Yerevan/Mediamax/. Former President of Armenia Robert Kocharyan said that current Armenian economy gives no cause for optimism.

Robert Kocharyan stated it in an interview with 2rd.am website commenting on the December devaluation of national currency (dram) and the overall economic situation.

“There should not be such correlation of dram and the Russian ruble. However, given the moods and downbeat expectations, even the minor speculations might result in panic among people and play a critical role, irrespective of the seemingly stable financial situation.

Pro forma, the Central Bank of Armenia is accountable for the dynamics of the national currency and it committed a series of efforts to stabilize dram within its areas of competence. However, the December situation showed that those efforts were apparently insufficient – urgent and coordinated measures of all governmental institutions as well as employment of monetary, fiscal and administrative tools to address the situation were required. Judging by the results, those measures were piecemeal and late”, said the former Armenian President.

He noted that “dram rate reflects Armenia’s overall economic situation and balance of payments”.

“Their deterioration will depreciate dram, while their improvement will enhance it. Dram cannot exist all by itself in isolation from the economy. In any case, sharp currency fluctuations putting the country’s financial system in jeopardy, undermining trust to the national currency and hitting our citizens in their pockets are inadmissible”, said Robert Kocharyan.

He noted that the “downgrade of Armenia’s sovereign rating by Moody’s will lead to an increase in the external borrowing cost, especially considering that the external debt has already gone off-scale”.

“The EEU economy will be in recess in the mid-term, which means it will be harder to occupy a significant niche in it. The strongly cheapened ruble will considerably change the trade structure with Russia but not in favor of our goods. Serious Russian investments are less likely – the sanctions have caused them to face issues related to the refinancing of Western loans. Our EEU membership has made us less attractive for Western companies. It’s yet not clear what will happen with our trade volumes with Iran. World market prices on non-ferrous metals are predicted not to grow, rather on the contrary. The recent tighter regulations for Armenian banks will result in rise in the cost of borrowed money, thus loans to businesses will also go up. The monopolization of economy intensifies, the investment volumes constantly decline and the investment activity degrades”, said Robert Kocharyan.

Answering the question on ways to overcome this situation, the former President said:

“First off, the authorities should admit there are fundamental issues and should dispose themselves to a frank dialog with the society and business on the current situation in the country and ways to overcome the crisis. Trust is the most important condition for the success of any action of the authorities, and it is virtually absent today. The country needs shakedown and for sure, it does not refer to the constitutional reforms. I will not list the set of overt and necessary steps. In my opinion, there are enough people in Armenia, and in the government as well, who at least understand what should be done in the first place. The biggest obstacle to success will be the conflict of the political elite’s economic interests with the country’s long-term interests”.