(IMI) ARMENIA, COMMERCIAL NEWS SUMMARY:

UNCLAS SECTION 01 OF 02 YEREVAN 000973

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TAGS: KTDB BBSR BEXP BTIO AM
SUBJECT: (IMI) ARMENIA, COMMERCIAL NEWS SUMMARY:
MAY, 2005

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

-- Germany to finance mortgage loan development
program in Armenia;

-- "Dun and Bradstreet" takes share of Armenian
credit bureau;

-- OPEC fund to invest in Armenia's private
sector;

-- U.S. foundation acquires a bank in Armenia;

-- Draft law on venture capital ready for
parliament's consideration; and

-- May 2005 economic highlights.

END SUMMARY.

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GERMANY TO FINANCE MORTGAGE LOAN DEVELOPMENT
PROGRAM
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2. According to Armenia's Minister of Finance
and Economy, Germany will give 7.5 million Euros
to develop Armenia's mortgage loan market in
2005-2006. The program plans to provide mortgage
loans with terms of 7-8 years at 10 percent
annual interest. Currently mortgage loans terms
are 3-5 years at 12-16 percent interest.

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U.S. COMPANY TAKES SHARE OF ARMENIAN CREDIT
BUREAU
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3. The Armenian Credit Reporting Agency (ACRA)
and U.S. Credit Risk Company, Dun and Bradstreet
Corporation, have signed an agreement in Yerevan
giving the latter a 5 percent share in ACRA. Dun
and Bradstreet's Managing Director for Central
Asia and the Middle East said that they plan to
introduce modern technology to the Armenian
company and give ACRA access to their global data
network. Established in 2004 by the U.S.-based
Credential Inc., ACRA is the first private credit
bureau in Armenia. Germany's SCHUFA credit
bureau is also a shareholder of ACRA.

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OPEC FUND TO INVEST IN ARMENIA'S PRIVATE SECTOR
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4. The Government of Armenia (GOAM) has signed
two agreements with the OPEC Fund for
International Development (the Fund). The Fund
will provide a USD 5 million loan for a rural
economic development project. The International
Fund for Agricultural Development (IFAD) will
administer the loan through its existing USD 15.3
million Economic Development of Rural Areas
credit program, for a total program value of over
USD 20 million. IFAD will give USD 10 million in
loans to family enterprises and SMEs, USD 310,000
for the development of a network of organizations
providing business services and USD 9.4 to
restore infrastructure.


5. In February 2005, the GOAM and the OPEC Fund
signed an Investment Encouragement and Protection
Agreement within the framework of Fund's Private
Sector Facility Program. Through this program
the Fund may finance private sector activities by
lending or investing in equities or bonds. The
agreement still needs to be approved by the
Constitutional Court of Armenia.

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U.S. FOUNDATION BUYS COMMERCIAL BANK IN ARMENIA
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6. U.S.-based Cafesjian Family Foundation
acquired Emporiki Bank Armenia, a Greek-owned
bank in Yerevan. The bank will be renamed
Cascade Bank and will become a part of the
Yerevan-based company, Cascade Capital Holdings,
owned by Armenian-American businessman Gerard
Cafesjian. The Cafesjian Family Foundation has
several commercial projects in Armenia, and is
active in media, financial services, renewable
energy, and construction.

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DRAFT LAW OF VENTURE CAPITAL READY FOR PARLIAMENT
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7. With the assistance of the Eurasia
Foundation, the Corporate Governance Center
introduced a concept for a venture capital system
in Armenia, as well as a draft law on venture
capital. The concept is based on an extensive
study of the experience of many countries
worldwide. According to the Managing Director of
the Union of Armenian Banks, who participated in
developing the concept, both the concept and
draft law will be presented soon to the National
Assembly for consideration.

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MAY 2005 ECONOMIC HIGHLIGHTES
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8. According to the Armenian National
Statistical Service, from January to April 2005
the country's real GDP grew by 8 percent to USD
763 million. Industrial production increased by
2.6 percent January-April 2005 to USD 413
million. Agricultural output grew 1.7 percent to
USD 119 million. From January to April 2005,
Armenia's foreign trade increased by 30.1 percent
to USD 789.4 million. From January to April
2005, exports totalled USD 375.2 million, and
imports USD 514.2, leaving a foreign trade
deficit of USD 139 million. Inflation was 3.6
percent during the period of January to April
2005 compared to the same period last year.
GODFREY