ContentsArticles 2

Real and Equilibrium Real Exchange Rates in Armenia 2Vardan Aramyan

Quantitative Estimations of Exchange Rate 7Hayk Ghlijyan

International Experience in Export Promotion 10Karen Grigoryan

Conceptual Approaches to the Strategy of Armenia’s Economic Development 13Manuk HergnyanGagik GabrielyanAra ChalabyanSevak Hovhannisyan

BOX 17Public Expenditures in the Social Sector and the PRSP 17Ruzanna Gabrielyan

Statistical Data 21

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Real and Equilibrium Real Exchange Rates in Armenia1

Vardan Aramyan

The real exchange rate is of high importance to any country. It is important because of the three functions it performs. First, the realexchange rate is the major price determinant of a country’s competitiveness and determines the structure of production andconsumption. Second, it reflects the speed of convergence of a given country towards developed countries. Third, it ensures thedomestic and external balancing of the economy.

When interpreting the behavior of the real exchange rate, the issue is addressed in two dimensions. First, the question is whether theappreciation of the real exchange rate does not result in a loss of a country’s competitiveness. Second, it examines whether realappreciation is affected by the behavior of fundamental economic indicators or only as a short-term phenomenon reacting to short-term shocks from policy-makers that will eventually lead the economy into a crisis. In other words, the policy-makers will only worsenthe gap between the actual and real equilibrium exchange rates.

Let us discuss these questions with the example of Armenia.

Figure 1: Real Exchange Rates Behavior, 1998-2005 (upward trend of curve implies appreciation)

The real external exchange rate calculated on the basis of the CPI in Armenia depreciated until 2003, thus providing price competitive-ness to Armenian exporters in external markets (see Figure 1). What concerns the domestic real exchange rate, however, is that it hasbeen steadily appreciating since 2000, showing that the people in Armenia became wealthier each year. Exporters could afford to paybetter salaries to attract laborers from the non-tradable sectors because the real exchange rate depreciated due to nominal exchangerate depreciation, ensuring excess profits to expor ters. However, since 2004, when capital and financial inflows into the Armenianeconomy increased and accelerated, coupled with drastic improvements of trade terms in foreign markets in 2005 due to an increasein prices for metals in the international market, the real external exchange rate started appreciating. Some exporters (namely, metalexporters) were able to maintain their markets due to the increase in international prices (see Figure 2). Other expor ters could onlymanage to survive if their productivity increased accordingly.

In order to substantiate this scenario, we cite the results of the CBA paper “Estimation of Ballassa-Samuelson in Armenia.” Let us remindthe reader that this effect was named for two famous economists-Ballassa and Samuelson-who first developed the concept. In the1960s, when a number of countries were enjoying high economic growth rates while simultaneously suffering from permanent real

1 The issues discussed in this article base on the following papers on the real and real equilibrium exchange rates developed by the CBA: “Estimation of thereal equilibrium exchange rates in Armenia with the 1-2-3 model” and “Estimation of Ballassa-Samuelson in Armenia”. The named papers were prepared byVahagn Grigoryan and Harutyun Sargsyan, macroeconomists of the External Economic Relations Division of the CBA Monetary Policy Depar tment.

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exchange rate appreciation, critics blamed the policy-makers that exports were losing their competitiveness. This was when Ballassa andSamuelson proved that the appreciation bears the effects of the comparative productivity growth of the tradable sector and, therefore,there is no need to worry.

Figure 2: Behavior of External Real Effective Exchange Rates and Export Prices, 1998-2006

The results for Armenia show that this effect is quite weak as compared to a number of developing countries (see Table 1). Table 1summarizes the comparison of the Ballassa-Samuelson Effect where the domestic price level is derived from the comparative prices oftradable and non-tradable sectors (domestic real exchange rate). Only 0.19 percentage points out of an annual average 2.3 percentprice increase in Armenia is the result of the productivity growth. The balance is the consequence of the financial inflow and externalinflation (described below.) In other words, our exporters did not take advantage of the opportunities during the depreciation periodto upgrade production technologies and increase productivity. If Armenian export sectors have limited productivity growth rates theneventually structural changes in exports take place. The industries that enjoyed price competitiveness due to exchange rate depreciationyet unable to increase productivity (e.g., labor-intensive sectors that were once competitive due to low salaries and a depreciatedexchange rate) will be gradually crowded out from their markets since the real exchange rate will appreciate along with economicdevelopment and enrichment of the society.

Table 1: Comparison of Ballassa-Samuelson Effect2

Product iv i tyProduct iv i tyProduct iv i tyProduct iv i tyProduct iv i ty Average Inflation Rate,Average Inflation Rate,Average Inflation Rate,Average Inflation Rate,Average Inflation Rate,Impact on PricesImpact on PricesImpact on PricesImpact on PricesImpact on Prices 1999-2005 1999-2005 1999-2005 1999-2005 1999-2005

Armenia 0.19% 2.3%

Czech Republic 1.1-1.2% 2.5%

Estonia 2.2% 3.6%

Poland 3.6-4.2% 4.5%

Slovenia 2.1% 6.1%

Hungary 3.9-4.3% 7.0%

What concerns the real equilibrium exchange rate, if the actual exchange rate is different from the estimated equilibrium level, is that thismay create large problems for countries. Under significant excessive appreciation, a country can face serious crisis due to an imbalancein external sectors, while excessive depreciation constrains domestic demand, consumption and investments. That is why it is crucial that

2 Sinn and Reutter (2001)

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policy-makers be aware of the real equilibrium exchange rate: it allows them to develop policies that avoid potential distortions andpressures in goods and foreign exchange markets.

The theory suggests different approaches to estimating the level of the real equilibrium exchange rate. The CBA has analyzed the situationbased on some of those approaches to estimate the behavior of the real equilibrium exchange rate.

One of the approaches is the famous Devarajan, Lewis, Robinson3 (DLR) model, or the so-called 1-2-3 model4 . This general equilibriummodel estimates the real equilibrium exchange rate by examining international inflation, foreign trade terms and capital flows. One of thepositive sides of the DLR model is that it also accounts for the conditions of non-perfectly competitive markets. However, theshortcoming of this model is that it depends on which base year is used. The base year is supposed to be the year when the economywas in a steady state. The arguably chosen year of 2002 for Armenia has yielded the following results:

Table 2: DLR or 1-2-3 Model Applied to the Armenian Economy, 1999-2006

YYYYYea rea rea rea rea r In ternat iona lIn ternat iona lIn ternat iona lIn ternat iona lIn ternat iona l Impact ofImpact ofImpact ofImpact ofImpact of Impact ofImpact ofImpact ofImpact ofImpact of Equ i l ib r iumEqu i l ib r iumEqu i l ib r iumEqu i l ib r iumEqu i l ib r ium Actual DollarActual DollarActual DollarActual DollarActual Dollar Dev ia t ionDev ia t ionDev ia t ionDev ia t ionDev ia t ionPrice IncreasePrice IncreasePrice IncreasePrice IncreasePrice Increase TTTTTrrrrrade ade ade ade ade TTTTTererererermsmsmsmsms Capital FlowsCapital FlowsCapital FlowsCapital FlowsCapital Flows Dollar PricesDollar PricesDollar PricesDollar PricesDollar Prices Prices Prices Prices Prices Prices (+ implies excessive(+ implies excessive(+ implies excessive(+ implies excessive(+ implies excessive

apprec ia t ion)apprec ia t ion)apprec ia t ion)apprec ia t ion)apprec ia t ion)1 2 3 4 5 6

1999 -1.8 1.9 -7.8 -7.5 -5.0 -14.9

2000 0.3 -0.4 -5.6 -5.8 -1.6 -11.2

2001 0.3 0.5 -9.2 -8.4 0.3 -2.8

2002 3.2 -0.9 -7.0 -4.9 -2.2 0.0

2003 1.2 -2.4 -1.1 -2.7 3.7 6.6

2004 9.0 -1.3 -0.7 6.9 16.1 15.8

2005 14.0 9.1 -2.3 22.1 17.1 11.1

2006 est. 12.7 -2.7 11.8 21.5 12.9 3.2

The first three columns correspond to the three factors determining the equilibrium prices: international price increase, terms of tradeand capital flows. If we assume that the economy will go back to its 2002 state (foreign trade prices will come back, capital flows willstop), then the current real equilibrium exchange rate is over-appreciated by 3.2 percent. The major deviation took place in 2003 and2004, then it decreased (the real equilibrium exchange rate appreciated faster than the actual) mostly due to a combination of monetarysterilization and non-expansionary fiscal policies. If such policies are continued, the gap will most likely close. The results are interesting

3 Devarajan, S.; Lewis, J.D.; Robinson, S. “External Shocks, Purchasing Power Parity, and the Equilibrium Real Exchange Rate,” The World Bank Economic Reviewv. 7, 1993, pp. 45-63.4 1-Country, 2-Goods (tradable and non-tradable), 3-Activities (impor ts, expor ts, domestic production and consumption).

Figure 3: Sensitivity of Base Year Choice

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in that they show that the Armenian economy is quite sensitive and dependent on developments in the external world (internal pricebehavior). For example, 12.7 percentage points of the 21.5 percent increase in equilibrium dollar prices during from 2002 to 2006occurred due to international price increases. At the same time, the appreciation of the 2005 real equilibrium exchange rate was assistedby an improvement in foreign trade terms, whereas the appreciation in 2006 was assisted by capital inflows.

However, it is wor th mentioning that these results are heavily affected by the choice of 2002 as the base year. Therefore, if we believethat the financial inflows (that accelerated since the end of 2003) can be sustained in the future then 2003 or 2004 can be used as thebase year. In this case, the real exchange rate in 2006 will be under-appreciated by almost 11 percent when compared to 2004 and by3.2 percent when compared to 2003. During this exercise, international prices, capital flows and the terms of trade still show the generalpicture of their impact.

Conclusions

One can draw the following conclusions from this analysis.••••• The trend of the real equilibrium exchange rate is towards appreciation. The results of estimations performed by the CBA with

different approaches prove the same trend.••••• Among the fundamental factors (productivity, capital flows, terms of trade) affecting the real equilibrium exchange rate, the impact

of financial flows is very strong, while in some years drastic improvement in the terms of trade was very influential.••••• The tradable sector of the Armenian economy gradually becomes less competitive as compared to the non-tradable sector;

however, it remains competitive due to improved terms of trade. This is explained by the fact that the investments in the Armenianeconomy take place mostly in non-production sectors (investments mostly flow to the construction sector).

••••• In the long run, the Armenian economy may experience difficulties when the capital inflows stop or decrease, while the lowsignificance of other fundamental factors, in particular, the relatively low increase in productivity, will not compensate for the drasticreduction in capital inflows.

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Box 1: Real and Real Equilibrium Exchange Rate

RRRRReal eeal eeal eeal eeal exxxxxccccchanghanghanghanghange re re re re raaaaatetetetete is the ratio of the given country to counterpar t countries’ prices calculated on the basis of one currency.

RRRRReal equilibrium eeal equilibrium eeal equilibrium eeal equilibrium eeal equilibrium exxxxxccccchanghanghanghanghange re re re re raaaaatetetetete,,,,, in the classical definition, is the value of the real exchange rate that corresponds to bothdomestic and external equilibrium at the same time under the given values of the fundamental variables determining thoseequilibriums. Nurkse (1945)

Let us present what real exchange rates exist and what we understand under fundamental variables of the economy.

It is a textbook statement that, for the assessment of competitiveness, two approaches to the real exchange rate are used: realdomestic exchange rate and real external exchange rate. The real domestic exchange rate is calculated as the ratio of the pricesin the tradable sector to the prices in the non-tradable sectors and it shows the incentives of the investors to put their moneyeither into the tradable or the non-tradable sector.

The real external exchange rate is calculated as the ratio of the prices in the given country and its counterpart countries (in termsof the same currency) and shows the incentives for investors to put their money in the country or its counterpart countries.

The domestic real exchange rate appreciates when the prices in non-tradable sectors increase faster than in the tradable sector.Therefore, under similar productivity growth rates in the two sectors, the tradable sector loses competitiveness to the non-tradable sector. In other words, investing in the non-tradable sector becomes more attractive and the resources of the economyflow from tradable sectors to non-tradable sectors.

The real external exchange rate appreciates when the domestic prices in a country increase or the nominal exchange rateappreciates or a combination of the two occurs. In all cases, the dollar prices in the tradable sector of the given country increase.However, since a small country cannot dictate prices in the international marketplace and acts as a price-taker, the tradablesector of the case country is crowded out of the international market or is forced to decrease its profits, thus becoming lessattractive for external investors.

Let us discuss the fundamental indicators of the real exchange rate. There are three of them: capital flows, terms of trade andcomparative productivity growth5. If a country experiences capital inflows, both domestic and external real exchange ratesappreciate. This occurs because, on one hand, the domestic demand is promoted and starts pressing on the prices of the non-tradable sector (the prices for tradable sectors are given by the international market). On the other hand, the large inflowstrigger significant pressure on the nominal exchange rate towards appreciation.

Improvements in trade terms—faster increases in prices of expor ts over those of imports—allows for earning more netforeign exchange from units of expor ts compared to units of imports. This triggers appreciation of both domestic and externalreal exchange rates in the same manner as capital inflows.

The third and most important factor is the comparative growth of productivity of the tradable sector that results in theappreciation of the real exchange rate, according to the renown Ballassa-Samuelson effect.

When the real exchange rate appreciates due to capital or financial inflows without increases in productivity increase, the exportsector undeniably gradually loses its competitiveness both domestically (in terms of attracting resources) and in externalmarkets.

When the real exchange rate appreciates because of improvements in the terms of trade, the exporters temporarily may not losecompetitiveness in external markets since exporters from competing countries benefit from the price increases in exportmarkets. Therefore, competitiveness of expor ters may be temporary.

When the real exchange rate appreciates due to comparative productivity growth (Ballassa-Samuelson effect), the expor tersundeniably remain competitive since production costs decrease due to productivity growth, thus ensuring profitability.

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Quantitative Estimations of Exchange Rate

Hayk Ghlijyan

Introduction

Exchange rate is one of the major factors of macroeconomicequilibrium in an economy. It is important not only because itdefines the parameters of external trade, but also because of itsimpact on domestic production and consumption, investments,productivity, capital flows, interest rates and other economic indi-cators. These indicators, in turn, determine the direction of mon-etary and fiscal policies.

The real exchange rate shows the consumer basket price ratio inthe given country and its trade counterparts, whereas the nominalexchange rate shows the monetary ratio of currencies. A numberof theories exist to evaluate real and nominal exchange rates thatenable calculations of market exchange rate deviations due tospecific reasons.

In the long run, the real equilibrium exchange rate theories that explainthe fundamental basis for changes in the real and nominal exchangerate, determined by the developments in the real sector, should beused. As for the short- and medium-term, quantitative estimationmethodologies of the nominal exchange rate should be used.

The present article attempts to make quantitative estimations offactors affecting the nominal exchange rate since the hypothesis isthat the appreciation of the Armenian dram (AMD) is mostly deter-mined by nominal factors rather than by more fundamental fac-tors of the real sector. There are two major reasons to refrainfrom estimating the real equilibrium exchange rate. First, the ap-preciation of the AMD took place during the past two to threeyears which is not sufficiently long enough to assume that thequalitative shifts in the economy caused the approximately 40percent appreciation. The second reason is that, in the case ofArmenia, it is difficult to insist on the fundamental assumptions ofthe theories estimating the real equilibrium exchange rate.

Theories to estimate the real exchange rate include the following:

1. PurPurPurPurPurccccchasing Phasing Phasing Phasing Phasing Pooooowwwwwer Per Per Per Per Parity theorarity theorarity theorarity theorarity theory:y:y:y:y: According to thistheory, the long-run prices for goods are constant in allcountries and so are the exchange rates. Therefore, no tradearbitrage may take place due to market forces. The majorassumption of this theory is the existence of competitivemarkets and terms of free trade. The Purchasing Power

Parity theory does not work. First, even if the prices oftradable goods are constant, the prices for non-tradablegoods are not constant since labor and capital productivitylevels vary from country to country. In the particular case ofArmenia, this theory is not feasible since it is difficult to provethat competitive markets exist.

2. ExterExterExterExterExternal and Domestic Economic Equilibriumnal and Domestic Economic Equilibriumnal and Domestic Economic Equilibriumnal and Domestic Economic Equilibriumnal and Domestic Economic Equilibriumtheortheortheortheortheory:y:y:y:y: In an open market economy, the achievement ofdomestic and external equilibriums in the tradable and thenon-tradable sectors are dependant on the domestic ab-sorption (consumption plus government spending) and realexchange rates. According to this theory, the real exchangerate is variable and depends on the domestic absorption orconsumption. In turn, absorption or consumption relies onthe differences between the increases in prices of tradableand non-tradable markets. The tradable goods in this modelare given (i.e., determined in the international market),whereas the prices for non-tradable goods are determinedthrough domestic supply and demand. The basic assump-tion for achieving domestic and external equilibriums is thatthe labor market and markets for non-tradable goods underfull employment are cleared. Due to increased domestic con-sumption, the prices for non-tradable goods increase onone hand, resulting in real appreciation. On the other hand,this results in an increase in imports and a deepening ofcurrent account deficits, which bring in real depreciation.Thus, under full employment, these forces result in theachievement of external and domestic equilibriums in trad-able and non-tradable markets and a new level of the realexchange rate. For Armenia, this theory can hardly be sub-stantiated since it is difficult to prove that the economy hasachieved full employment. At the same time, it is difficult toinsist that the labor market and non-tradable goods marketsare cleared. (Rather, as a result of various economic shocks,these markets rapidly move to a new level of equilibrium.)

3. HarHarHarHarHarold-Ballassa-Samold-Ballassa-Samold-Ballassa-Samold-Ballassa-Samold-Ballassa-Samuelson theoruelson theoruelson theoruelson theoruelson theory:y:y:y:y: According tothis theory, the relative productivity growth between the trad-able and the non-tradable sectors over that of counterpar tcountries leads to increased wages in the tradable sector.Due to labor mobility, this then leads in increased wages in thenon-tradable sector. Therefore, the wage level in the tradableand the non-tradable sectors converge. As a result of thesehigher wages, inflation rises and leads to appreciation of thereal exchange rate. In fact, this theory rejects the PurchasingPower Parity theory. The basic assumptions of this theory

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are: a competitive labor market, elastic prices, perfect labormobility between tradable and non-tradable sectors, and arelatively equal distribution of the labor force between thetradable and the non-tradable sectors. In this theory, capitalproductivity is an exogenous variable and equals the marginalproductivity of capital (i.e., real interest rates.) It assumescapital flows are liberalized and financial markets are inte-grated. On the other hand, the productivity growth in the trad-able sector results in a decrease in output costs. This theoryassumes that the impact of the increased wages on the pricesof tradable goods is higher than the reduction of output costsdue to increased productivity. The application of this theory toArmenia is difficult because the fundamental assumptions can-not be substantiated and the share of wages in the ArmenianGDP is very low. Therefore, even if this theory does work, itcannot explain the large real appreciation.

Factors affecting the nominal exchange rate include the following:

1. According to the interest rate parity theory, the changes indomestic and external real interest rates may result in capitalflows which do affect the nominal exchange rate.

2. Foreign exchange inflows (non-commercial and non-invest-ment such as factor income and transfers that are mainly usedfor financing consumption), can affect the exchange rate.

3. The short-term exchange rate expectations trigger specula-tive effects in the economy and affect the domestic foreignexchange savings, which, in turn, affect the exchange rates.

For Armenia, the last two effects hold true: transfers grew while thedomestic foreign exchange savings decreased.

Hypothesis for a quantitative estimation of factors affecting theexchange rate includes:

Based on the official statistical data, a supply-demand model is builtfrom the balance of payments and the exchange rate policy of theCentral Bank of Armenia (CBA). If the balance of payments reflectsthe real picture of foreign exchange flows, the equilibrium level of theexchange rate is determined by the proportion of supply and de-mand in the FOREX market. However, if the estimated level of theexchange rate does not correspond to the real level, then the bal-ance of payments does not fully reflect all FOREX flows.

Possible Methodology Errors

The balance of payments does not allow for precise estimation ofFOREX outflows and inflows; therefore, some approximations

were performed. It is difficult to estimate:••••• The currency and commodity structure of official transfers,

direct and other investments;••••• The savings-consumption propor tions of factor income and

transfers, as well as the breakdown per consumption andinvestments (in particular, real estate);

••••• The proportions of imports, expor ts and growth ininventory, as well as timing of sales;

••••• The profitability levels of imports in the domestic market andof expor ts in external markets; and

••••• The appreciation/depreciation of the AMD against othercurrencies (which is ignored in this case.)

Used Variables

All of the following variables were used on a quar terly basis(1996:1-2006:2), expressed in millions of U.S. dollars (USD).••••• EE-end-of-period USD/AMD exchange rate,••••• DSW-supply of USD excluding the factor income and

transfers (exports, direct, net portfolio and net otherinvestments),

••••• TR-factor income and current transfers,••••• INT-FOREX interventions of the Central Bank, and••••• DDN-demand for USD (imports excluding humanitarian

assistance, factor income, current transfers and directinvestments less a change in foreign reserves).

Models

• ARIMAARIMAARIMAARIMAARIMA-a model of AR(1) I(2) MA(1,3)AR(1) I(2) MA(1,3)AR(1) I(2) MA(1,3)AR(1) I(2) MA(1,3)AR(1) I(2) MA(1,3) time series whichshows the correlation of the exchange rate from its historiclevels (AR) and its residual error (MA), i.e. from the error ofactual and estimated values. These variables mostly reflectthe expectations of economic agents depending on theprevious values of the variables and the deviation of theirown expectations and the actual exchange rate.

o Variables-end-of-period USD/AMD exchange rate.••••• OLS strOLS strOLS strOLS strOLS structuructuructuructuructural ral ral ral ral reeeeegggggrrrrression model ession model ession model ession model ession model which shows the

correlation of the exchange rate with the supply of dollars,transfers, demand for dollars, Central Bank interventions, aswell as from its past values (AR) and residual error (MA).

o Endogenous variables-exchange rate.

o Exogenous variables-dollar supply excluding transfers, dollar demand and Central Bank foreign exchangeinterventions.

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Results of ARIMA Model

D(D(EE)) = AR(1) - AR(3) - MA(1) + MA(3)

Or

D(D(EE)) = [AR(1)=0.257,AR(3)=-0.556,MA(1)==- 0.864, MA(3)=0.521,]

According to this model, the exchange rate in the current periodpositively correlates with its past values, residual error (laggingthree periods) and negatively correlates with its past values (lag-ging three periods) and residual error (lagging one period.)

The projections under the ARIMA model show that the expectationsof economic agents on depreciation were lower than the actual. Inother words, the FOREX inflows were underestimated by economicagents as compared to their actual levels.

Results of OLS Model

D(D(EE)) = 0.27*D(DDN) - 0.42*D(TR) - 0.29*D(DSW) -- 0.19*INT + [AR(3)=-0.64,MA(1)=-0.99,MA(3)=0.38]

All variables are statistically significant (t-statistics) and statisti-cally important at 0.1 percent reliability, except for DDN and DSW.They are statistically significant at 9 percent of reliability. Theprobability of error in the equation (F-statistics) is 0.001 percent.

The coefficients of variables estimated through this model docorrespond to the theory, i.e. the increase in the supply of dollarsand transfers results in appreciation, whereas the increase in de-mand triggers depreciation. The Central Bank interventions tosterilize the USD result in appreciation, whereas steps to sterilizethe AMD result in depreciation. The components AR and MA in the

model reflect the estimates of the expectations in the economy.

Under the OLS model, ex-ante projections are not feasible as longas the exogenous variables are not assigned certain values.Therefore, the model allows only ex-post projections.

Ex-Post Structural Projections excluding AR and MAComponents (i.e., ignoring the exchange rateexpectations in the economy)

Ac t ua lA c t ua lA c t ua lA c t ua lA c t ua l Pro ject ionsPro ject ionsPro ject ionsPro ject ionsPro ject ions Dev ia t ionDev ia t ionDev ia t ionDev ia t ionDev ia t ion

Q-3-2005 444.2 454.9 -10.7

Q-4-2005 450.2 451.7 -1.5

Q-1-2006 450.9 457.5 -6.6

Q-2-2006 418.8 455.0 -36.2

Ex-Post Structural Projections including AR and MAComponents (i.e., including the exchange rateexpectations in the economy)

Ac t ua lA c t ua lA c t ua lA c t ua lA c t ua l Pro ject ionsPro ject ionsPro ject ionsPro ject ionsPro ject ions Dev ia t ionDev ia t ionDev ia t ionDev ia t ionDev ia t ion

Q-3-2005 444.2 454.3 -12.1

Q-4-2005 450.2 440.9 9.3

Q-1-2006 450.9 442.5 8.4

Q-2-2006 418.8 436.4 -17.6

The deviation between the two projections shows the impact ofexchange rate expectations. The projections excluding the effectof expectations show that the exchange rate should be fluctuatingin the range of AMD 452 to AMD 457 against the USD during theestimated period. However, adding the expectations componentinto the picture causes the AMD to appreciate. In this case, theexpectations affect the FOREX savings by decreasing them. How-ever, it is obvious that the expectations of the AMD appreciationwere lower than the actual. Nonetheless, if the depreciation of theUSD against other currencies is not taken into account, the pro-jected exchange rate is very close to its actual rate.

Major Conclusions

••••• According to the OLS model, the supply of foreign exchangeaffects the change in the level of exchange rates rather thanthe demand for it.

••••• Increases/decreases in transfers have more impact on theexchange rate than other components of the FOREX supply(expor ts, investments, etc.).

••••• CBA interventions have less impact on the exchange rate thanthe market forces.

Ex-Post Exchange Rate Projections of ARIMA Model

A c t ua lA c t ua lA c t ua lA c t ua lA c t ua l Pro ject ionsPro ject ionsPro ject ionsPro ject ionsPro ject ions Dev ia t ionDev ia t ionDev ia t ionDev ia t ionDev ia t ion

Q-1-2006 450.9 435.5 15.44

Q-2-2006 418.8 418.8 -0.02

Q-3-2006 381.5 411.4 -29.89

Ex-Ante Exchange Rate Projections of ARIMA Model

Q-4-2006 375.5

Q-1-2007 384.5

Q-2-2007 387.4

Q-3-2007 371.2

Q-4-2007 341.7

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••••• Expectations have a significant impact on the exchange rate.••••• Excess of supply over demand by USD 10 million results in

appreciation of the AMD by 2.9 to 4.2, depending onwhether it occurred because of an excess in supply or intransfers.

••••• Excess of demand over supply by USD 10 million results in adepreciation of the AMD by 2.7.

••••• CBA interventions of USD 10 million result in changes in theexchange rate of the AMD by 1.9.

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International Experience in ExportPromotion

Karen Grigoryan

Introduction

Exports affect and are affected by long-term economic growth.Thus, because of the important role of expor ts, relevant promo-tion policies should be written to develop this sector. Today’sexport promotion programs often provide comprehensive andsophisticated services to the business community.

The Policy of Export Promotion

Most developing countries have an eeeeexporxporxporxporxpor t prt prt prt prt promotion oromotion oromotion oromotion oromotion orggggga-a-a-a-a-nizanizanizanizanizationtiontiontiontion ( ( ( ( (EPOEPOEPOEPOEPO))))): South Korea (KOTRA-Korea Trade PromotionCorporation), Thailand (Department of Export Promotion), Ma-laysia (MATRADE-Malaysia External Trade Development Corpora-tion) and Singapore (TDB-Trade Development Board). These or-ganizations play a significant role in export development not onlywithin the business community, but also within the public sector1 .Five stages of government involvement in exporting are shown inTable 1 and EPOs play the key role throughout the process. Byhelping companies transform foreign market oppor tunities intosales, EPOs remarkably facilitate export development.

It should be noted that there are some nuances between the pro-motion of traditional exports and the promotion of new exportproducts. The first one can lead only to export growth, whereasthe last one concerns diversification (both geographic and prod-ucts), which is very important for expor t development.

ExporExporExporExporExport prt prt prt prt promotion is comotion is comotion is comotion is comotion is closellosellosellosellosely connected with a disman-y connected with a disman-y connected with a disman-y connected with a disman-y connected with a disman-tling oftling oftling oftling oftling of impor impor impor impor import rt rt rt rt restrictionsestrictionsestrictionsestrictionsestrictions..... Import tariffs and expor t taxeshave symmetrical effects on domestic relative prices. Both instru-ments raise the domestic price of imports relative to exports2.Moreover, they discourage all types of expor ts since they causea country’s exchange rate to appreciate. Additionally, tariffs andother import barriers discourage expor ts by raising the price ofimported intermediate inputs used by exporters.

Meanwhile, the Korean experience illustrates an interesting aspectof timing. Direct expor t promotion was initiated before importliberalization took place in order to relax the balance of paymentconstraints during a period of declining foreign assistance. It thenbecame the major impulse of sustained export growth3 .

1 Seringhaus, Rolf F. H.; Rosson, Philip J. (1991), Export development and promotion: the role of public organizations, Boston: Kluver Academic Publishers, p. 364.2 Tokarick Stephen, (2006), Does Import Protection Discourage Exports? IMF Working Paper No. 06/20.3Agarwal, Jamuna P.; Langhammer, Rolf J.; Lücke, Mattias; and Nunnenkamp, Peter (1995), Export Expansion and Diversification in Central and Eastern Europe: WhatCan Be Learnt from East and Southeast Asia? Institut für Weltwirtschaft Kiel, Discussion paper 261.

Table 1: Five Stages of Export Involvement by Public Organizations

StageStageStageStageStage FocusFocusFocusFocusFocus Evaluation MeasuresEvaluation MeasuresEvaluation MeasuresEvaluation MeasuresEvaluation Measures

1 Export marketing and improvement of infrastructure Knowledge, resource level, infrastructure network development

2 Export orientation Motivation level

3 Export promotion Need, awareness level

4 Export potential and supply Opportunity survey

5 Export development Export growth and optimization of structure of exports

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A number of countries stimulated their exports on the basis ofindustrial policindustrial policindustrial policindustrial policindustrial policyyyyy,,,,, having beforehand identified the most pro-spective manufacturers. In general, this was characteristic ofcountries with inconsistent reforms. In some cases, such policyyielded positive results, especially when targeted at developingnon-traditional expor ts or exports of technically complex prod-ucts demanding significant capital investments by organizations tomanufacture and promote them on the world market. In this case,financial suppor t from the state-intervening after mobilizing pri-vate capital, creating an infrastructure and so on-was importantand supported the optimization of the export structure in a rathershort period. South Korea can serve as the most indicative ex-ample of such a policy.

In cases of state-owned foreign trade monopolies (e.g., China’sreform in 1980), a decentralization policy plays a prominent rolein the first stage of the expor t promotion strategy. Export pro-motion through reforms of external economic relations requiresprogressively decentralized foreign trade systems and foreignexchange allocation systems.

Any decentralization of international trade systems can be orga-nized either by:••••• delegating direct trading rights to a larger variety of

independent national, provincial and local Foreign TradeCorporations (FTC) and to other provincial authorities; or

••••• granting foreign trade decision-making powers to thoseenterprises that produce tradables.

The first approach to trade system reform might be termed ad-ministrative decentralization4 , whereas the second approachcould be described as market economy-oriented decentraliza-tion. Administrative decentralization preserves a system whereforeign trade is conducted through intermediation of authorizedtrading companies5.

StandarStandarStandarStandarStandards and tecds and tecds and tecds and tecds and technical rhnical rhnical rhnical rhnical reeeeegulagulagulagulagulationstionstionstionstions are also the instru-ments of trade policy and, of course, impor tant parts of thetrade debate. The results of a World Bank survey of 619 firms in17 developing countries6 indicate that technical regulations in

industrial countries adversely affect firms’ propensities to expor tfrom developing countries. The diversity of standards acrossforeign countries reduces the economy of scale for firms andinfluences their decisions about exporting. Moreover, firmsoutsourcing components are already challenged by multi-stan-dard compliance issues.

The Methods of Export Promotion

WWWWWorororororldldldldldwide ewide ewide ewide ewide experience shoxperience shoxperience shoxperience shoxperience shows thaws thaws thaws thaws that t t t t stimulation of exportsoccurs in two basic ways: through the formation of a favorablemacroeconomic climate and through the creation of stimuli formanufacturers to expor t.

The first way is certainly preferable due to the successful experi-ences of countries with market-driven economies. However, it isused within the scope of some international economic organiza-tions and/or integration unions, and encompasses detailed regu-lations of trade issues. The experience of developing countriesproves that macroeconomic stabilization should be sufficientlyadvanced before embarking on foreign trade liberalization pro-gram. Otherwise, due to excessive inflation and the wrong rate ofexchange, imports will rise too steeply, while exports would hardlygrow7 . The successful experience of East Asian countries in main-taining macroeconomic stability, for example, was one of the mainreasons it could successfully attract foreign direct investmentsand other forms of international cooperation.8

On the other hand, export instability can cause the macroeco-nomic uncertainty in developing countries. So, the question is howvarious agents in a national economy should react to significantuncertainty over the prices of a principal export and, therefore,declining real expor t earnings and real incomes.

TTTTThe ehe ehe ehe ehe exxxxxccccchanghanghanghanghange re re re re raaaaatetetetete iiiiis extremely important from the point ofview of the allocation of resources in an economy. Many countriessuccessfully stimulating exports (Chile, Colombia, Mexico, Taiwan,China, South Korea and Indonesia) resorted to undervaluation oftheir currencies in foreign exchange markets.

4 Reynold, B. L. (1987), Trade, Employment and Inequality in Post Reform China, Journal of Comparative Economics, vol. 11, p. 484.5Bender Dieter, China’s Structural Reforms of the External Sector as a Means of Export Promotion: Inconsistencies and Consequences, (1991), Jahrbuch fürSozialwissenschaft Zeitschrift für Wir tschaftswissenschaften, Band 42/1991, Heft 1, Vandenhoeckand Ruprecht in Göttingen, pp. 34-35.6 Chen, Maggie Xiaoyang; Otsuki, Tsunehiro; Wilson, John S. (2006), Do standards matter for expor t success? Policy Research Working Paper, WPS 3809,World Bank, Washington, D.C.7 Bender, Dieter; Currency Conver tibility and International Competitiveness, (1993), Address at Plenary Session 1, 19.02.1993, ‘’Shaping a Vibrant India,’’ PHDHouse, Konrad-Adenauer-Stiftung, New Delhi, p. 19.8Gundlach, Erich; Nunnenkamp, Peter; Catching Up Processes or Decoupling Trends? Developing Countries in the Age of Globalization, (1997), Economics,a biannual collection of recent German studies, v. 55/56, Focus: The changing Nor th-South trade relations and the World Trade Order (WTO), Institute forScientific Co-operation, Tübingen, Germany, p. 81.

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Mussa9 and Edwards10 examined the effects of certain financialpolicies on the equilibrium real exchange rate. Mussa notices thata permanent increase in the real rate of return available to privateasset holders results in long run real appreciation; whereasEdwards concludes that capital account liberalization also has thiseffect. Therefore, financial liberalization may at least partially un-dermine the expor t-promoting effects of outward-oriented tradereform.

Connected with exchange rate policy, IMF statistics of official ex-change rate regimes confirm that a majority of developing coun-tries prefer exchange rates pegged to a single currency - the U.S.dollar. Among Southeast Asian nations, Malaysia, Singapore andThailand are basket peggers. The growing number of basket pegshas been accompanied by a spread of managed floating11 .

Criteria for Choosing an Export Promotion Plan

The choice of this or that plan to stimulate expor ts is made by acountry on the basis of the following criteria:••••• A strategic direction for export policy (state regulation,

market forces, market forces in combination with specialmeasures on expor t promotion) based on the generalmacroeconomic policy in the country;

••••• Definition of internal restrictions on ways to developexpor ts;

••••• Highlighting external barriers to expor ts;••••• Identifying sectors with perspectives from the point of

view of exports;••••• Definition of opportunities for export promotion as a

whole, and also separate ways of export promotion;••••• Comparison of benefits from expor t promotion in the long

term with the expenses connected with similar promotion(in some cases, a country simply does not have the meansto carry out an export promotion policy);

••••• Selection of countries, goods and/or regions whichaddress expor t promotion plans; and

••••• Definition of measures of promotion.

The Role of Differentiation and Specialization in ExportCompetitiveness

Theoretical models have discussed the impor tance of horizontaland vertical product differentiation through the production ofgreater varieties of goods or higher quality goods to maintainexport markets 12 and ways to achieve this differentiation throughproduct innovation. In the dynamically developing worldeconomy, specialization in technology-intensive and skilled-labor-intensive goods play a more crucial role than natural resource-intensive, unskilled labor-intensive and primary products.

It should be noted that there is some trade-off between diversifi-cation and specialization. It is known that specialization benefitsefficiency, but diversification may eliminate negative impacts ofmarket shocks on an economy. Several theories view this trade-off in uninsurable shocks as key determinants of economic devel-opment13 .

Sequences of Export Promotion Policies

Sequences ofSequences ofSequences ofSequences ofSequences of e e e e exporxporxporxporxpor t prt prt prt prt promotion policies can be comotion policies can be comotion policies can be comotion policies can be comotion policies can be clas-las-las-las-las-sifsifsifsifsified in the fied in the fied in the fied in the fied in the folloolloolloolloollowing mannerwing mannerwing mannerwing mannerwing manner:::::

1. Macroeconomic stabilization (exchange rate-based stabili-zation), infrastructural development and financial sector de-velopment;

2. Gradual trade liberalization (reducing tariffs, quotaschanged into tariffs), export subsidies (direct/indirect), FDIpromotion; and

3. Liberalization of international capital flows (opening the capi-tal account).

Additionally, there is one possible negative consequence of ex-port promotion. Domestic prices of exporting goods can in-crease and affect the living standards of the exporter country ifthese products are included in the consumer basket.

9Mussa, Michael (1986), Nominal Exchange Rate Regimes and the Behaviour of Real Exchange Rates: Evidence and Implications, Carnegie-Rochester Serieson Public Policy, pp. 117-21310Edwards, Sebastian (1987), Exchange Rate Misalignment in Developing Countries, UCLA Economics Working Papers 442, UCLA Depar tment of Economics.11Bender, Dieter; Monetary Stability, Export Promotion and Exchange Rate Policy: A macro model of exchange rate management in NICs and its applicationto Singapore 1975-83, ASEAN Economic Bulletin, v. 2, No. 3, March 1986, p. 197.12 Krugman, Paul, (1980), Scale Economics, Product Differentiation and the Pattern of Trade, American Economic Review, Vol. 70, pp. 950-959. Flam, H.;Elhanan, Helpman; (1987), Vertical Product Differentiation and North South Trade, American Economic Review, Vol. 77 (December), pp. 810-822. Grossman,Gene; Elhanan, Helpman; (1991), Quality Ladders and Product Cycles, Quar terly Journal of Economics, Vol. 106 (No.2), 557-586.13Saint-Paul, Gilles; (1992), Technological Choice, Financial Markets and Economic Development, European Economic Review, Vol. 36, No. 4, pp. 763-781.

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Conclusions

While integrating into the world economy, countries start fromvarious points in their economy and from different political condi-tions. A country’s cultural and geographic differences, as well asits character in developing democratic rules affect expor t devel-opment and the methods used to promote exports. In developingcountries, export promotion policies were carried out at variousstages of their industrialization, which deeply influenced theirimplementation tactics and methods.

The experiences of particularly East and South Asian countriesshow us that export development was and is based on technologi-cal know-how. Therefore, a nation’s capabilities to adapt importednew technology, as well as an advanced educational system, arefundamental preconditions for export development in developingcountries.

We should realize that any special measures to support exportmanufacturers and to develop export demand are connected toshort-term budget losses and mid-term prospects. That meansthere either needs to be money in the state treasury (direct cred-iting of the enterprises, both manufacturers and expor ters) ormobilization of private sources. It also demands support fromthe state (e.g., the state-warranting of export credits), or short-reception in the budget for some receipts (in the case of subsidiz-ing manufacturing, decreases in import duties on the goods usedin manufacturing the exported product.)

In the absence of these means, indirect measures to promoteexports are necessary. They will not bring additional income to thebudget, but they also will not demand allocations from it. Amongthe alternatives, state warranting of expor t credits may be thebest option. They are widely used by all countries that want topromote expor ts.

KKKKKarararararen Grigen Grigen Grigen Grigen Grigorororororyyyyyan,an,an,an,an, PhD PhD PhD PhD PhD,,,,, is a lectur is a lectur is a lectur is a lectur is a lecturer aer aer aer aer at the t the t the t the t the ArArArArArmenianmenianmenianmenianmenianStaStaStaStaState Unite Unite Unite Unite Univvvvvererererersity ofsity ofsity ofsity ofsity of Economics Economics Economics Economics Economics.....

Conceptual Approaches to the Strategy ofArmenia’s Economic Development

Manuk HergnyanGagik GabrielyanAra ChalabyanSevak Hovhannisyan

Armenia faces the challenge of maintaining its high economicgrowth achieved primarily through private transfers. This doesnot create sustainable competitive advantages for the Armenianeconomy and will not secure Armenia’s long-term economicgrowth. New approaches for the country’s development are re-quired.

There are several successful examples of economies that man-aged to transform their initial acceleration into sustainable growth.A majority of countries achieving these successes adopted con-sistent strategies for formulating a distinctive value proposition(e.g., Singapore, China and Ireland). A value proposition points toa specific role the country plays in the world or regional economy.What can constitute Armenia’s distinct value proposition?

Global Positioning of the Armenian Economy

The current situation in Armenia does not provide grounds forconfirming the existence of a certain value. However, Armenia hastwo options. First, it could consider complete annihilation as anindependent player in the global arena. Second, it could transformitself into a supplier of highly qualified human resources for cer-tain sectors of the global economy. The second alternative impliesshifting from a temporary exporter of a high-quality workforcefor Russia to a location of high-quality human capital for special-ized, value-added fields.

The claim for such a specific regional and, in the future, global roleis an ambitious, yet fully achievable objective that will require a realbreakthrough in how the country currently operates. Scarcity ofresources, the unfavorable geo-political situation and transporta-tion problems prevent Armenia from developing other proposi-tions (for instance, becoming a base for expansion into otherdeveloped regions, similar to how Ireland and Singapore posi-tioned themselves). On the other hand, the second suggestedpositioning enables Armenia to compete in creating specific valuesand to accumulate a notable competitive advantage. However, tocreate such an advantage Armenia need not compete with re-

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source-based economies (China, Russia or Turkey, for example),but with those focused on creating high values (Estonia, Israel,Taiwan and Korea, for example). This means that Armenia’s con-cept of competitiveness must aim at achieving the best interna-tional standards in education and training, applied science, man-agement systems, service and work - all of which require specialcompetencies and creative skills - as well as creating a globallycompetitive business environment in general.

Moving to the Next Stage of Competitive Development

Within the framework of the economic development paradigmbased on the concept of competitiveness, three stages of devel-opment are identified:••••• Resource-based economy: competitiveness is achieved

through the use of cheap production factors;••••• Investment-driven economy: competitiveness is achieved

through effectively managing large-scale investments;••••• Innovation-driven economy: competitiveness is achieved by

creating a unique value for use in the global market.

Today, Armenia’s economy is in the resource-based stage. Duringthe past five years, private transfers from Diaspora have been themain driving force for economic growth. Except for a few indus-tries, it does not stimulate the creation of globally competitivecompanies. Instead, it contributes to turning Armenia into à “con-suming zone.” The sectors that compete in the global market - theinformation technology (IT) and jewelry businesses - now playsecondary roles in the economy.

Accordingly, the main challenge in the current stage is attractinglarge-scale foreign investments in existing and new sectors of theeconomy to move it into the next stage of development. Increas-ing large-scale investments must become the priority driving eco-nomic policy between 2008 and 2015. This will provide a firmbasis for shifting Armenia into the innovation phase of develop-ment.

Basic Instruments of the Breakthrough

1 .1 .1 .1 .1 . FFFFFocus on Interocus on Interocus on Interocus on Interocus on Internananananational Intional Intional Intional Intional Invvvvvestmentsestmentsestmentsestmentsestments

Implementation of the above-mentioned strategic economic goalsis impossible without attracting productive foreign capital, espe-cially large, transnational or multinational corporations (MNC).Only they can provide resources at the necessary scale to tackleexport markets, distribution channels, technology and world-class business practices.

Until recently, Armenia attracted foreign direct investment (FDI)mainly through politically motivated large infrastructure orprivatization deals. During the period of 1998-2004, infrastruc-ture accounted for about 45 percent of FDIs and largeprivatization deals accounted for 25 percent of FDIs (source: EV).However, these sources will be exhausted within the next two orthree years. The new areas necessary to attract foreign capital willrequire extraordinary and focused efforts from the Armeniangovernment to design distinctive value propositions for MNCs.

The institutionalization of FDI attraction policy initiated in the pastdid not yield significant results. This was due to a poor under-standing of the target audience, the lack of an integral strategy, anextremely ineffective human resource policy and, as a result, pas-sive and spontaneous efforts. Under new conditions, potentialinvestors must receive coordinated and effective signals from thecountry and reinforced with equivalent actions.

Three key spheres require active institutional policy.••••• FFFFFororororormamamamamation oftion oftion oftion oftion of a g a g a g a g a globallloballloballloballlobally competitiy competitiy competitiy competitiy competitivvvvve be be be be businessusinessusinessusinessusiness

enenenenenvirvirvirvirvironment.onment.onment.onment.onment. Transnational companies are only interestedin countries where total expenses of conducting business arelower than in comparative countries or where there areunique opportunities to create new values. This is why thepersistent improvement of the Armenian businessenvironment is so important.

••••• Creation of new sources of growth. Creation of new sources of growth. Creation of new sources of growth. Creation of new sources of growth. Creation of new sources of growth. Even within afavorable environment, business expansion will requirespecial resources and competencies in certain sectors. ForArmenia, with its limited natural resources, this may becompensated by technological, managerial and creativecompetencies in these sectors.

••••• Attraction of Diaspora resources. Attraction of Diaspora resources. Attraction of Diaspora resources. Attraction of Diaspora resources. Attraction of Diaspora resources. The third keyelement for Armenia is the active attraction of Diasporaresources to break the information and reputation vacuumaround the country; creating additional incentives for MNCs(including those with Diaspora capital) to choose Armenia asan investment destination; and extensive expansion of theresource base for economic growth.

Implementation of such an institutional policy will require new skills,experience, commitment and professional trust, which today’sArmenia lacks. Armenia may achieve a breakthrough only by mo-bilizing its best managerial resources, including those temporarilylocated abroad, as well as by attracting high-quality managersand business leaders from abroad and from within Diasporaranks.

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2 .2 .2 .2 .2 . FFFFFororororormamamamamation oftion oftion oftion oftion of a Competiti a Competiti a Competiti a Competiti a Competitivvvvve Business Ene Business Ene Business Ene Business Ene Business Envirvirvirvirvironmentonmentonmentonmentonment

The most fundamental and serious competitive disadvantages ofArmenia are rooted in the microeconomic realm. With the level ofdevelopment of the business environment and especially some ofits critical components, Armenia is behind its main competitors,including Azerbaijan. The microeconomic business environmentshould be improved in the following spheres:••••• Considerable improvement in the quality of human resources

through reforms in healthcare and education by directgovernment investments and formation of quasi-governmental, specialized institutions with the activeinvolvement of the private sector;

••••• Targeted modernization of main physical infrastructures(combination of private foreign, international and stateresources), especially in the areas of targeted foreigncapital;

••••• Consistent liberalization of the economic life and relief frombureaucratic regulatory mechanisms; Armenia must have aregulatory environment comparable to offshore zones;

••••• Promoting competition in practically monopolistic spheresof the economy to increase the effectiveness of capitalallocation, to reduce costs and to improve the quality ofservices; and

••••• Creating equal competitive conditions that eliminatepreferential regimes.

These actions are impor tant for not only direct economic benefit,but for their perceived effectiveness as signals of the real inten-tions of authorities. Such signals are much appreciated by themarket and by international players, in particular. However, if noreal changes take place within Armenia, the efforts aimed at theoutside audience will not produce the desired results.

3 .3 .3 .3 .3 . Creation of Sources for a New GrowthCreation of Sources for a New GrowthCreation of Sources for a New GrowthCreation of Sources for a New GrowthCreation of Sources for a New Growth

Sources for new growth in Armenia can be created by offeringresources and competencies in cer tain sectors which may beintegrated into global value chains of international companies. Inthe case of Armenia, the desired elements of global value chainsmay be research and development, product testing, productionof technological components requiring a disciplined workforce ofmedium to high qualification, strong creative skills as well as spe-cific managerial resources capable of integrating into internationalcompanies and securing the expansion of their businesses intoArmenia. These competencies and resources must reach a criticalmass in a certain sector in order to attract the attention of MNCs;therefore, they may be created and modernized through focusedinvestments.

Such investments may be directed at special education and cre-ation of training centers, specialized laboratories, obtaining tech-nologies, hiring highly qualified foreign specialists as well as creat-ing experimental productions. The key function of the governmentmust be that of catalyst and coordinator of the process. However,coordination and active involvement of the business sector, edu-cational institutions, professional associations and interested rep-resentatives of the Diaspora are preconditions to real success.The scale and novelty of these efforts require active attraction offoreign sources of competence and capital, in particular those ofthe Diaspora. At the initial stage, they can become autonomoussources for economic growth and, consequently, they will stimu-late growth suppor ted by private investments. At the same time,these efforts will be productive only with a distinct focus on certainsectors and, in some cases, even on certain MNCs. Otherwise, themarketplace will not create demand.

Finally, the objective of these initiatives will be the creation ofstrong and effective clusters (geographically close, intercon-nected groups of companies and suppor ting institutions). Thevery presence of clusters, and not separate companies, makesthe given industry attractive for MNCs. On the other hand, theentrance of a large MNC may stimulate the entrance of others andthe development of an entire cluster. Considering this, in somecases it will be reasonable to create special infrastructures forcertain large MNCs. Special strategies are necessary for compa-nies seeking geographic diversification in development and pro-duction, and striving to set itself up in the CIS and the Near Eastregion. To attract such important players, the government mayact as a co-investor, providing land, buildings, infrastructuresand, in special cases, tax privileges.

4 .4 .4 .4 .4 . Attraction of Diaspora ResourcesAttraction of Diaspora ResourcesAttraction of Diaspora ResourcesAttraction of Diaspora ResourcesAttraction of Diaspora Resources

Given the increasing pace of globalization, unprecedented devel-opment of communication technologies and the exceptional roleof business networks, the Armenian Diaspora may become aunique competitive advantage for the Armenian economy. Duringthe transition period, the role of the Diaspora has been mainly toprovide humanitarian aid, private transfers, lobbying of Armenianinterests abroad and cultural connections. Despite the FDI policyof the Armenian government that heavily relies on Diaspora, thelatter has not become a large-scale investor in the Armenianeconomy.

For comprehensive deployment of the Diaspora to transform theeconomy, Armenia must fundamentally change its policy towardsDiaspora. They must be seen not only as a source for materialresources, but also as an important global commercial network

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suppor ting the Armenian economy with critical, highly skilled hu-man resources.

The competitiveness of an economy cannot be local; it is mea-sured and achieved globally. This suggests a new mental paradigmin relationship to active elements of the Diaspora and a set ofcoordinated actions. In particular:••••• Armenia itself must invest in the Diaspora, especially in

maintaining and developing its national identity. Although atthe current stage these investments will be mainly cultural,they will result in consolidation of the Diaspora and preventits quick assimilation.

••••• Transforming the current national structures into large-scaleand effective tools for investing in infrastructure.

••••• Creating institutional and collective forms of investmentssuch as “development (Diaspora) bonds,” investment andventure funds (e.g., Israeli Diaspora bonds).

••••• Attracting MNCs by leveraging the influence of the Diasporaon the decision-making process within these companies.

••••• Direct investments in the Armenian economy. The totalpotential of free investment resources of the active par t ofthe Diaspora is estimated in the range of US$10 to $20billion. Although in the 1998-2004 period about 70 percentof foreign investors in Armenia were Diaspora Armenians orDiaspora-connected companies, their total investmentsmade up only 24 percent of all FDIs, amounting to US$260million.

••••• Repatriating Armenians. Repatriation may become apowerful instrument for stimulating the economy due toadditional sources of human and financial capital, as well asthe expansion of the domestic market and, accordingly,

increased attractiveness for MNCs. Chances of repatriationare higher among Armenians living in the Near East, Iran andthe CIS countries. In case of proper coordination ofideological and financial dimensions within the next 50 years,Armenia is able to repatriate 10,000 to 30,000 peopleannually, without creating too much pressure on the labormarket and effectively integrating them into the Armeniansociety.

National Leadership

The economic challenges that Armenia faces are difficult to over-come; however, they give Armenia a historical opportunity. Therealization of this opportunity requires not only thoroughlyworked out, long-term strategies and their consistent and effec-tive implementation, but also an inspiring leadership capable ofconsolidating, motivating and leading the people and the processitself. The long-term nature of this strategy requires that the lead-ership see the perspective of the Armenian nation hundreds ofyears beyond, instead of short political cycles. The leadershipshould transcend the narrow party interests and boundaries, aswell as the boundaries of the present day Armenian state to ex-pand its influence on the active elements of the Armenian nationinterested in its revival.

TTTTThe arhe arhe arhe arhe articticticticticle has been prle has been prle has been prle has been prle has been prooooovided bvided bvided bvided bvided by Economy Economy Economy Economy Economy and y and y and y and y and VVVVValuesaluesaluesaluesaluesRRRRResearesearesearesearesearccccch Centerh Centerh Centerh Centerh Center..... Econom Econom Econom Econom Economy and y and y and y and y and VVVVValues Ralues Ralues Ralues Ralues ResearesearesearesearesearccccchhhhhCenter* (EV) is a think-tank specialized in competi-Center* (EV) is a think-tank specialized in competi-Center* (EV) is a think-tank specialized in competi-Center* (EV) is a think-tank specialized in competi-Center* (EV) is a think-tank specialized in competi-tiveness and strategy research, as well as businesstiveness and strategy research, as well as businesstiveness and strategy research, as well as businesstiveness and strategy research, as well as businesstiveness and strategy research, as well as businessconsulting thrconsulting thrconsulting thrconsulting thrconsulting through EV Consulting Companough EV Consulting Companough EV Consulting Companough EV Consulting Companough EV Consulting Companyyyyy..... EV is a EV is a EV is a EV is a EV is aparparparparpartner institute oftner institute oftner institute oftner institute oftner institute of the the the the the WWWWWorororororld Economic Fld Economic Fld Economic Fld Economic Fld Economic Forororororum’um’um’um’um’sssssGlobal CompetitiGlobal CompetitiGlobal CompetitiGlobal CompetitiGlobal Competitivvvvveness Netweness Netweness Netweness Netweness Networorororork in k in k in k in k in ArArArArArmenia.menia.menia.menia.menia.

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*http://www.ev.am

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Public Expenditures in the Social Sector and the PRSP

Ruzanna Gabrielyan

The 2004 Budget Law was the first budget based on the priorities set in the Poverty Reduction Strategy Paper (PRSP.) Since 2004, thefirst priority of the government budget has been the social sector, namely education, health care, social security and insurance. Thesepriority sectors will remain both in the medium- and long-term future. This article represents a brief overview on the public funding ofsocial sectors, current public programs and poverty.

The GDP growth rate of 14 percent recorded in 2005 continues previous trends. This was much higher than the projected growth rateunder the PRSP baseline scenario of 6 percent. It is worth noting that almost all major sectors of the economy contributed to the higher-than-projected growth rates. This fact, other things being equal, positively affects the equal distribution of income, especially onincomes earned from employment.

The average monthly salaries in the economy reached AMD 52,059 in 2005 and grew by almost 20 percent as compared to 2004 levels.This exceeds the projected level under the PRSP baseline scenario (AMD 35,048) by 48 percent.

Budget revenues in 2005 grew by 28 percent in nominal terms as compared to 2003, while the expenditures grew by 33 percent.RRRRReeeeevvvvvenenenenenues and eues and eues and eues and eues and expenditurxpenditurxpenditurxpenditurxpenditures es es es es of the 2005 consolidated budget (accrual basis) in absolute terms equaled AMD 449.5 and 492.2,respectively. The bulk of revenues came from tax revenues, while the social sector expenditures prevailed in total expenditures.

What concerns the expenditures is the priority sectors, i.e. social sectors1 . It is worth noting that the growth rate of these expendituresexceeded those of the rest of the expenditure sectors, resulting in shifts in the structure of expenditures towards increasing the shareof “social” expenditures to 44.5 percent in 2005 as compared to 30.9 percent in 2003.

According to the 2005 Budget Law, total rtotal rtotal rtotal rtotal reeeeevvvvvenenenenenues ues ues ues ues exceed the PRSP-projected total revenues by AMD 53.4 billion in nominal terms.The tax revenues exceed the previously projected levels by AMD 51 billion, while the non-tax revenues by AMD 24.5 billion, whereas theofficial transfer projections in the 2005 Budget Law are lower than projected under the PRSP by about AMD 20 billion.

Table 1: Economic Growth and Poverty

2 0 0 32 0 0 32 0 0 32 0 0 32 0 0 3 2 0 0 42 0 0 42 0 0 42 0 0 42 0 0 4 2 0 0 52 0 0 52 0 0 52 0 0 52 0 0 5

Economic growth, % 14 10.5 14

GDP per capita, U.S. dollar 874 1,113 1,524

Poverty, % * 34.6 29.8

Extreme poverty, % * 6.4 4.6

Average monthly wages 34,783 43,445 52,059

Table 2: Budget Expenditures in Social Sectors, 2003-2005, AMD billion

2 0 0 32 0 0 32 0 0 32 0 0 32 0 0 3 2 0 0 42 0 0 42 0 0 42 0 0 42 0 0 4 2 0 0 52 0 0 52 0 0 52 0 0 52 0 0 5

Public ExpendituresPublic ExpendituresPublic ExpendituresPublic ExpendituresPublic Expenditures 3 1 2 . 53 1 2 . 53 1 2 . 53 1 2 . 53 1 2 . 5 3 3 3 . 93 3 3 . 93 3 3 . 93 3 3 . 93 3 3 . 9 4 1 7 . 54 1 7 . 54 1 7 . 54 1 7 . 54 1 7 . 5

Education and Science 34.84 47.44 60.82

Health Care 19.59 24.69 31.07

Social Security and Insurance 29.25 34.98 44.14

TTTTTotal Expenditurotal Expenditurotal Expenditurotal Expenditurotal Expenditures in Social Sectores in Social Sectores in Social Sectores in Social Sectores in Social Sectorsssss 8 3 . 78 3 . 78 3 . 78 3 . 78 3 . 7 1 0 7 . 11 0 7 . 11 0 7 . 11 0 7 . 11 0 7 . 1 1 3 6 . 01 3 6 . 01 3 6 . 01 3 6 . 01 3 6 . 0

1 Education, Health, Social Security and Social Insurance

Box

18EPP III - 4

The expenditures under the 2005 Budget Law as a whole exceed the PRSP-projected levels by AMD 65.5 billion. Half of the exceededamount (by about AMD 30 billion) is recorded in the priority sectors (social sectors): expenditures in education, by about AMD 11.6billion; in health care, by AMD 1.4 billion; and social security and social insurance, by AMD 18.9 billion.

Despite that, both revenues and expenditures in 2005 significantly exceeded the PRSP budgetary framework projections in nominalterms; nonetheless, the share of budgetary expenditures and revenues in the GDP remained lower than it was initially projected underthe PRSP.

The PRSP Priorities in the Social Sectors and the Possibilities for Funding through the Government Budget

Social Security and Social InsuranceSocial Security and Social InsuranceSocial Security and Social InsuranceSocial Security and Social InsuranceSocial Security and Social Insurance

In the social security and social insurance sector, the improvement of targeting the family benefit system in order to use it as animpor tant tool for poverty reduction for the poorest population groups. The policy in the social insurance sub-sector is directedtowards increasing the system’s efficiency; increasing the size of pensions; as well as expanding the diversification of pensions,depending on the employment record.

Table 3: Consolidated Budget Expenditures in Social Security and Social Insurance Sector, 2003-2005

2 0 0 32 0 0 32 0 0 32 0 0 32 0 0 3 2 0 0 42 0 0 42 0 0 42 0 0 42 0 0 4 2 0 0 52 0 0 52 0 0 52 0 0 52 0 0 5

Consolidated budget expenditures, total, AMD billion 73.0 85.35 124

Government budget, AMD billion 29.3 34.9 44.1

State Social Insurance Fund, AMD billion 43.2 51 78.9

Average monthly family benefit size, AMD 7,600 9,600 12,000

Average monthly pension, AMD 5,660 8,350 9,735

Expenditures in the social sectors, according to the 2005 budget, increased by AMD 124 billion (or 70 percent) as compared to theactual budgetary expenditures in 2003. In 2005, the expenditures on family benefits totaled AMD 20 billion, increasing almost twice the2003 level. As a result, the average size of the monthly benefit increased by 58 percent during 2003-2005; while the number ofbeneficiary households remained the same. The budget expenditures on pensions grew by about 50 percent during the same period,increasing the average size of pensions by 70 percent.

Table 4: Poverty Incidence in Social Groups, 2003-2004*

2 0 0 32 0 0 32 0 0 32 0 0 32 0 0 3 2 0 0 42 0 0 42 0 0 42 0 0 42 0 0 4

Households with unemployed heads 48.9 48.1

Large households (6 and more household members) 57.0 53.8

Households with age-pensioners 46.8 41.9

Single age-pensioners 18.7 14.4

Households with 3 and more children (0-14 years) 66.1 61.0

Households headed by females 43.3 40.3

Households with children under 5 53.9 52.7National average 42.9 39.0

As seen in this table, poverty reduction was recorded in all social groups in 2004. The largest reduction was recorded among singlepensioners where those living in poverty decreased by about 23 percent during 2003-2004. As a whole, this group is the only onewhere the poverty level is significantly lower than the national average by about 2.7 times. This remarkable reduction in poverty among

Box

19EPP III - 4

this group of single pensioners took place due to the targeted policy stated in the PRSP. In 2004, the average monthly pension size wasAMD 8,841, which is about 12 percent higher than envisioned in the PRSP as a target indicator.

Households with three and more children between the ages of zero and 14 years remain the poorest group among the social groups:the poverty level among this group exceeds the national average by 56 percent. Poverty in households with many children (six andmore) exceeds the national average by 38 percent, while in the group of households with children under age five, by 35 percent. In fact,the most crucial factor determining pover ty of these three groups is the existence of children. Taking this into account, the governmentdecided in 2005 to channel increased budgetary allocations to transfers and benefits paid for each child.

The data in the table below proves the importance of the role of social transfers in reducing poverty. According to these estimates, ifwe exclude the transfers from the poverty incidence calculations, pover ty in 2004 would have constituted 49.9 percent (against actual39 percent), while the extreme poverty rate would have been 18.6 percent (against actual 7.2 percent).

Table 5: Poverty Incidence Estimates Excluding Social Assistance and Transfers

P P P P Pooooovvvvvererererer ty Incidence incty Incidence incty Incidence incty Incidence incty Incidence includingludingludingludingluding P P P P Pooooovvvvvererererer ty Incidencety Incidencety Incidencety Incidencety Incidence Social Transfers Social Transfers Social Transfers Social Transfers Social Transfers Before Social Transfers Before Social Transfers Before Social Transfers Before Social Transfers Before Social Transfers

Excluding Social Excluding SocialAssistance2 Transfers3

2 0 0 32 0 0 32 0 0 32 0 0 32 0 0 3 2 0 0 42 0 0 42 0 0 42 0 0 42 0 0 4 2 0 0 32 0 0 32 0 0 32 0 0 32 0 0 3 2 0 0 42 0 0 42 0 0 42 0 0 42 0 0 4 2 0 0 32 0 0 32 0 0 32 0 0 32 0 0 3 2 0 0 42 0 0 42 0 0 42 0 0 42 0 0 4

Non-Poor Population, % 57.1 61 55.8 58.4 50.1 50.1

Poor Population, % 42.9 39 44.2 41.6 49.9 49.9

Of which: Extremely Poor 7.4 7.2 9.7 10.1 16.2 18.6

The increase in expenditures on pensions occurred due to two main factors: an increase in the revenues of the State Social InsuranceFund (from mandatory social insurance payments), as well as separation of funding for social pensions and non-insurance paymentsand insurance pensions. In particular, since 2003, social pensions are funded by the government budget. Furthermore, the additionsfor these periods to be paid by the government, in accordance with the legislation, have also financed from the government budget since2004.

Overall improvement in resource packages allowed for continuous increases in the amount of pension paid per each employment year,thus aiding in the further differentiation of pensions depending on the number of employment years (AMD 160 in 2005 and AMD 100in 2003).

Health Care

The objectives of the PRSP in the Health Care sector are improved affordability and service quality by paying attention to primary healthcare and smoothening out regional disparities.

The 2005 health care budget totaled AMD 31.1 billion, a 60 percent increase from the 2003 level. As a result of increased allocationsto the sector, per capita budgetary health care expenditures reached AMD 10,000 in 2005 compared to AMD 6,000 in 2003.

The salaries of medical personnel in polyclinics and hospitals have increased significantly.

The increase in health care financing through the years and, as a priority, directing the bulk of that increase to the primary health caresystem, enabled all types of primary health care services to be provided free-of-charge to people above 65 years without limitationsto the volume or types of services.

With regard to access to medicine, the targeted policy was implemented. Medicine to certain social groups of the population for certain2 Social assistance includes compensations for former privileges, transfers for children, transfers to single mothers, unemployment benefits, educationfellowships, family benefits, etc.3 Social transfers include the above listed assistance and age pensions.

Box

20EPP III - 4

types of diseases is provided free-of-charge or at discounts by primary health care institutions: this improves the access to medicinefor the poor and vulnerable groups of the population.

Education

The main PRSP objectives in education were the increase in access to education and an improvement in its quality by setting generaleducation as a priority. To that end, the allocations to this sector were intended to grow, along with the implementation of measures toincrease the efficiency of the system.

Table 6: Public Expenditures in Education, 2003–2005

2 0 0 32 0 0 32 0 0 32 0 0 32 0 0 3 2 0 0 42 0 0 42 0 0 42 0 0 42 0 0 4 2 0 0 52 0 0 52 0 0 52 0 0 52 0 0 5

Total, Education sector, AMD billion 35 48 60

Elementary, General and Secondary Education, AMD billion 23 34 44.4

The government sees the increase in salariessalariessalariessalariessalaries paid to teachers and school administrations as the major prerequisites to improving thequality of education, defined as one of the key factors in increasing the public expenditures in the education sector. To that end, thecurrent policy aims at increasing salaries to ensure quality improvements. In particular, the monthly salaries of school teachers reachedAMD 50,500 in 2005 compared to AMD 18,600 in 2003.

In 2005, 70 percent of education sector allocations were earmarked for general education. The policy of providing textbooks inelementary classes free-of-charge continued.

Priority areas in education are to fund school building and heating improvements to ensure an uninterrupted educational process.

The efficiency of allocated public funds increased, too, due to school optimization and increased weekly workloads of teachers. Toensure efficient and targeted use of funds, all schools transferred to a new financing mechanism and management oversight throughboards since 2004.

RRRRRuzanna Gauzanna Gauzanna Gauzanna Gauzanna Gabrielbrielbrielbrielbrielyyyyyan is a can is a can is a can is a can is a chiefhiefhiefhiefhief specialist a specialist a specialist a specialist a specialist at the PRSP Coort the PRSP Coort the PRSP Coort the PRSP Coort the PRSP Coordinadinadinadinadination and Monitoring Detion and Monitoring Detion and Monitoring Detion and Monitoring Detion and Monitoring Deparparparparpar tment oftment oftment oftment oftment of the Ministr the Ministr the Ministr the Ministr the Ministry ofy ofy ofy ofy ofFinance and EconomFinance and EconomFinance and EconomFinance and EconomFinance and Economy fy fy fy fy for the Ror the Ror the Ror the Ror the Reeeeepubpubpubpubpublic oflic oflic oflic oflic of ArArArArArmenia.menia.menia.menia.menia.

Box

21EPP III - 4

Stat

istic

al D

ata

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by w

e pre

sent

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e sta

tistic

al da

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n Ma

in Ma

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: Mai

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omic

Indi

cato

rs1

99

51

99

51

99

51

99

51

99

51

99

61

99

61

99

61

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99

71

99

71

99

71

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71

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71

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81

99

81

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91

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91

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91

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02

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02

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12

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12

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12

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12

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22

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22

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22

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32

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32

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32

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32

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32

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42

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42

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42

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42

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42

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52

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52

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52

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52

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5No

min

al GD

P (b

ln A

MD)

522.

366

1.2

804.

395

5.4

987.

41,

031.

31,

195.

21,

362.

51,

624.

61,

907.

92,

244.

0No

min

al GD

P (m

ln U

SD)

1,28

6.7

1,59

9.3

1,63

8.9

1,89

2.3

1,84

5.5

1,91

1.6

2,15

3.3

2,37

6.3

2,80

7.1

3,57

6.6

4,90

2.8

Per C

apita

GDP

(US

D)*

408.

551

2.1

531.

962

0.7

608.

263

3.3

717.

279

2.1

936.

41,

190.

71,

630.

4Pe

r Cap

ita G

NI (

USD)

*42

1.2

526.

456

3.9

640.

562

6.3

650.

873

8.6

821.

596

7.9

1,20

2.9

1,64

5.3

GDP

Real

Grow

th (

%)

6.9

5.9

3.3

7.3

3.3

5.9

9.6

13.2

14.0

10.5

14.0

GDP

Defla

tor (

%)

161.

219

.617

.710

.70.

1-1

.45.

80.

74.

66.

33.

2In

flatio

n (a

vera

ge, %

)17

6.0

18.7

13.9

8.7

0.6

-0.8

3.1

1.1

4.7

7.0

0.6

Infla

tion

(end

of p

erio

d,

%)

32.2

5.7

21.9

-1.3

2.0

0.4

2.9

2.0

8.6

2.0

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Exch

ange

Rat

e (A

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USD,

ave

rage

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5.9

413.

449

0.8

504.

953

5.1

539.

555

5.1

573.

457

8.8

533.

545

7.7

Unem

ploy

men

t (av

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79.

310

.89.

411

.211

.710

.410

.810

.19.

68.

2Wa

ges

(mon

thly

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.147

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3.7

Stat

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Rev

enue

s an

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6.2

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0.9

172.

119

3.6

228.

329

2.0

302.

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4.7

Stat

e Bu

dget

Rev

enue

s an

d Gr

ants

/ G

DP (

%)

18.0

14.9

15.7

17.7

19.3

16.7

16.2

16.8

18.0

15.8

16.7

Stat

e Bu

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Exp

endi

ture

s (

bln

AMD)

125.

212

7.2

146.

920

4.6

242.

622

2.9

244.

426

3.9

312.

733

4.0

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ate

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et E

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/ GD

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.321

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.621

.620

.419

.419

.217

.518

.6St

ate

Budg

et D

efici

t / G

DP (

%)

6.0

4.4

2.6

3.8

5.2

4.9

4.3

2.6

1.3

1.7

1.9

Educ

atio

n &

Scien

ce /

GDP

(%

)na

2.3

1.9

2.1

2.2

2.8

2.4

2.1

2.1

2.5

2.7

Publ

ic He

alth

/ GD

P (%

)na

1.4

1.2

1.4

1.4

1.0

1.3

1.2

1.2

1.3

1.4

Socia

l Ins

uran

ce &

Soc

ial S

ecur

ity /

GDP

(%

)na

1.1

1.6

2.1

2.6

2.1

2.2

1.7

1.8

1.8

2.0

Exte

rnal

Debt

(m

ln U

SD)

-53

6.3

682.

577

5.3

870.

385

9.5

905.

51,

025.

51,

097.

71,

182.

91,

099.

2Ex

tern

al De

bt /

GDP

(%

)-

35.3

42.0

42.4

46.2

46.0

42.6

44.0

38.2

30.1

22.1

Dom

estic

Deb

t / G

DP (

%)

0.04

1.5

2.9

2.1

2.3

2.9

3.0

3.0

2.7

2.4

2.3

Curre

nt A

ccou

nt B

alanc

e /

GDP

(%)

-17.

0-1

8.2

-18.

7-2

1.3

-16.

6-1

4.6

-9.3

-6.2

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-3.9

Expo

rts,

g&s

(mln

USD

)29

9.5

368.

133

0.2

359.

338

3.1

446.

953

9.6

697.

690

3.5

984.

91,

336.

6Ex

port

s, g&

s /

GDP

(%)

23.3

23.0

20.1

19.0

20.8

23.4

25.1

29.4

32.2

27.5

27.3

Impo

rts,

g&s

(mln

USD

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6.1

888.

195

2.5

1,00

0.0

919.

196

6.2

977.

61,

107.

11,

405.

91,

513.

61,

983.

8Im

port

s, g&

s /

GDP

(%)

56.4

55.5

58.1

52.8

49.8

50.5

45.4

46.6

50.1

42.3

40.5

Broa

d M

oney

(bl

n AM

D)40

.354

.470

.297

.111

1.1

151.

717

2.2

203.

123

3.8

285.

936

5.6

Rese

rve

Mon

ey (

bln

AMD)

29.4

41.3

50.6

53.8

53.9

72.4

80.4

111.

311

8.6

132.

120

0.6

* EDRC e

stim

atio

n

Statistical Data

22EPP III - 4

Tabl

e 1.

1 Ex

chan

ge R

ate

AMD/

USD

(ave

rage

)

Perio

d19

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

06Ja

nuar

y12

7.5

405.

940

2.0

452.

149

7.1

535.

652

7.0

553.

456

4.1

583.

056

8.4

491.

745

1.7

Febr

uary

195.

740

5.3

402.

746

6.6

499.

154

3.3

527.

955

2.2

565.

358

6.4

564.

447

3.4

450.

1M

arch

206.

040

4.0

403.

447

7.7

502.

153

7.2

527.

554

6.0

572.

159

0.4

562.

946

6.0

451.

0Ap

ril26

0.7

408.

140

5.5

482.

250

2.6

535.

553

0.9

547.

857

8.3

588.

155

6.9

447.

945

0.0

May

316.

940

8.9

406.

749

2.3

503.

153

8.8

534.

155

3.8

580.

858

6.0

552.

744

9.3

439.

7Ju

ne31

5.6

409.

440

9.2

511.

450

3.0

545.

354

3.7

555.

158

0.7

585.

254

3.9

449.

042

0.6

July

310.

140

7.8

413.

350

4.3

501.

754

2.8

548.

155

4.1

565.

757

9.6

525.

944

2.6

417.

4Au

gust

318.

440

9.2

418.

550

2.1

501.

854

0.4

540.

555

4.6

558.

557

8.1

517.

646

1.0

401.

9Se

ptem

ber

340.

340

6.9

414.

050

1.1

506.

453

4.2

539.

855

4.1

564.

557

4.8

513.

445

4.4

387.

9Oc

tobe

r36

3.9

400.

141

6.3

500.

650

8.3

520.

754

5.0

560.

858

1.5

563.

950

6.4

449.

438

1.3

Nove

mbe

r40

3.6

402.

443

1.1

499.

951

5.1

523.

355

5.5

564.

758

4.3

564.

650

2.7

458.

337

6.2

Dece

mbe

r41

4.3

402.

743

8.8

498.

851

8.4

523.

855

4.5

564.

658

4.6

565.

348

6.3

449.

436

4.6

Exch

ange

Ra

te

Annu

al

Aver

age

Exch

ange

Ra

te

Annu

al

Aver

age

Exch

ange

Ra

te

Annu

al

Aver

age

Exch

ange

Ra

te

Annu

al

Aver

age

Exch

ange

Ra

te

Annu

al

Aver

age

297.

7

29

7.7

297.

7

29

7.7

297.

7

40

5.9

405.

9

40

5.9

405.

9

40

5.9

413.

4

41

3.4

413.

4

41

3.4

413.

4

49

0.8

490.

8

49

0.8

490.

8

49

0.8

504.

9

50

4.9

504.

9

50

4.9

504.

9

53

5.1

535.

1

53

5.1

535.

1

53

5.1

539.

5

53

9.5

539.

5

53

9.5

539.

5

55

5.1

555.

1

55

5.1

555.

1

55

5.1

573.

4

57

3.4

573.

4

57

3.4

573.

4

57

8.8

578.

8

57

8.8

578.

8

57

8.8

533.

5

53

3.5

533.

5

53

3.5

533.

5

45

7.7

457.

7

45

7.7

457.

7

45

7.7

416.

0

41

6.0

416.

0

41

6.0

416.

0

Tabl

e 1.

2 Ex

chan

ge R

ate

AMD/

USD

(end

of p

erio

d)Pe

riod

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Janu

ary

144.

840

6.4

402.

146

2.3

498.

054

6.9

529.

055

4.3

564.

458

4.7

566.

047

8.5

449.

2Fe

brua

ry24

4.6

403.

040

2.9

469.

050

0.7

540.

252

7.8

548.

456

8.2

588.

556

4.3

471.

245

0.7

Mar

ch22

8.4

406.

940

4.2

477.

550

2.4

535.

352

7.6

544.

757

6.0

589.

556

1.6

458.

145

0.9

April

295.

140

7.8

405.

848

6.3

503.

153

6.3

530.

754

8.6

579.

358

7.0

547.

143

9.3

446.

1Ma

y32

6.1

409.

340

8.0

504.

850

3.1

543.

253

6.6

556.

258

2.2

585.

054

8.4

445.

142

7.6

June

308.

740

8.2

409.

850

9.8

501.

954

3.8

547.

955

4.1

577.

158

4.8

534.

544

2.3

418.

8Ju

ly31

0.8

409.

141

7.3

502.

750

1.7

542.

854

5.8

553.

956

1.5

574.

051

9.1

447.

741

5.3

Augu

st32

3.9

407.

941

8.8

501.

150

2.1

538.

554

0.2

555.

055

7.0

581.

251

5.3

468.

339

6.5

Sept

embe

r34

9.0

400.

041

2.3

501.

150

7.9

515.

153

6.4

554.

158

0.2

570.

150

8.2

444.

238

1.5

Octo

ber

380.

640

0.8

421.

049

9.9

509.

451

9.2

551.

456

3.0

582.

755

8.3

504.

345

1.2

378.

9No

vem

ber

421.

340

3.3

434.

150

0.0

517.

153

0.2

554.

056

6.5

585.

856

6.2

501.

044

9.4

369.

1

Dec

embe

rD

ecem

ber

Dec

embe

rD

ecem

ber

Dec

embe

r40

5.5

405.

540

5.5

405.

540

5.5

402.

040

2.0

402.

040

2.0

402.

043

5.1

435.

143

5.1

435.

143

5.1

495.

049

5.0

495.

049

5.0

495.

052

2.0

522.

052

2.0

522.

052

2.0

523.

852

3.8

523.

852

3.8

523.

855

2.2

552.

255

2.2

552.

255

2.2

561.

856

1.8

561.

856

1.8

561.

858

4.9

584.

958

4.9

584.

958

4.9

566.

056

6.0

566.

056

6.0

566.

048

5.8

485.

848

5.8

485.

848

5.8

450.

245

0.2

450.

245

0.2

450.

236

3.5

363.

536

3.5

363.

536

3.5

Tabl

e 1.

3 Ex

chan

ge R

ate

AMD/

EUR

(ave

rage

)Pe

riod

1999

2000

2001

2002

2003

2004

2005

2006

Janu

ary

623.

453

5.2

518.

549

8.7

619.

671

7.0

645.

854

7.1

Febr

uary

609.

851

9.7

508.

849

1.7

631.

971

3.1

616.

153

7.9

Mar

ch58

5.8

508.

849

8.2

500.

563

7.2

690.

161

4.6

542.

0Ap

ril57

4.2

504.

048

7.3

511.

763

7.3

668.

757

9.4

550.

1Ma

y57

3.8

483.

048

6.4

531.

367

7.0

662.

057

1.3

560.

8Ju

ne56

6.1

515.

347

3.7

554.

468

2.3

660.

354

6.4

532.

4

Statistical Data

23EPP III - 4

July

560.

551

6.3

476.

756

2.4

659.

364

4.8

533.

752

9.1

Augu

st57

4.1

490.

249

8.0

546.

164

3.3

630.

156

6.4

514.

6Se

ptem

ber

562.

047

2.2

504.

555

3.3

643.

862

6.4

557.

549

4.1

Octo

ber

558.

146

7.5

508.

257

0.2

659.

463

2.2

540.

248

0.9

Nove

mbe

r54

1.8

475.

150

2.4

584.

766

0.7

651.

854

0.6

483.

7De

cem

ber

530.

349

7.3

503.

559

4.8

693.

465

0.8

532.

748

1.8

Exch

ange

Ra

te

Annu

al

Aver

age

Exch

ange

Ra

te

Annu

al

Aver

age

Exch

ange

Ra

te

Annu

al

Aver

age

Exch

ange

Ra

te

Annu

al

Aver

age

Exch

ange

Ra

te

Annu

al

Aver

age

571.

7

57

1.7

571.

7

57

1.7

571.

7

49

8.7

498.

7

49

8.7

498.

7

49

8.7

497.

2

49

7.2

497.

2

49

7.2

497.

2

54

1.6

541.

6

54

1.6

541.

6

54

1.6

653.

8

65

3.8

653.

8

65

3.8

653.

8

66

2.3

662.

3

66

2.3

662.

3

66

2.3

570.

4

57

0.4

570.

4

57

0.4

570.

4

52

1.2

521.

2

52

1.2

521.

2

52

1.2

Tabl

e 1.

4 Ex

chan

ge R

ate

AMD/

EUR

(end

of p

erio

d)Pe

riod

1999

2000

2001

2002

2003

2004

2005

2006

Janu

ary

626.

652

7.8

509.

648

8.1

628.

570

5.7

623.

354

2.7

Febr

uary

592.

751

8.0

497.

049

1.6

631.

970

2.2

620.

453

4.2

Mar

ch57

3.9

504.

848

2.6

503.

363

2.6

684.

459

3.0

545.

4Ap

ril56

9.3

487.

949

4.4

523.

664

3.1

647.

056

6.9

553.

8Ma

y57

5.1

483.

047

5.7

545.

868

7.8

667.

155

5.1

548.

9Ju

ne56

4.9

515.

847

1.6

567.

066

7.4

650.

453

3.2

524.

7Ju

ly57

5.6

512.

448

4.7

552.

265

5.5

624.

254

1.7

526.

0Au

gust

562.

848

4.3

504.

854

8.3

629.

362

0.8

570.

550

8.3

Sept

embe

r55

8.7

476.

051

0.9

567.

465

0.7

626.

353

5.9

485.

0Oc

tobe

r54

6.4

459.

050

7.0

572.

565

5.3

641.

054

7.7

481.

9No

vem

ber

535.

647

4.3

500.

358

1.9

673.

966

3.7

529.

948

5.6

Dec

embe

rD

ecem

ber

Dec

embe

rD

ecem

ber

Dec

embe

r52

7.4

527.

452

7.4

527.

452

7.4

513.

851

3.8

513.

851

3.8

513.

849

5.1

495.

149

5.1

495.

149

5.1

606.

960

6.9

606.

960

6.9

606.

970

2.2

702.

270

2.2

702.

270

2.2

661.

166

1.1

661.

166

1.1

661.

153

2.4

532.

453

2.4

532.

453

2.4

478.

747

8.7

478.

747

8.7

478.

7

Tabl

e 1.

5 Ex

chan

ge R

ate

AMD/

RUB

(ave

rage

)Pe

riod

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Janu

ary

90.2

83.9

80.0

80.6

23.1

18.3

19.4

18.4

18.3

19.7

17.6

15.9

Febr

uary

89.7

82.1

81.8

81.3

22.6

18.1

19.3

18.3

18.4

19.8

16.9

16.0

Mar

ch81

.882

.082

.981

.822

.418

.319

.018

.318

.719

.716

.916

.2Ap

ril79

.482

.282

.982

.021

.118

.519

.018

.518

.819

.416

.116

.3Ma

y79

.481

.784

.181

.921

.218

.819

.118

.618

.919

.116

.116

.3Ju

ne83

.380

.587

.381

.321

.419

.119

.018

.519

.218

.715

.815

.6Ju

ly89

.279

.785

.880

.421

.919

.618

.918

.019

.118

.115

.415

.5Au

gust

91.8

79.0

85.2

70.2

21.7

19.5

18.8

17.7

19.0

17.7

16.2

15.0

Sept

embe

r89

.476

.784

.928

.521

.019

.418

.817

.718

.817

.616

.014

.5Oc

tobe

r86

.876

.484

.630

.520

.219

.518

.918

.318

.717

.415

.714

.2No

vem

ber

87.4

78.2

84.0

28.9

19.6

19.9

18.8

18.3

18.9

17.6

15.9

14.1

Dece

mbe

r85

.179

.082

.725

.419

.419

.818

.718

.319

.217

.415

.613

.9Ex

chan

geEx

chan

geEx

chan

geEx

chan

geEx

chan

ge

Rate

Rate

Rate

Rate

Rate

An

nual

Annu

alAn

nual

Annu

alAn

nual

Aver

age

Aver

age

Aver

age

Aver

age

Aver

age

86

.18

6.1

86

.18

6.1

86

.1

80.1

80

.1

80.1

80

.1

80.1

83

.8

83.8

83

.8

83.8

83

.8

62.7

62

.7

62.7

62

.7

62.7

21

.3

21.3

21

.3

21.3

21

.3

19.1

19

.1

19.1

19

.1

19.1

19

.0

19.0

19

.0

19.0

19

.0

18.2

18

.2

18.2

18

.2

18.2

18

.8

18.8

18

.8

18.8

18

.8

18.5

18

.5

18.5

18

.5

18.5

16

.2

16.2

16

.2

16.2

16

.2

15.3

15

.3

15.3

15

.3

15.3

Note

: dat

a fo

r 19

95-1

997

in AM

D pe

r 10

00 R

UB.

Statistical Data

24EPP III - 4

Tabl

e 1.

6 Ex

chan

ge R

ate

AMD/

RUB

(end

of p

erio

d)Pe

riod

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Janu

ary

84.8

83.3

80.3

81.1

22.6

18.0

19.4

18.4

18.3

19.9

17.1

16.0

Febr

uary

86.0

81.4

81.9

81.6

22.6

18.5

19.1

18.3

18.4

19.8

17.0

16.0

Mar

ch79

.082

.482

.581

.321

.518

.218

.918

.418

.819

.716

.516

.2Ap

ril78

.582

.083

.482

.021

.018

.619

.018

.518

.818

.915

.816

.3Ma

y80

.081

.386

.381

.621

.218

.919

.118

.619

.018

.915

.815

.8Ju

ne88

.980

.287

.081

.021

.819

.419

.018

.419

.318

.415

.415

.5Ju

ly90

.379

.685

.580

.222

.119

.718

.917

.819

.017

.815

.615

.5Au

gust

91.5

78.1

84.9

25.1

21.5

19.4

18.8

17.6

19.1

17.6

16.4

14.8

Sept

embe

r87

.376

.284

.932

.121

.019

.318

.818

.218

.617

.415

.614

.3Oc

tobe

r86

.476

.884

.728

.220

.119

.618

.818

.318

.717

.515

.914

.2No

vem

ber

87.6

78.5

83.9

27.8

20.0

19.9

18.8

18.3

19.0

17.7

15.6

14.0

Dec

embe

rD

ecem

ber

Dec

embe

rD

ecem

ber

Dec

embe

r8

4.0

84

.08

4.0

84

.08

4.0

78

.07

8.0

78

.07

8.0

78

.08

1.1

81

.18

1.1

81

.18

1.1

24

.72

4.7

24

.72

4.7

24

.71

9.0

19

.01

9.0

19

.01

9.0

19

.61

9.6

19

.61

9.6

19

.61

8.5

18

.51

8.5

18

.51

8.5

18

.31

8.3

18

.31

8.3

18

.31

9.2

19

.21

9.2

19

.21

9.2

17

.51

7.5

17

.51

7.5

17

.51

5.6

15

.61

5.6

15

.61

5.6

13.8

Note

: dat

a fo

r 19

95-1

997

in AM

D pe

r 10

00 R

UB.

Tabl

e 2.

1 Ba

lanc

e of

Pay

men

ts (

milli

on U

SD)

Indi

cato

rs19

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

05Cu

rrent

Ac

coun

t Ba

lanc

eCu

rrent

Ac

coun

t Ba

lanc

eCu

rrent

Ac

coun

t Ba

lanc

eCu

rrent

Ac

coun

t Ba

lanc

eCu

rrent

Ac

coun

t Ba

lanc

e-6

6.8

-66.

8-6

6.8

-66.

8-6

6.8

-103

.8-1

03.8

-103

.8-1

03.8

-103

.8-2

18.4

-218

.4-2

18.4

-218

.4-2

18.4

-290

.7-2

90.7

-290

.7-2

90.7

-290

.7-3

06.5

-306

.5-3

06.5

-306

.5-3

06.5

-402

.9-4

02.9

-402

.9-4

02.9

-402

.9-3

06.9

-306

.9-3

06.9

-306

.9-3

06.9

-278

.3-2

78.3

-278

.3-2

78.3

-278

.3-1

99.6

-199

.6-1

99.6

-199

.6-1

99.6

-147

.9-1

47.9

-147

.9-1

47.9

-147

.9-1

89.4

-189

.4-1

89.4

-189

.4-1

89.4

-161

.6-1

61.6

-161

.6-1

61.6

-161

.6-1

93.3

-193

.3-1

93.3

-193

.3-1

93.3

Good

s Ba

lanc

eGo

ods

Bala

nce

Good

s Ba

lanc

eGo

ods

Bala

nce

Good

s Ba

lanc

e-9

8.0

-98.

0-9

8.0

-98.

0-9

8.0

-178

.3-1

78.3

-178

.3-1

78.3

-178

.3-4

03.0

-403

.0-4

03.0

-403

.0-4

03.0

-469

.2-4

69.2

-469

.2-4

69.2

-469

.2-5

59.5

-559

.5-5

59.5

-559

.5-5

59.5

-577

.5-5

77.5

-577

.5-5

77.5

-577

.5-4

74.0

-474

.0-4

74.0

-474

.0-4

74.0

-463

.5-4

63.5

-463

.5-4

63.5

-463

.5-4

20.2

-420

.2-4

20.2

-420

.2-4

20.2

-368

.8-3

68.8

-368

.8-3

68.8

-368

.8-4

34.1

-434

.1-4

34.1

-434

.1-4

34.1

-458

.0-4

58.0

-458

.0-4

58.0

-458

.0-5

87.9

-587

.9-5

87.9

-587

.9-5

87.9

Expo

rts

F.O.B

.15

6.2

215.

427

0.9

290.

323

2.5

220.

523

1.7

300.

534

1.8

505.

268

5.6

722.

997

3.9

Othe

r Ex

port

s

-

-

-

0.1

1.1

8.4

15.6

9.4

11.3

8.6

10.5

15.4

30.9

Impo

rts

F.O.B

.-2

54.2

-393

.6-6

73.9

-757

.4-7

79.4

-794

.7-6

97.3

-759

.5-7

53.9

-863

.6-1

,115

.9-1

,173

.1-1

,556

.1Ot

her

Impo

rts

-

-

--2

.3-1

3.7

-11.

6-2

4.0

-14.

0-1

9.4

-19.

0-1

4.4

-23.

2-3

6.7

Ser

Ser

Ser

Ser

Ser v

ices

Bala

nce

vices

Ba

lanc

evic

es

Bala

nce

vices

Ba

lanc

evic

es

Bala

nce

-22.

8-2

2.8

-22.

8-2

2.8

-22.

8-2

7.0

-27.

0-2

7.0

-27.

0-2

7.0

-23.

7-2

3.7

-23.

7-2

3.7

-23.

7-5

0.8

-50.

8-5

0.8

-50.

8-5

0.8

-62.

8-6

2.8

-62.

8-6

2.8

-62.

8-6

3.2

-63.

2-6

3.2

-63.

2-6

3.2

-62.

0-6

2.0

-62.

0-6

2.0

-62.

0-5

5.8

-55.

8-5

5.8

-55.

8-5

5.8

-17.

8-1

7.8

-17.

8-1

7.8

-17.

8-4

0.7

-40.

7-4

0.7

-40.

7-4

0.7

-68.

3-6

8.3

-68.

3-6

8.3

-68.

3-7

0.7

-70.

7-7

0.7

-70.

7-7

0.7

-59.

3-5

9.3

-59.

3-5

9.3

-59.

3Tr

ansp

ort

Serv

ices

-18.

5-2

8.7

-28.

9-5

5.9

-41.

2-5

7.2

-54.

0-5

2.0

-49.

4-6

5.6

-78.

3-1

05.1

-98.

5Ot

her

Serv

ices

-4.3

1.6

5.3

5.1

-21.

6-6

.1-8

.0-3

.831

.624

.910

.034

.439

.2In

com

e,

net

Inco

me,

ne

tIn

com

e,

net

Inco

me,

ne

tIn

com

e,

net

-1.3

-1.3

-1.3

-1.3

-1.3

-4.0

-4.0

-4.0

-4.0

-4.0

40

.04

0.0

40

.04

0.0

40

.04

4.7

44

.74

4.7

44

.74

4.7

98

.59

8.5

98

.59

8.5

98

.56

0.4

60

.46

0.4

60

.46

0.4

54

.95

4.9

54

.95

4.9

54

.95

2.9

52

.95

2.9

52

.95

2.9

64

.56

4.5

64

.56

4.5

64

.58

8.2

88

.28

8.2

88

.28

8.2

94

.59

4.5

94

.59

4.5

94

.53

6.7

36

.73

6.7

36

.73

6.7

44

.74

4.7

44

.74

4.7

44

.7Co

mpe

nsat

ion

of E

mpl

oyee

s

-

-

53.0

55.7

124.

082

.378

.877

.072

.510

5.4

133.

717

8.8

207.

7Ot

her

Inco

me

-1.3

-4.0

-13.

0-1

1.0

-25.

5-2

1.9

-23.

9-2

4.1

-8.1

-17.

2-3

9.3

-142

.1-1

63.0

Curre

nt

Tran

sfer

s,

net

Curre

nt

Tran

sfer

s,

net

Curre

nt

Tran

sfer

s,

net

Curre

nt

Tran

sfer

s,

net

Curre

nt

Tran

sfer

s,

net

55

.25

5.2

55

.25

5.2

55

.210

5.6

105.

610

5.6

105.

610

5.6

168.

316

8.3

168.

316

8.3

168.

318

4.6

184.

618

4.6

184.

618

4.6

217.

221

7.2

217.

221

7.2

217.

217

7.4

177.

417

7.4

177.

417

7.4

174.

117

4.1

174.

117

4.1

174.

118

8.1

188.

118

8.1

188.

118

8.1

174.

017

4.0

174.

017

4.0

174.

017

3.4

173.

417

3.4

173.

417

3.4

218.

521

8.5

218.

521

8.5

218.

533

0.4

330.

433

0.4

330.

433

0.4

409.

240

9.2

409.

240

9.2

409.

2Of

ficia

l55

.094

.414

9.9

117.

114

9.4

112.

793

.810

2.5

71.9

54.7

60.2

61.0

67.3

Priva

te0.

211

.118

.467

.567

.864

.780

.385

.610

2.1

118.

715

8.3

269.

434

1.9

Capi

tal

and

Fina

ncia

l Ac

coun

tCa

pita

l an

d Fi

nanc

ial

Acco

unt

Capi

tal

and

Fina

ncia

l Ac

coun

tCa

pita

l an

d Fi

nanc

ial

Acco

unt

Capi

tal

and

Fina

ncia

l Ac

coun

t5

1.8

51

.85

1.8

51

.85

1.8

99

.19

9.1

99

.19

9.1

99

.120

7.2

207.

220

7.2

207.

220

7.2

277.

227

7.2

277.

227

7.2

277.

229

8.3

298.

329

8.3

298.

329

8.3

399.

439

9.4

399.

439

9.4

399.

429

4.5

294.

529

4.5

294.

529

4.5

261.

326

1.3

261.

326

1.3

261.

318

9.0

189.

018

9.0

189.

018

9.0

152.

715

2.7

152.

715

2.7

152.

719

0.9

190.

919

0.9

190.

919

0.9

162.

616

2.6

162.

616

2.6

162.

618

8.8

188.

818

8.8

188.

818

8.8

Capi

tal

Acco

unt

Capi

tal

Acco

unt

Capi

tal

Acco

unt

Capi

tal

Acco

unt

Capi

tal

Acco

unt

5.1

5.15.1

5.1

5.1

5.7

5.75.7

5.7

5.7

8.1

8.18.1

8.1

8.1

13

.41

3.4

13

.41

3.4

13

.41

0.9

10

.91

0.9

10

.91

0.9

9.7

9.79.7

9.7

9.7

12

.61

2.6

12

.61

2.6

12

.62

8.3

28

.32

8.3

28

.32

8.3

30

.13

0.1

30

.13

0.1

30

.16

8.1

68

.16

8.1

68

.16

8.1

89

.98

9.9

89

.98

9.9

89

.93

4.3

34

.33

4.3

34

.33

4.3

50

.95

0.9

50

.95

0.9

50

.9Ca

pita

l Tra

nsfe

rs5.

15.

78.

113

.410

.99.

712

.628

.330

.168

.189

.934

.350

.9

of w

hich

Gen

eral

gove

rnm

ent

5.1

5.7

8.1

13.4

10.9

9.7

16.9

29.5

32.6

70.2

86.6

13.1

18.0

Statistical Data

25EPP III - 4

Fina

ncia

l Ac

coun

tFi

nanc

ial

Acco

unt

Fina

ncia

l Ac

coun

tFi

nanc

ial

Acco

unt

Fina

ncia

l Ac

coun

t4

6.7

46

.74

6.7

46

.74

6.7

93

.39

3.3

93

.39

3.3

93

.319

9.2

199.

219

9.2

199.

219

9.2

263.

826

3.8

263.

826

3.8

263.

828

7.4

287.

428

7.4

287.

428

7.4

389.

638

9.6

389.

638

9.6

389.

628

1.9

281.

928

1.9

281.

928

1.9

233.

023

3.0

233.

023

3.0

233.

015

8.9

158.

915

8.9

158.

915

8.9

84

.78

4.7

84

.78

4.7

84

.710

0.9

100.

910

0.9

100.

910

0.9

128.

312

8.3

128.

312

8.3

128.

313

7.9

137.

913

7.9

137.

913

7.9

Dire

ct

Inve

stm

ent

Dire

ct

Inve

stm

ent

Dire

ct

Inve

stm

ent

Dire

ct

Inve

stm

ent

Dire

ct

Inve

stm

ent

0.8

0.80.8

0.8

0.8

8.0

8.08.0

8.0

8.0

25

.32

5.3

25

.32

5.3

25

.31

7.6

17

.61

7.6

17

.61

7.6

51

.95

1.9

51

.95

1.9

51

.922

0.8

220.

822

0.8

220.

822

0.8

122.

012

2.0

122.

012

2.0

122.

010

4.2

104.

210

4.2

104.

210

4.2

69

.96

9.9

69

.96

9.9

69

.911

0.7

110.

711

0.7

110.

711

0.7

120.

512

0.5

120.

512

0.5

120.

521

6.6

216.

621

6.6

216.

621

6.6

251.

525

1.5

251.

525

1.5

251.

5PPPP P o

rororor ortftftftf tf o

lio

Inol

io

Inol

io

Inol

io

Inol

io

Invvvv v e

stm

ent

estm

ent

estm

ent

estm

ent

estm

ent

---- -

-

-

-

-

-

-

-

-

-

-

7.2

7.27.2

7.2

7.2

15

.81

5.8

15

.81

5.8

15

.8-1

5.9

-15.

9-1

5.9

-15.

9-1

5.9

1.6

1.61.6

1.6

1.6

-18.

9-1

8.9

-18.

9-1

8.9

-18.

9-5

.7-5

.7-5

.7-5

.7-5

.71

.51

.51.5

1.5

1.5

0.3

0.30.3

0.3

0.3

-2.9

-2.9

-2.9

-2.9

-2.9

-1.6

-1.6

-1.6

-1.6

-1.6

of

whi

ch G

ener

al go

vern

men

t-

-

-

5.4

9.8

-21.

21.

9-0

.2-0

.5-1

.30.

4-3

.8-0

.2Ot

her

Inve

stm

ent

Othe

r In

vest

men

tOt

her

Inve

stm

ent

Othe

r In

vest

men

tOt

her

Inve

stm

ent

90

.49

0.4

90

.49

0.4

90

.410

6.6

106.

610

6.6

106.

610

6.6

248.

624

8.6

248.

624

8.6

248.

629

7.8

297.

829

7.8

297.

829

7.8

290.

629

0.6

290.

629

0.6

290.

623

7.2

237.

223

7.2

237.

223

7.2

178.

817

8.8

178.

817

8.8

178.

816

6.9

166.

916

6.9

166.

916

6.9

114.

411

4.4

114.

411

4.4

114.

45

3.5

53

.55

3.5

53

.55

3.5

27

.42

7.4

27

.42

7.4

27

.4-5

9.1

-59.

1-5

9.1

-59.

1-5

9.1

50

.05

0.0

50

.05

0.0

50

.0 T

rade

Cre

dits

-42

.159

.053

.052

.591

.741

.770

.425

.6-1

5.1

22.8

1.7

-25.

0

Loan

s99

.079

.919

7.6

202.

817

8.7

106.

395

.454

.783

.646

.161

.423

.893

.4

M

onet

ary

auth

oritie

s

-

24.6

46.4

54.1

23.5

49.1

15.4

-14.

97.

212

.01.

5-0

.8-2

6.0

Gene

ral g

over

nmen

t99

.055

.315

1.2

102.

212

2.9

35.0

80.2

44.3

64.2

45.1

24.7

38.5

37.4

B

anks

-

-

0.01

17.9

10.3

20.0

-7.6

-1.9

-6.1

-21.

23.

07.

07.

8

Ot

her

sect

ors

-

-

-28

.622

.02.

27.

427

.218

.110

.332

.1-2

0.8

74.2

Ca

sh m

oney

--8

.20.

155

.356

.930

.341

.923

.36.

2-2

9.6

-33.

7-7

9.5

1.4

Ot

her

-8.6

-7.3

-8.2

-13.

32.

68.

9-0

.118

.5-0

.952

.1-2

3.0

-5.1

-19.

8RRRR R e

ser

eser

eser

eser

eser

vvvv v e e e e e

Asse

tsAs

sets

Asse

tsAs

sets

Asse

ts-4

4.6

-44.

6-4

4.6

-44.

6-4

4.6

-21.

2-2

1.2

-21.

2-2

1.2

-21.

2-7

4.7

-74.

7-7

4.7

-74.

7-7

4.7

-58.

9-5

8.9

-58.

9-5

8.9

-58.

9-7

1.0

-71.

0-7

1.0

-71.

0-7

1.0

-52.

5-5

2.5

-52.

5-5

2.5

-52.

5-2

0.6

-20.

6-2

0.6

-20.

6-2

0.6

-19.

2-1

9.2

-19.

2-1

9.2

-19.

2-1

9.6

-19.

6-1

9.6

-19.

6-1

9.6

-81.

1-8

1.1

-81.

1-8

1.1

-81.

1-4

7.3

-47.

3-4

7.3

-47.

3-4

7.3

-26.

3-2

6.3

-26.

3-2

6.3

-26.

3-1

62.1

-162

.1-1

62.1

-162

.1-1

62.1

Net

Erro

rs

and

Omiss

ions

Net

Erro

rs

and

Omiss

ions

Net

Erro

rs

and

Omiss

ions

Net

Erro

rs

and

Omiss

ions

Net

Erro

rs

and

Omiss

ions

15

.11

5.1

15

.11

5.1

15

.14

.74

.74.7

4.7

4.7

11

.21

1.2

11

.21

1.2

11

.21

3.5

13

.51

3.5

13

.51

3.5

8.3

8.38.3

8.3

8.3

3.6

3.63.6

3.6

3.6

12

.51

2.5

12

.51

2.5

12

.51

7.0

17

.01

7.0

17

.01

7.0

10

.51

0.5

10

.51

0.5

10

.5-4

.9-4

.9-4

.9-4

.9-4

.9-1

.4-1

.4-1

.4-1

.4-1

.4-1

.0-1

.0-1

.0-1

.0-1

.04

.54

.54.5

4.5

4.5

Tabl

e 3.

1 Ex

port

s by

Mai

n Gr

oups

of G

oods

(m

illion

USD

)

Indi

cato

rs19

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

06E

xpo

rE

xpo

rE

xpo

rE

xpo

rE

xpo

r tstststs ts

156.

215

6.2

156.

215

6.2

156.

221

5.5

215.

521

5.5

215.

521

5.5

270.

927

0.9

270.

927

0.9

270.

929

0.3

290.

329

0.3

290.

329

0.3

232.

523

2.5

232.

523

2.5

232.

522

0.5

220.

522

0.5

220.

522

0.5

231.

723

1.7

231.

723

1.7

231.

730

0.5

300.

530

0.5

300.

530

0.5

341.

834

1.8

341.

834

1.8

341.

850

5.2

505.

250

5.2

505.

250

5.2

685.

668

5.6

685.

668

5.6

685.

672

2.9

722.

972

2.9

722.

972

2.9

1,00

4.0

1,00

4.0

1,00

4.0

1,00

4.0

1,00

4.0

Food

stuf

fs10

.412

.912

.611

.824

.616

.815

.927

.348

.054

.872

.269

.295

.3M

iner

al Pr

oduc

ts2.

317

.828

.819

.117

.922

.231

.037

.237

.942

.150

.399

.613

6.4

Plas

tics,

Rubb

er a

nd A

rticl

es t

here

of4.

37.

910

.88.

29.

28.

19.

19.

013

.16.

34.

810

.128

.1Te

xtile

Pr

oduc

tion

14.8

15.8

15.2

9.7

10.6

13.6

13.6

13.2

24.3

28.6

31.2

44.0

35.5

Prec

ious

Sto

nes

and

Met

als41

.075

.289

.614

0.3

55.2

53.1

99.9

121.

512

2.8

258.

335

0.7

299.

332

0.4

Non-

prec

ious

Sto

nes

and

Met

als5.

39.

430

.547

.357

.740

.325

.044

.228

.544

.890

.413

7.6

280.

8M

achi

nery

and

Equ

ipm

ent

25.3

30.9

39.1

34.3

32.2

40.8

17.5

31.0

43.4

21.4

20.1

21.9

20.8

Vehi

cles,

Airc

raft,

Shi

ps a

nd P

arts

the

reof

4.7

1.7

11.4

2.7

2.0

3.3

2.7

1.8

2.4

15.0

14.5

9.4

13.9

Inst

rum

ents

and

App

arat

us2.

54.

03.

92.

54.

83.

71.

62.

33.

819

.231

.57.

122

.7Ot

her

Good

s45

.539

.929

.114

.418

.318

.715

.513

.017

.614

.519

.824

.750

.0

Tabl

e 3.

2 Im

port

s by

Mai

n Gr

oups

of G

oods

(m

illion

USD

)

Indi

cato

rs19

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

06Im

por

Impo

rIm

por

Impo

rIm

por t

stststs ts25

4.2

254.

225

4.2

254.

225

4.2

393.

839

3.8

393.

839

3.8

393.

867

3.9

673.

967

3.9

673.

967

3.9

855.

885

5.8

855.

885

5.8

855.

889

2.3

892.

389

2.3

892.

389

2.3

902.

490

2.4

902.

490

2.4

902.

481

1.3

811.

381

1.3

811.

381

1.3

884.

788

4.7

884.

788

4.7

884.

787

7.4

877.

487

7.4

877.

487

7.4

987.

298

7.2

987.

298

7.2

987.

21,

279.

51,

279.

51,

279.

51,

279.

51,

279.

51,

350.

71,

350.

71,

350.

71,

350.

71,

350.

72,

194.

42,

194.

42,

194.

42,

194.

42,

194.

4Pr

oduc

ts o

f an

imal

orig

in23

.046

.163

.367

.458

.547

.041

.533

.630

.827

.732

.840

.340

.1Ve

geta

ble P

rodu

cts

45.5

64.3

85.6

112.

810

5.3

117.

875

.799

.185

.274

.475

.010

9.0

112.

0Fo

odst

uffs

16.8

32.5

51.5

85.1

86.1

110.

077

.069

.876

.979

.393

.311

2.6

163.

9M

iner

al Pr

oduc

ts10

5.1

161.

022

4.7

186.

520

9.8

204.

617

6.0

179.

318

8.2

171.

417

9.5

209.

436

5.8

Statistical Data

26EPP III - 4

Chem

ical

Prod

ucts

4.2

9.1

55.4

56.2

85.2

73.7

71.4

82.4

65.1

62.8

78.4

85.2

152.

1Te

xtile

Pr

oduc

tion

4.5

8.7

7.8

21.0

33.7

31.7

30.0

32.1

36.0

36.1

39.8

47.1

59.3

Prec

ious

Sto

nes

and

Met

als26

.831

.862

.412

9.8

47.5

45.5

86.7

113.

210

6.8

213.

533

3.1

291.

531

2.5

Non-

prec

ious

Sto

nes

and

Met

als11

.13.

616

.010

.224

.620

.123

.824

.488

.455

.776

.760

.816

3.7

Mac

hine

ry a

nd E

quip

men

t4.

08.

049

.680

.510

2.2

65.8

81.4

117.

236

.110

3.4

133.

813

5.5

305.

1Ve

hicle

s, Ai

rcra

ft, S

hips

and

Par

ts t

here

of1.

92.

06.

412

.015

.847

.333

.123

.225

.939

.978

.592

.519

7.3

Othe

r Go

ods

11.3

27.0

51.3

94.4

123.

713

8.8

114.

611

0.4

138.

212

3.0

158.

716

6.6

322.

6

Tabl

e 3.

3 Ex

port

s by

Cou

ntrie

s (m

illion

USD

)

Indi

cato

rs19

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

06E

xpo

rE

xpo

rE

xpo

rE

xpo

rE

xpo

r tstststs ts

156.

215

6.2

156.

215

6.2

156.

221

5.5

215.

521

5.5

215.

521

5.5

270.

927

0.9

270.

927

0.9

270.

929

0.3

290.

329

0.3

290.

329

0.3

232.

523

2.5

232.

523

2.5

232.

522

0.5

220.

522

0.5

220.

522

0.5

231.

723

1.7

231.

723

1.7

231.

730

0.5

300.

530

0.5

300.

530

0.5

341.

834

1.8

341.

834

1.8

341.

850

5.2

505.

250

5.2

505.

250

5.2

685.

668

5.6

685.

668

5.6

685.

672

2.9

722.

972

2.9

722.

972

2.9

1,00

4.0

1,00

4.0

1,00

4.0

1,00

4.0

1,00

4.0

CIS

Coun

ties

CIS

Coun

ties

CIS

Coun

ties

CIS

Coun

ties

CIS

Coun

ties

126.

612

6.6

126.

612

6.6

126.

615

7.9

157.

915

7.9

157.

915

7.9

169.

616

9.6

169.

616

9.6

169.

613

3.7*

133.

7*13

3.7*

133.

7*13

3.7*

94

.79

4.7

94

.79

4.7

94

.78

0.5

80

.58

0.5

80

.58

0.5

56

.45

6.4

56

.45

6.4

56

.47

3.4

73

.47

3.4

73

.47

3.4

89

.18

9.1

89

.18

9.1

89

.19

6.3

96

.39

6.3

96

.39

6.3

129.

112

9.1

129.

112

9.1

129.

112

5.1

125.

112

5.1

125.

112

5.1

212.

621

2.6

212.

621

2.6

212.

6Ru

ssia

58.5

83.9

90.8

96.1

62.9

40.0

33.9

44.6

60.5

64.6

94.4

77.9

121.

7Tu

rkm

enist

an57

.065

.668

.717

.513

.822

.76.

15.

50.

82.

83.

60.

61.

8Ge

orgi

a3.

22.

92.

76.

910

.79.

611

.116

.012

.416

.618

.729

.154

.3Ot

her

8.0

5.4

7.4

7.6

7.3

8.3

5.3

7.3

15.3

12.3

12.4

17.5

34.8

Non

CIS

Coun

ties

Non

CIS

Coun

ties

Non

CIS

Coun

ties

Non

CIS

Coun

ties

Non

CIS

Coun

ties

29

.62

9.6

29

.62

9.6

29

.65

7.6

57

.65

7.6

57

.65

7.6

101.

310

1.3

101.

310

1.3

101.

315

6.6

156.

615

6.6

156.

615

6.6

137.

813

7.8

137.

813

7.8

137.

814

0.0

140.

014

0.0

140.

014

0.0

175.

317

5.3

175.

317

5.3

175.

322

7.1

227.

122

7.1

227.

122

7.1

252.

825

2.8

252.

825

2.8

252.

840

8.8

408.

840

8.8

408.

840

8.8

556.

555

6.5

556.

555

6.5

556.

559

7.8

597.

859

7.8

597.

859

7.8

791.

479

1.4

791.

479

1.4

791.

4Be

lgiu

m14

.926

.030

.814

.747

.049

.884

.275

.146

.592

.312

3.8

107.

910

8.8

Iran

5.5

14.6

35.0

43.9

42.6

31.4

34.2

30.1

31.9

31.5

22.5

30.6

29.5

USA

0.2

0.4

0.6

4.4

7.1

11.6

16.0

37.9

52.3

46.2

56.1

70.6

65.0

Germ

any

0.3

6.6

10.1

3.7

9.3

9.3

10.2

12.9

11.1

28.2

44.4

83.2

148.

0Un

ited

King

dom

0.0

0.5

1.3

3.2

1.2

8.1

9.4

10.1

20.1

51.1

42.6

1.2

7.6

Turk

ey0.

30.

22.

66.

07.

23.

01.

11.

51.

11.

41.

22.

02.

2Ot

her

8.4

9.5

20.9

80.6

23.6

26.8

20.1

59.6

89.8

158.

226

5.9

302.

343

0.2

* Al

so in

clude

d "T

rade

mad

e by

citiz

ens"

, whic

h co

uldn'

t be

clas

sified

by

coun

tries

for

1996

.

Tabl

e 3.

4 Im

port

s by

Cou

ntrie

s (m

illion

USD

)

Indi

cato

rs19

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

06Im

por

Impo

rIm

por

Impo

rIm

por t

stststs ts25

4.2

254.

225

4.2

254.

225

4.2

393.

839

3.8

393.

839

3.8

393.

867

3.9

673.

967

3.9

673.

967

3.9

855.

885

5.8

855.

885

5.8

855.

889

2.3

892.

389

2.3

892.

389

2.3

902.

490

2.4

902.

490

2.4

902.

481

1.3

811.

381

1.3

811.

381

1.3

884.

788

4.7

884.

788

4.7

884.

787

7.4

877.

487

7.4

877.

487

7.4

987.

298

7.2

987.

298

7.2

987.

21,

279.

51,

279.

51,

279.

51,

279.

51,

279.

51,

350.

71,

350.

71,

350.

71,

350.

71,

350.

72,

194.

42,

194.

42,

194.

42,

194.

42,

194.

4CI

S Co

untie

sCI

S Co

untie

sCI

S Co

untie

sCI

S Co

untie

sCI

S Co

untie

s16

8.2

168.

216

8.2

168.

216

8.2

205.

620

5.6

205.

620

5.6

205.

633

4.0

334.

033

4.0

334.

033

4.0

332.

6*33

2.6*

332.

6*33

2.6*

332.

6*29

9.1

299.

129

9.1

299.

129

9.1

230.

223

0.2

230.

223

0.2

230.

218

7.2

187.

218

7.2

187.

218

7.2

173.

617

3.6

173.

617

3.6

173.

621

8.5

218.

521

8.5

218.

521

8.5

302.

230

2.2

302.

230

2.2

302.

228

1.3

281.

328

1.3

281.

328

1.3

290.

029

0.0

290.

029

0.0

290.

057

3.5

573.

557

3.5

573.

557

3.5

Russ

ia77

.911

2.2

135.

112

5.5

215.

919

1.4

149.

913

7.2

173.

619

3.3

203.

417

9.7

365.

3Ge

orgi

a19

.517

.861

.851

.238

.226

.826

.919

.818

.531

.533

.048

.575

.6Tu

rkm

enist

an64

.169

.612

9.3

86.4

27.7

0.6

0.8

1.1

0.8

25.0

0.1

0.1

0.4

Othe

r6.

75.

97.

714

.617

.411

.49.

615

.525

.552

.544

.961

.713

2.3

Non

CIS

Coun

ties

Non

CIS

Coun

ties

Non

CIS

Coun

ties

Non

CIS

Coun

ties

Non

CIS

Coun

ties

86

.08

6.0

86

.08

6.0

86

.018

8.3

188.

318

8.3

188.

318

8.3

339.

933

9.9

339.

933

9.9

339.

952

3.2

523.

252

3.2

523.

252

3.2

593.

259

3.2

593.

259

3.2

593.

267

2.2

672.

267

2.2

672.

267

2.2

624.

162

4.1

624.

162

4.1

624.

171

1.1

711.

171

1.1

711.

171

1.1

658.

965

8.9

658.

965

8.9

658.

968

4.9

684.

968

4.9

684.

968

4.9

998.

299

8.2

998.

299

8.2

998.

21,

060.

71,

060.

71,

060.

71,

060.

71,

060.

71,

620.

81,

620.

81,

620.

81,

620.

81,

620.

8US

A26

.996

.111

4.4

103.

611

6.1

96.3

85.7

102.

784

.252

.711

1.2

104.

813

6.6

Belg

ium

2.9

1.4

15.6

49.3

49.7

54.6

85.2

84.4

41.8

91.1

129.

110

9.0

157.

4

Statistical Data

27EPP III - 4

Iran

15.8

42.5

89.8

149.

888

.763

.978

.582

.378

.162

.670

.276

.313

2.5

Unite

d Ki

ngdo

m0.

20.

52.

27.

110

.569

.167

.059

.591

.228

.183

.310

6.8

79.4

UAE

2.7

1.1

13.8

33.4

71.7

54.5

40.2

41.7

47.4

42.9

60.5

65.2

145.

2Tu

rkey

0.0

0.5

2.6

6.3

38.4

56.8

40.2

40.5

33.8

38.2

36.7

39.8

88.6

Germ

any

0.3

6.9

11.3

17.4

26.2

34.0

34.2

36.5

34.0

42.9

43.8

73.9

85.3

Italy

31.1

8.9

22.4

26.2

36.2

34.6

23.7

25.7

29.6

36.6

36.2

38.3

76.5

Othe

r6.

130

.367

.813

0.2

155.

720

8.3

169.

523

7.8

218.

928

9.7

427.

244

6.6

719.

3

* Al

so in

clude

d "T

rade

mad

e by

citiz

ens"

, whic

h co

uldn'

t be

clas

sified

by

coun

tries

for

1996

.

Tabl

e 4.

1 In

tern

atio

nal I

nves

tmen

t Pos

ition

(m

illion

USD

, end

-yea

r)

Indi

cato

rs19

9719

9819

9920

0020

0120

0220

0320

0420

05Ne

t In

tern

atio

nal

Inve

stm

ent

Posit

ion

Net

Inte

rnat

iona

l In

vest

men

t Po

sitio

nNe

t In

tern

atio

nal

Inve

stm

ent

Posit

ion

Net

Inte

rnat

iona

l In

vest

men

t Po

sitio

nNe

t In

tern

atio

nal

Inve

stm

ent

Posit

ion

-563

.4-5

63.4

-563

.4-5

63.4

-563

.4-9

08.9

-908

.9-9

08.9

-908

.9-9

08.9

-1,1

18.8

-1,1

18.8

-1,1

18.8

-1,1

18.8

-1,1

18.8

-1,3

00.3

-1,3

00.3

-1,3

00.3

-1,3

00.3

-1,3

00.3

-1,4

34.2

-1,4

34.2

-1,4

34.2

-1,4

34.2

-1,4

34.2

-1,5

12.4

-1,5

12.4

-1,5

12.4

-1,5

12.4

-1,5

12.4

-1,5

14.8

-1,5

14.8

-1,5

14.8

-1,5

14.8

-1,5

14.8

-1,6

91.5

-1,6

91.5

-1,6

91.5

-1,6

91.5

-1,6

91.5

-1,7

59.4

-1,7

59.4

-1,7

59.4

-1,7

59.4

-1,7

59.4

Ass

ets

Ass

ets

Ass

ets

Ass

ets

Ass

ets

382.

338

2.3

382.

338

2.3

382.

341

6.4

416.

441

6.4

416.

441

6.4

488.

948

8.9

488.

948

8.9

488.

952

9.4

529.

452

9.4

529.

452

9.4

544.

254

4.2

544.

254

4.2

544.

268

5.1

685.

168

5.1

685.

168

5.1

786.

978

6.9

786.

978

6.9

786.

997

8.3

978.

397

8.3

978.

397

8.3

1,13

0.5

1,13

0.5

1,13

0.5

1,13

0.5

1,13

0.5

Dire

ct I

nves

tmen

t Ab

road

0.0

0.0

0.0

0.0

0.0

0.4

0.4

2.7

10.3

Port

folio

In

vest

men

t0.

60.

20.

119

.38.

94.

54.

54.

65.

9Ot

her

Inve

stm

ent

141.

812

4.1

185.

819

6.0

204.

124

8.0

278.

042

1.0

440.

4Re

serv

e As

sets

239.

829

2.1

303.

031

4.1

331.

243

2.3

504.

155

0.0

673.

8Li

abili

ties

Liab

iliti

esLi

abili

ties

Liab

iliti

esLi

abili

ties

945.

694

5.6

945.

694

5.6

945.

61,

325.

31,

325.

31,

325.

31,

325.

31,

325.

31,

607.

71,

607.

71,

607.

71,

607.

71,

607.

71,

829.

71,

829.

71,

829.

71,

829.

71,

829.

71,

978.

41,

978.

41,

978.

41,

978.

41,

978.

42,

197.

62,

197.

62,

197.

62,

197.

62,

197.

62,

301.

72,

301.

72,

301.

72,

301.

72,

301.

72,

669.

92,

669.

92,

669.

92,

669.

92,

669.

92,

889.

92,

889.

92,

889.

92,

889.

92,

889.

9Di

rect

Inv

estm

ent

in R

epor

ting

Econ

omy

103.

431

2.7

421.

451

3.1

579.

968

4.5

793.

41,

005.

11,

279.

3Po

rtfo

lio

Inve

stm

ent

21.2

3.4

4.5

4.8

5.9

5.8

6.4

4.3

4.5

Othe

r In

vest

men

t82

1.0

1,00

9.2

1,18

1.9

1,31

1.8

1,39

2.6

1,50

7.2

1,50

1.9

1,66

0.5

1,60

6.0

Tabl

e 4.

2 St

ruct

ure

of In

tern

atio

nal I

nves

tmen

t Pos

ition

(%

, end

-yea

r)

Indi

cato

rs19

9719

9819

9920

0020

0120

0220

0320

0420

05A

sset

sA

sset

sA

sset

sA

sset

sA

sset

s10

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

Dire

ct I

nves

tmen

t Ab

road

0.0

0.0

0.0

0.0

0.0

0.1

0.0

0.3

0.9

Port

folio

In

vest

men

t0.

20.

00.

03.

61.

60.

70.

60.

50.

5Ot

her

Inve

stm

ent

37.1

29.8

38.0

37.0

37.5

36.2

35.3

43.0

39.0

Rese

rve

Asse

ts62

.770

.262

.059

.360

.963

.164

.156

.259

.6Li

abili

ties

Liab

iliti

esLi

abili

ties

Liab

iliti

esLi

abili

ties

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

0Di

rect

Inv

estm

ent

in R

epor

ting

Econ

omy

10.9

23.6

26.2

28.0

29.3

31.1

34.5

37.6

44.3

Port

folio

In

vest

men

t2.

20.

30.

30.

30.

30.

30.

30.

20.

2Ot

her

Inve

stm

ent

86.8

76.1

73.5

71.7

70.4

68.6

65.3

62.2

55.6

Statistical Data

28EPP III - 4

Tabl

e 5.

1 Ex

tern

al D

ebt (

milli

on U

SD)

Indi

cato

rs19

9619

9719

9819

9920

0020

0120

0220

0320

0420

05TTTT T o

tal

Exte

rot

al

Exte

rot

al

Exte

rot

al

Exte

rot

al

Exte

r nal

De

nal

Dena

l De

nal

Dena

l De

btbtbtbt bt53

6.3

536.

353

6.3

536.

353

6.3

682.

568

2.5

682.

568

2.5

682.

577

5.3

775.

377

5.3

775.

377

5.3

870.

387

0.3

870.

387

0.3

870.

385

9.5

859.

585

9.5

859.

585

9.5

905.

590

5.5

905.

590

5.5

905.

51,

025.

51,

025.

51,

025.

51,

025.

51,

025.

51,

097.

71,

097.

71,

097.

71,

097.

71,

097.

71,

182.

91,

182.

91,

182.

91,

182.

91,

182.

91,

099.

21,

099.

21,

099.

21,

099.

21,

099.

2TTTT T o

tal

Exte

rot

al

Exte

rot

al

Exte

rot

al

Exte

rot

al

Exte

r nal

De

nal

Dena

l De

nal

Dena

l De

bt

bt

bt

bt

bt

(exc

ludi

ng

Guar

ante

es

and

Spec

ial

Prog

ram

s)52

2.0

640.

473

8.7

834.

182

6.5

856.

798

7.9

1,08

6.8

1,17

4.7

1,09

2.8

Debt

of

Go

vern

men

t of

RA

Debt

of

Go

vern

men

t of

RA

Debt

of

Go

vern

men

t of

RA

Debt

of

Go

vern

men

t of

RA

Debt

of

Go

vern

men

t of

RA

407.

740

7.7

407.

740

7.7

407.

750

3.3

503.

350

3.3

503.

350

3.3

546.

854

6.8

546.

854

6.8

546.

863

2.9

632.

963

2.9

632.

963

2.9

651.

065

1.0

651.

065

1.0

651.

068

4.3

684.

368

4.3

684.

368

4.3

793.

179

3.1

793.

179

3.1

793.

187

2.2

872.

287

2.2

872.

287

2.2

957.

095

7.0

957.

095

7.0

957.

091

6.4

916.

491

6.4

916.

491

6.4

Cred

its M

ultila

tera

l21

9.3

296.

934

9.2

438.

047

1.7

510.

560

6.3

744.

084

5.6

803.

3Cr

edits

Bila

tera

l18

8.3

206.

419

7.6

194.

917

9.3

173.

818

6.8

128.

211

1.4

113.

1De

bt

of

Cent

ral

Bank

of

RA

Debt

of

Ce

ntra

l Ba

nk

of

RADe

bt

of

Cent

ral

Bank

of

RA

Debt

of

Ce

ntra

l Ba

nk

of

RADe

bt

of

Cent

ral

Bank

of

RA

114.

411

4.4

114.

411

4.4

114.

413

7.1

137.

113

7.1

137.

113

7.1

191.

919

1.9

191.

919

1.9

191.

920

1.2

201.

220

1.2

201.

220

1.2

175.

517

5.5

175.

517

5.5

175.

517

2.5

172.

517

2.5

172.

517

2.5

194.

819

4.8

194.

819

4.8

194.

821

4.6

214.

621

4.6

214.

621

4.6

217.

621

7.6

217.

621

7.6

217.

617

6.4

176.

417

6.4

176.

417

6.4

Cred

its

Guar

ante

ed

by

Gove

rnm

ent

and

CB

of

RACr

edits

Gu

aran

teed

by

Go

vern

men

t an

d CB

of

RA

Cred

its

Guar

ante

ed

by

Gove

rnm

ent

and

CB

of

RACr

edits

Gu

aran

teed

by

Go

vern

men

t an

d CB

of

RA

Cred

its

Guar

ante

ed

by

Gove

rnm

ent

and

CB

of

RA1

4.3

14

.31

4.3

14

.31

4.3

42

.14

2.1

42

.14

2.1

42

.13

6.6

36

.63

6.6

36

.63

6.6

29

.72

9.7

29

.72

9.7

29

.71

9.1

19

.11

9.1

19

.11

9.1

27

.92

7.9

27

.92

7.9

27

.91

9.4

19

.41

9.4

19

.41

9.4

7.3

7.37.3

7.3

7.3

5.2

5.25.2

5.2

5.2

3.1

3.13.1

3.1

3.1

Spec

ial

Prog

ram

sSp

ecia

l Pr

ogra

ms

Spec

ial

Prog

ram

sSp

ecia

l Pr

ogra

ms

Spec

ial

Prog

ram

s

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

6.5

6.56.5

6.5

6.5

13

.91

3.9

13

.91

3.9

13

.92

0.9

20

.92

0.9

20

.92

0.9

18

.11

8.1

18

.11

8.1

18

.13

.53

.53.5

3.5

3.5

3.0

3.03.0

3.0

3.0

3.3

3.33.3

3.3

3.3

Tabl

e 5.

2 St

ruct

ure

of E

xter

nal D

ebt (

%)

Indi

cato

rs19

9619

9719

9819

9920

0020

0120

0220

0320

0420

05TTTT T o

tal

Exte

rot

al

Exte

rot

al

Exte

rot

al

Exte

rot

al

Exte

r nal

De

nal

Dena

l De

nal

Dena

l De

btbtbtbt bt10

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

0De

bt

of

Gove

rnm

ent

of

RADe

bt

of

Gove

rnm

ent

of

RADe

bt

of

Gove

rnm

ent

of

RADe

bt

of

Gove

rnm

ent

of

RADe

bt

of

Gove

rnm

ent

of

RA7

6.0

76

.07

6.0

76

.07

6.0

73

.77

3.7

73

.77

3.7

73

.77

0.5

70

.57

0.5

70

.57

0.5

72

.77

2.7

72

.77

2.7

72

.77

5.7

75

.77

5.7

75

.77

5.7

75

.67

5.6

75

.67

5.6

75

.67

7.3

77

.37

7.3

77

.37

7.3

79

.57

9.5

79

.57

9.5

79

.58

0.9

80

.98

0.9

80

.98

0.9

83

.48

3.4

83

.48

3.4

83

.4Cr

edits

Mul

tilate

ral

40.9

43.5

45.0

50.3

54.9

56.4

59.1

67.8

71.5

73.1

Cred

its B

ilate

ral

35.1

30.2

25.5

22.4

20.9

19.2

18.2

11.7

9.4

10.3

Debt

of

Ce

ntra

l Ba

nk

of

RADe

bt

of

Cent

ral

Bank

of

RA

Debt

of

Ce

ntra

l Ba

nk

of

RADe

bt

of

Cent

ral

Bank

of

RA

Debt

of

Ce

ntra

l Ba

nk

of

RA2

1.3

21

.32

1.3

21

.32

1.3

20

.12

0.1

20

.12

0.1

20

.12

4.7

24

.72

4.7

24

.72

4.7

23

.12

3.1

23

.12

3.1

23

.12

0.4

20

.42

0.4

20

.42

0.4

19

.01

9.0

19

.01

9.0

19

.01

9.0

19

.01

9.0

19

.01

9.0

19

.61

9.6

19

.61

9.6

19

.61

8.4

18

.41

8.4

18

.41

8.4

16

.01

6.0

16

.01

6.0

16

.0Cr

edits

Gu

aran

teed

by

Go

vern

men

t an

d CB

of

RA

Cred

its

Guar

ante

ed

by

Gove

rnm

ent

and

CB

of

RACr

edits

Gu

aran

teed

by

Go

vern

men

t an

d CB

of

RA

Cred

its

Guar

ante

ed

by

Gove

rnm

ent

and

CB

of

RACr

edits

Gu

aran

teed

by

Go

vern

men

t an

d CB

of

RA

2.7

2.72.7

2.7

2.7

6.2

6.26.2

6.2

6.2

4.7

4.74.7

4.7

4.7

3.4

3.43.4

3.4

3.4

2.2

2.22.2

2.2

2.2

3.1

3.13.1

3.1

3.1

1.9

1.91.9

1.9

1.9

0.7

0.70.7

0.7

0.7

0.4

0.40.4

0.4

0.4

0.3

0.30.3

0.3

0.3

Spec

ial

Prog

ram

sSp

ecia

l Pr

ogra

ms

Spec

ial

Prog

ram

sSp

ecia

l Pr

ogra

ms

Spec

ial

Prog

ram

s

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-0

.70

.70.7

0.7

0.7

1.6

1.61.6

1.6

1.6

2.3

2.32.3

2.3

2.3

1.8

1.81.8

1.8

1.8

0.3

0.30.3

0.3

0.3

0.3

0.30.3

0.3

0.3

0.3

0.30.3

0.3

0.3

Tabl

e 5.

3 Sh

are

truc

ture

of E

xter

nal D

ebt (

%)

Indi

cato

rs19

9619

9719

9819

9920

0020

0120

0220

0320

0420

05TTTT T o

tal

Exte

rot

al

Exte

rot

al

Exte

rot

al

Exte

rot

al

Exte

r nal

De

nal

Dena

l De

nal

Dena

l De

btbtbtbt bt3

5.3

35

.33

5.3

35

.33

5.3

42

.04

2.0

42

.04

2.0

42

.04

2.4

42

.44

2.4

42

.44

2.4

46

.24

6.2

46

.24

6.2

46

.24

6.0

46

.04

6.0

46

.04

6.0

42

.64

2.6

42

.64

2.6

42

.64

4.0

44

.04

4.0

44

.04

4.0

38

.23

8.2

38

.23

8.2

38

.23

0.1

30

.13

0.1

30

.13

0.1

22

.12

2.1

22

.12

2.1

22

.1De

bt

of

Gove

rnm

ent

of

RADe

bt

of

Gove

rnm

ent

of

RADe

bt

of

Gove

rnm

ent

of

RADe

bt

of

Gove

rnm

ent

of

RADe

bt

of

Gove

rnm

ent

of

RA2

6.8

26

.82

6.8

26

.82

6.8

31

.03

1.0

31

.03

1.0

31

.02

9.9

29

.92

9.9

29

.92

9.9

33

.63

3.6

33

.63

3.6

33

.63

4.9

34

.93

4.9

34

.93

4.9

32

.23

2.2

32

.23

2.2

32

.23

4.0

34

.03

4.0

34

.03

4.0

30

.43

0.4

30

.43

0.4

30

.42

4.4

24

.42

4.4

24

.42

4.4

18

.41

8.4

18

.41

8.4

18

.4Cr

edits

Mul

tilate

ral

14.4

18.3

19.1

23.2

25.3

24.0

26.0

25.9

21.5

16.1

Cred

its B

ilate

ral

12.4

12.7

10.8

10.3

9.6

8.2

8.0

4.5

2.8

2.3

Debt

of

Ce

ntra

l Ba

nk

of

RADe

bt

of

Cent

ral

Bank

of

RA

Debt

of

Ce

ntra

l Ba

nk

of

RADe

bt

of

Cent

ral

Bank

of

RA

Debt

of

Ce

ntra

l Ba

nk

of

RA7

.57

.57.5

7.5

7.5

8.4

8.48.4

8.4

8.4

10

.51

0.5

10

.51

0.5

10

.51

0.7

10

.71

0.7

10

.71

0.7

9.4

9.49.4

9.4

9.4

8.1

8.18.1

8.1

8.1

8.4

8.48.4

8.4

8.4

7.5

7.57.5

7.5

7.5

5.5

5.55.5

5.5

5.5

3.5

3.53.5

3.5

3.5

Cred

its

Guar

ante

ed

by

Gove

rnm

ent

and

CB

of

RACr

edits

Gu

aran

teed

by

Go

vern

men

t an

d CB

of

RA

Cred

its

Guar

ante

ed

by

Gove

rnm

ent

and

CB

of

RACr

edits

Gu

aran

teed

by

Go

vern

men

t an

d CB

of

RA

Cred

its

Guar

ante

ed

by

Gove

rnm

ent

and

CB

of

RA0

.90

.90.9

0.9

0.9

2.6

2.62.6

2.6

2.6

2.0

2.02.0

2.0

2.0

1.6

1.61.6

1.6

1.6

1.0

1.01.0

1.0

1.0

1.3

1.31.3

1.3

1.3

0.8

0.80.8

0.8

0.8

0.3

0.30.3

0.3

0.3

0.1

0.10.1

0.1

0.1

0.1

0.10.1

0.1

0.1

Spec

ial

Prog

ram

sSp

ecia

l Pr

ogra

ms

Spec

ial

Prog

ram

sSp

ecia

l Pr

ogra

ms

Spec

ial

Prog

ram

s

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-0

.30

.30.3

0.3

0.3

0.7

0.70.7

0.7

0.7

1.0

1.01.0

1.0

1.0

0.8

0.80.8

0.8

0.8

0.1

0.10.1

0.1

0.1

0.1

0.10.1

0.1

0.1

0.1

0.10.1

0.1

0.1

Statistical Data