"Life saver" of the Armenian economy

Susanna Petrosian in Yerevan. Exclusively for VK

The volume of non-bank transfers to individuals in Armenia in the first eight months of this year exceeded one billion dollars. According to the Central Bank of Armenia, when compared to the first 8 months of last year, the volume of transfers has increased by 10%. All transfers in 2011 totaled 1.28 billion dollars. Russia is the leading donor country (83%) and accounts for over 870 million dollars. The second-largest donor country is the United States with 5.3%. Ukraine (1.3%) is the third largest donor.

However, the influx of money into the country is not limited to bank transfers. Armenian guest workers, mostly working in Russia, often visit their families in Armenia and, of course, bring them the money they earn. Therefore bank transfers can be considered the level of the inflow of money to Armenia. The increase in the inflow of money affects prices in Armenia. A direct link between money coming into Armenia from abroad in cash and the current socio-economic situation is obvious.

At the moment there are no official data on what part of the Armenian population actually exists on money transfers from abroad. According to some research carried out by economists, about 40% of the country's population rely on transfers, while a large part of these people are relatively wealthy people, who are not part of the 30% of the population in Armenia who are poor.

Private transfers, which started to arrive in Armenia in 1990, play an important role in the social life of the population, given the large share of unemployment, as well as inefficient or low-paid jobs.

According to Doctor of Economic Science and head of the research center "Alternative", Tatul Manaseryan, bank transfers are one of the most serious problems of the Armenian economy. It is a phenomenon that allows consumer demand to be kept at a high level: "We have no right to put all our hopes on the resources of the Diaspora. The psychology of the Diaspora is changing as well. In the new world, everybody thinks and cares first about himself and this phenomenon has a tendency to limits on the global scale. "

Great responsibility in this issue lies with the government of Armenia, which in order to reduce inflation is conducting a policy of revaluation of the dram, leading to a reduction of the trade surplus and stimulating imports at the cost of exports. "It is good when the Diaspora helps Armenia, but it should not become the only way of people's existence. This help has already become a punishment for the country. The country is addicted to private transfers, which, due to an incompetent policy, contribute to the appreciation of the dram and, as a consequence, to a reduction of exports. The share of private transfers in the GDP is about 9%, and this figure is probably the only one in which Armenia is the leader among other states. In regard to this index, only Lebanon and Bosnia, the economic situation in which, as we know, is very sad, are ahead of us," the ex-prime minister of Armenia, Hrant Bagratyan said.

Furthermore, according to some studies, the growth of private transfers will eventually lead to an outflow of capital from the country.

The problem is that due to government inaction, the potential of transfers has not been fully exploited. Such a large influx of money from abroad could solve many problems in the country, but on the contrary it is harming it. However, there is yet another problem. The lion's share of private transfers to Armenia from abroad originates from Russia. That means that transfers are increasing the dependence of Armenia on a single country, which cannot be regarded as a positive phenomenon.