Chapter

ARMENIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: May 29, 1997.
Exchange Arrangement
CurrencyThe currency of Armenia is the Armenian dram.
Exchange rate structureUnitary.
Classification
Independently floatingThe exchange rate of the dram against the dollar is determined on the basis of exchange rates in the interbank market and at foreign exchange auctions held five times a week in the Yerevan Stock Exchange (YSE) and twice a week in the Gjumry Stock Exchange (GSE). Banks and financial dealers holding licenses from the Central Bank of Armenia (CBA) may participate in the auctions. Anyone may buy and sell at the auctions through banks. However, foreign exchange transactions are taking place predominantly in the interbank market in which the CBA also participates. The CBA intervention in the foreign exchange market is limited to the smoothing of exchange rate fluctuations. The CBA quotes official rates in terms of dollars daily on the basis of the weighted average rate in the interbank market and at the foreign exchange auctions on the previous trading day. This rate is used for accounting valuation of all foreign exchange transactions of all economic agents, including the MOF. Exchange rates for other major currencies are calculated either on the basis of quotations on the YSE, when applicable, or solely on the basis of quotations for the dollar in major international interbank markets against the currencies concerned. Foreign exchange is also freely bought and sold by enterprises and persons, without restrictions, through authorized banks and licensed exchange bureaus that conduct cash transactions.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketResidents and nonresidents may freely negotiate forward exchange contracts for both commercial and financial transactions in all leading convertible currencies in the domestic exchange market and at major international foreign exchange markets. However, for the time being, the forward exchange market in Armenia is still undeveloped, although some banks sign forward contracts in small amounts.
Official cover of forward operationsYes.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payment arrangements
Bilateral payment arrangements
InoperativeArmenia maintains agreements with Russia and Turkmenistan.
Regional arrangementsArmenia is a signatory of the 1993 Treaty of Economic Union (with Azerbaijan, Belarus, Kazakhstan, Kyrgyz Republic, Moldova, Russia, Tajikistan, and Uzbekistan), which provides for the eventual establishment of a customs union, a payments union, cooperation on investment, industrial development, and customs procedures. Armenia also joined the Agreement on the Establishment of Payments Union of CIS member countries. Armenia is a member of the Black Sea Economic Cooperation (BSEC), together with Albania, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine. Bilateral free trade agreements have been signed with Georgia, the Kyrgyz Republic, Moldova, Russia, Tajikistan, and Ukraine, though only the agreement with Russia is in operation.
Clearing agreementsThere is an arrangement with Turkmenistan for the importation of natural gas. In addition, bilateral clearing agreements with the Baltic countries and the other countries of the FSU exist, but all have become largely inoperative.
Administration of controlThe CBA has overall responsibility for regulating financial relations between Armenia and other countries in close collaboration with the MOF. Resident and nonresident currency dealers, including banks, may undertake foreign exchange transactions without restriction. There are no restrictions on current and capital movements unless otherwise specified by the CBA (in which case, one month’s notice is required).
International security restrictionsn.a.
Payment arrearsNo.
Controls on trade in gold (coins and/or bullion)A license is required for trading.
Controls on domestic ownership and/or tradeYes.
Controls on external tradeYes.
Controls on exports and imports of banknotes
On exports
Foreign currencyIndividuals are authorized to transfer, deliver, and export currency denominated in foreign exchange up to $10,000 in cash or its equivalent without any restriction. Exports exceeding that amount are permitted through bank transfers.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadThese accounts are permitted, but approval is required.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Negative listImport licenses from the Ministry of Agriculture and the Ministry of Health are required and granted on a case-by-case basis to import medicinal preparations and pesticides. Imports of weapons, military equipment and parts, and explosives require special authorization from the government.
Import taxes and/or tariffsThere are two rates of customs duties: zero and 10%; most imports are zero rated. Products imported from countries in the CIS are exempted. On January 1, 1999, the tariff schedule was revised, with tariffs being reduced to zero from 10% for a few agricultural products, textiles, and vehicles, and increased to 10% from zero for a variety of new materials and manufactured products.
State import monopolyn.a.
Exports and Export Proceeds
Repatriation requirementsThe CBA has the power, as specified by legislation, to impose repatriation requirements on export proceeds.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExport licenses are required for medicines, wild animals and plants, and textile products exported to the EU. In addition, special government permission is required for the export of nuclear technology, nuclear waste, related nonnuclear products, and technology with direct military applications. Minimum threshold prices for the export of ferrous and nonferrous metals and the reexport of foreign-produced goods therefrom remain in force.
Without quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsIn accordance with the constitution, nonresidents are not allowed to acquire land in Armenia.
Controls on personal capital movementsNo.
Provisions specific to commercial banks and other credit institutions
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsEffective April 9, 1999, the CBA eliminated the option for banks to hold 50% of required reserves against deposits in foreign exchange in either foreign or domestic currency and introduced an 8% reserve requirement in local currency against deposits in either foreign or domestic currency. The reserve requirement is remunerated at an interest rate of 10% a year.
Open foreign exchange position limitsThe long foreign exchange position (the positive difference between foreign assets and liabilities) at the end of any business day must not exceed 40% of the bank’s total capital, while the open position in nonconvertible currencies must not exceed 10% of the bank’s total capital. Effective April 1, 1999, the limit on the overall foreign exchange position was lowered to 30% from 40%. Effective April 1, 2000, it was lowered further to 25%, while the open position limit in nonconvertible currencies was lowered to 5%.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 1999
Imports and import paymentsJanuary 1. The tariff schedule was revised, with tariffs being reduced to zero from 10% for a few agricultural products, textiles, and vehicles, and increased to 10% from zero for a variety of new materials and manufactured products.
Capital transactions
Provisions specific to commercial banks and other credit institutionsApril 1. The limit on the overall foreign exchange position of banks was lowered to 30% of their capital.



April 9. The CBA eliminated the option for banks to hold 50% of required reserves against deposits in foreign exchange in either foreign or domestic currency.
Changes During 2000
Capital transactions
Provisions specific to commercial banks and other credit institutionsApril 1. The limit on the overall foreign exchange position of banks was lowered to 25% of their capital, while the open position limit in nonconvertible currencies was lowered to 5%.

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