Armenia Says It Is No Longer Poor
This was the news that the country’s economy stewards were excited to share last week, not long after Armenia launched its first Eurobond. But for anyone looking to verify the government’s claims, good luck in defining poverty.
Armenian officials specified that they were referring to definitions by international aid groups, which have an entire lexicon of kinder synonyms for poverty, such as “transitional,” “developing” and “less-developed,” and a list of acronyms (GDPs, GNIs, CPIs, HDIs) to measure development.
Finance Minister David Sarkisian referred to "international standards" when he said that Armenia has left the poor countries’ club -- graduating from the low-income league to the medium-income league; or, rather, the “lower middle-income” category, as the World Bank puts it. But the descriptions, just like weather forecasts, may not fully capture the real feel on the ground. Looking at the largely hand-to-mouth life in rural parts of Armenia, the nature of the country’s economy, in which cash from labor-migrants and Diaspora abroad still plays a large role, the Armenian ministers’ announcement may come across as an overstatement.
Armenia and Georgia, the region’s first Eurobond-issuer, have been among the most sustainably poor descendants of the Soviet Union, with Armenia, arguably, hit the hardest in the South Caucasus by the 2009 global economic meltdown.
Largely thanks to international borrowing, Armenia came out of the crisis, and, according to the International Monetary Fund, is expected to post a growth rate of under four percent for 2013.
But the deeper reason for Yerevan’s optimism appears to stem from two key developments: the September 20 issuance of a Eurobond and its plans to join the Eurasian Customs Union, essentially Moscow’s response to the European Union. The government said that the Eurobond release raised enough cash ($700 million) to pay off its $500-million emergency debt to Russia. Investors from the US (42 percent), also home to the world's second-largest population of Diaspora Armenians (after Russia), evinced the most interest in Armenia’s Eurobond, Sarkisian said, Regnum reported.
Joining Moscow’s plans for creating an economic USSR came as a blow for hopes for the region’s European integration, but it is expected to bring short-term benefits -- both economic and political -- for Armenia. The IMF said that Armenia is in for lower natural-gas prices and the “financing of major infrastructure projects.”
Looking back from its new social status in the world, Yerevan conceded that being poor had its benefits. Armenia is no longer eligible for concessional international borrowing (usually defined as cheaper than market rates), Sarkisian said, and now the country has to be less reliant on loans. That’s why the Eurobond comes in handy, he said . . . though it is still a loan of a different type.