Central Bank governor addresses risks linked to Russian embargo on Armenian goods

Restrictions on the export of Armenian goods pose deflationary risks and could also lead to the depreciation of the national currency, according to Central Bank Governor Martin Galstyan.

Asked at a press conference about the possible risks arising from the current situation, Galstyan said:

“Because of the embargo, we see deflationary risks. If exports decrease significantly and we are unable to offset this through other components of the balance of payments, it could affect the exchange rate of the dram. Yes, the Central Bank is considering the possibility that the implementation of the embargo and other economic sanctions could create certain short-term challenges for the economy.”

Galstyan also said that, under the current circumstances, the Central Bank is considering the possibility of supporting farmers with loan obligations through appropriate assistance measures.

“There is no agreement with the banks yet. At this stage, discussions must first take place with our government partners, followed by discussions with the banks. We have already gone through this several times — during the pandemic and the war. The support programs will not be new in nature,” the Central Bank governor emphasized.

Martin Galstyan added:

“If the price of gas suddenly increases, it will naturally lead to inflation and have secondary effects.”

Ahead of the parliamentary elections held on June 7, Russia imposed restrictions and bans on the import of numerous Armenian goods, which remain in effect today. The move prompted exporters to look for new markets, including in the EU. The EU has since announced support measures. European Commission President Ursula von der Leyen, following a phone call with Armenian Prime Minister Nikol Pashinyan, announced immediate financial assistance of more than €50 million, along with other support measures to facilitate trade, including measures to expand export opportunities for Armenian goods.

Russia has cited phytosanitary violations as the reason for the ban, which has been widely viewed by the EU as “economic coercion.”