(IMI) ARMENIA, COMMERCIAL NEWS SUMMARY:

UNCLAS SECTION 01 OF 02 YEREVAN 000127

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E.O. 12958: N/A
TAGS: KTDB BBSR BEXP BTIO AM
SUBJECT: (IMI) ARMENIA, COMMERCIAL NEWS SUMMARY:
JANUARY, 2005


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SUMMARY
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1. This cable summarizes press reporting on commercial
developments in Armenia for January 2005. Major
headlines include:

-- EBRD invests in private Armenian construction
company;

-- French company takes over Armenia's water supply
system under the World Bank credit program;

-- Kazakh bank plans to buy 48.9 percent of shares of
Armenia's Interinvestbank;

-- A newly established Swiss-owned bank opens in
Armenia; and

-- Armenia's National Statistics Service releases 2004
year-end statistics.
End Summary.

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EBRD INVESTS IN ARMENIAN PRIVATE CONSTRUCTION COMPANY
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2. The European Bank for Reconstruction and
Development (EBRD) invested 850,000 Euros to buy 28
percent of the Armenian construction company Shen
Concern. This is the first time that EBRD has invested
in a private construction enterprise in Armenia. Shen
Concern will use EBRD funds to begin production of
concrete products and other construction materials. By
April 2005, the EBRD plans to increase its share of
Shen Concern to 36 percent.

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FRENCH COMPANY TO TAKE OVER ARMENIA'S WATER SYSTEM
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3. Saur France, one of the world's largest water
supply companies, won the right to operate the Armenian
Water and Sewerage Joint-Stock Company (AWSC) in an
international tender in August 2004. The Government of
Armenia and Saur France recently signed a management
contract for four years with a possible two-year
extension. AWSC is planning to invest USD 15.7 million
over the next four years to restore the water supply
system outside Yerevan. The World Bank financed USD 23
million of the project costs.

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KAZAKH BANK TO BUY SHARE OF INTERINVESTBANK
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4. Kazakhstan-based TuranAlem Bank intends to acquire
48.9 percent of the Armenian Interinvestbank.
Interinvestbank's two other shareholders are also
foreign companies: ZRL from Austria (31.1 percent) and
Mobilex from Kazakhstan (20 percent). The acquisition
is awaiting approval of Armenia's Central Bank.
TuranAlem's shareholders include EBRD, IFC, and several
German banks.

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A NEWLY ESTABLISHED SWISS-OWNED BANK OPENS IN ARMENIA
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5. A group of Diaspora-Armenians based in Switzerland
recently established ArmSwiss Invest and Trust Bank
(AITB) in Armenia. The Armenian Central Bank licensed
AITB in July 2004, and the bank recently transferred
the minimum statutory capital of USD 6 million to
Armenia. AITB plans to provide private banking
services.

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ARMENIA'S 2004 YEAR-END STATISTICS
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6. According to the Armenian National Statistical
Service, real GDP growth was 10.1 percent in 2004.
Inflation was 7 percent, higher than the Central Bank's
target of 3 percent. Armenia's foreign trade increased
by 5.1 percent to USD 2.1 billion, despite a dramatic
fall in Armenia's diamond trade. For the first nine
months of 2004, trade with the U.S. accounted 8.8
percent of country's foreign trade, about USD 130
million. The average dram/dollar exchange rate was
533.45 dram/dollar.
EVANS