the Fund.
So far Armenia has been mostly unsuccessful in attracting foreign
investments for the modernization of production. According to the
National Statistical Service, the inflow of foreign investment to
the real sector of Armenia's economy in January-March decreased by
19.5 percent, down to $130.6 million, compared with the same period
in 2010, whereas the country's state debt as of March 31 this year
increased by 2.8 percent compared to December 31, 2010 - the entire
debt of the Republic of Armenia (including domestic debt) amounted
to $3.884 billion.
In terms of bilateral credit facilities Armenia's largest lender
is Russia - $500 million, or 14.8 percent of the country's total
external debt. Armenia owes $371.9 million (11 percent of its total
external debt) to Japan, $143 million (4.2 percent) to Germany, $31.8
million (0.9 percent) to the United States, $4.3 million (0.1 percent)
to France.