CBA: it is difficult to control and use remittances in Armenia

PanARMENIAN.Net - Vice-Chairman of the Central Bank of Armenia (CBA) Vache Gabrielyan delivered a report to an international conference on economic and social impact of migration, remittances and Diaspora.

Specifically, Gabrielyan said that from the viewpoint of the effects on income distribution and poverty, CBA surveys showed that 60% of remittance receiving households are in middle and high income class, and 40% are poor and extreme poor households.

It is evident that remittances affect everything: the Real Exchange Rate, as 1% growth in remittances results in 0.2% appreciation of the Real Exchange Rate in the long run, what in its turn affects export and import. Besides, remittances have an impact on consumption and investments, as well as on demand and supply.

According to the report, remittances have significantly influenced the economic growth. Besides, they were an engine of appreciation of the Real Exchange Rate during the last pre-crisis years.

At the same time, the decrease in remittances should not lead to sudden macroeconomic stops, while at micro-level it should not cause moral risks related to the unwillingness to enter the market of competitive salary.

As Armenia’s market is not sufficiently developed, it is difficult to control remittances, as well as to use them, by creating financial instruments providing with the opportunity to use their potential.

The international conference is organized by the Armenian government, CBA and World Bank.