Major economic problems despite Russian loan
Overview:
Much attention has been focused on the historic agreements signed between Turkey and Armenia. Less notice has been paid to a major deterioration in Armenia’s economic performance. The economy is contracting savagely and much worse than had been anticipated just a few months ago. The current account deficit is rising despite a forced import contraction because worker remittances are down by one third. Inflation has moderated but the fiscal position has deteriorated dramatically and the dram remains under downward pressure. A large loan from Russia has boosted FX reserves and helped to secure budget financing. However, this extremely difficult economic situation is perhaps a contributory factor towards the government seeking a rapprochement with Turkey that is highly controversial on both sides.