(IMI) ARMENIA, COMMERCIAL NEWS SUMMARY:

UNCLAS SECTION 01 OF 02 YEREVAN 000329 SIPDIS COMMERCE FOR 3150/PBRADLEY/BSMITH COMMERCE FOR 4201/ITA/IEP/OEERIS/BISNIS/EHOUSE EMBASSIES - PLEASE PASS FCS DEPT FOR EUR/CACEN, EB/CBA ANKARA ALSO FOR CFC/ SNYDER/BALLINGER PASS TDA-STEIN, OPIC, EXIM-TUMMINIA/PANARO E.O. 12958: N/A TAGS: KTDB BBSR BEXP BTIO AM SUBJECT: (IMI) ARMENIA, COMMERCIAL NEWS SUMMARY: FEBRUARY, 2005 -------------- SUMMARY -------------- ¶1. This cable summarizes press reporting on commercial developments in Armenia for February 2005. Major headlines include: -- Austrian bank to finance Armenian metals company; -- Armenia to start negotiations on new IMF program; -- Central Bank of Armenia licenses new foreign bank; -- Japanese firm to launch emissions trading business in Armenia; -- World Bank to provide USD 55 million to Armenia in 2005; and -- Armenia January economic highlights. End Summary. -------------- --- AUSTRIAN BANK TO FINANCE ARMENIAN METALS COMPANY -------------- --- ¶2. Austrian bank Raiffeisen will provide USD 1.5 million in credit to the Armenian Copper Program (ACP) closed joint-stock company, a copper mine and processing plant. This will be part of a USD 4.5 million credit program managed by the European Bank for Reconstruction and Development (EBRD). -------------- --- ARMENIA TO START NEGOTIATIONS ON NEW IMF PROGRAM -------------- --- ¶3. In March 2005 the International Monetary Fund will start talks with Armenian authorities on the terms of a new multimillion-dollar loan program to support Armenia's macroeconomic stability. According to the IMF Resident Representative, it will be another three- year program with two reviews and tranches each year. The new program will focus on reforms of the tax and customs services and the financial sector. -------------- -------------- CENTRAL BANK OF ARMENIA LICENSES FOREIGN NEW BANK -------------- -------------- ¶4. Armenia's Central Bank Board approved licensing of a newly established partially foreign-owned bank, BNF. Its shareholders include both local and foreign investors: one of the key shareholders is a Canadian entrepreneur. The bank's initial capitalization will be USD 5 million. Currently 20 banks are operating in Armenia. -------------- EMISSIONS TRADING BUSINESS STARTS IN ARMENIA -------------- ¶5. Japanese corporations Shimizu Corporation, Mitsui & Co. and Hokkaido Electric Power Co. plan to start a greenhouse gas emission rights trading business in Armenia. The project is awaiting approval as a clean- development-mechanism (CDM) business under the terms of Kyoto Protocol, which will give it emission rights elsewhere in exchange for reducing emissions in Armenia. According to the plan Shimizu will build a power generation plant to produce electricity from methane gas from a waste disposal site. The facility would eliminate 135,000 tons of carbon dioxide each year, which the Japanese corporations could use to offset emissions elsewhere or sell to other companies for the same purpose. The company intends to invest some USD 8 million in this project. -------------- -------------- WORLD BANK TO LOAN USD 55 MILLION TO ARMENIA IN 2005 -------------- -------------- ¶6. According to the World Bank's Yerevan Office, the Bank will provide three loans in 2005 for the implementation of economic reforms in Armenia. Under this program the World Bank will direct USD 20 million to the improvement of the water supply system in Yerevan. Another USD 20 million will support the development of the agricultural sector, including SMEs involved in agribusiness. The final USD 15 million help establish a new heat supply system in Yerevan and other cities throughout the country. The World Bank's Armenia portfolio includes 17 credit programs, of which six programs were approved last year. -------------- ARMENIA JANUARY ECONOMIC HIGHLIGHTS -------------- ¶7. According to the Armenian National Statistical Service, Armenia's real GDP in January 2005 grew by 3.6 percent compared to January 2004. Compared to the same period in 2004, Armenia's foreign trade in January 2005 increased by 32 percent to USD 160.7 million. The inflation rate during January 2005 was 4.9 percent, higher than the 3 percent target for the entire year. Inflation in Armenia is cyclical, and January is typically the most inflationary month. GODFREY