ARMENIA COMMERCIAL NEWS SUMMARY:

UNCLAS SECTION 01 OF 02 YEREVAN 000147

SIPDIS

COMMERCE FOR 3150
COMMERCE FOR 4201/ITA/IEP/OEERIS/BISNIS
EMBASSIES - PLEASE PASS FCS
DEPT FOR EUR/CACEN, EB/CBA
PASS TDA, OPIC, EXIM

E.O. 12958: N/A
TAGS: ECON ETRD KTDB BBSR BEXP AM
SUBJECT: ARMENIA COMMERCIAL NEWS SUMMARY:
JANUARY 2006

--------------
SUMMARY
--------------


1. This cable summarizes press reporting on commercial
developments in Armenia for January 2006. Major headlines
include:

-- Armenian Central Bank establishes a new Unified Financial
Control Body;

-- World Bank (WB) approves second Poverty Reduction Support
Credit for Armenia;

--Global Gold acquires gold and uranium exploration
property;

-- Cascade Bank, CJSC, finalizes acquisition of Emporiki
Bank - Georgia S.A.;

-- December 2005 Economic Data.

END SUMMARY.

--------------
CENTRAL BANK ESTABLISHES UNIFIED CONTROL BODY
--------------


2. The Armenian Central Bank's Unified Financial Control
Body officially began operations on January 1, 2006.
According to Chairman of the Central Bank Tigran Sargsyan,
the new body would oversee all segments of the financial
market including banks, non-banking financial institutions,
insurance companies and the local stock exchange (replacing
the recently dissolved Securities Commission). The Central
Bank notes that having unified oversight would make it
easier for financial institutions to comply with
regulations. Sargsyan told the press that the new body
would have fifty staff members including many former
Securities Commission employees.

-------------- --------------
WB APPROVES SECOND POVERTY REDUCTION SUPPORT CREDIT
-------------- --------------


3. On 19 January, the World Bank approved a second Poverty
Reduction Support Credit (PRSC) for Armenia worth USD 20
million. According to a World Bank press release, the Dutch
Government had agreed to provide an additional EURO 4.7
million co-financing grant for this project. The project is
designed to assist the government with implementation of its
Poverty Reduction Strategy Program (PRSP),and has four
themes: consolidating macroeconomic discipline and
strengthening governance; sharpening competition and
entrenching property rights; addressing social and
environmental risks; and supporting the rural economy. The
World Bank loan has an annual interest rate of 0.75 percent
and was made on standard International Development
Association (IDA) terms.

-------------- --------------
GLOBAL GOLD ACQUIRES URANIUM EXPLORATION PROPERTY
-------------- --------------


4. On January 25, Connecticut-based Global Gold Corporation
(GGC) announced the acquisition of a 27 square kilometer
gold and uranium exploration property in northeastern
Armenia. Under a share purchase agreement, GGC issued
100,000 shares of common stock in exchange for an 80 percent
stake in Athelea Investments, the Armenian company that had
exploration rights for the site which is located in the
Gegharkunik Province near the village of Getik. According
to Global Gold Mining Regional Director Ashot Boghossisan,
previous research at the site indicated that there might be
exploitable gold and uranium deposits on the property. The
GGC now has a three-year exploration and drilling license
which will allow the company to better assess the viability
of these deposits. If the exploration proves successful,
GGC plans to begin a full-scale mining operation in the
area. Global Gold currently operates a number of gold and
polymetallic mines in northeastern and southern Armenia.

-------------- --------------
CASCADE BANK, CJSC AQUIRES EMPORIKI BANK - GEORGIA
-------------- --------------


5. Cascade Bank, CJSC, a subsidiary of Cascade Capital
Holdings, CJSC, purchased Emporiki Bank Georgia in late
December 2005. While the financial details of the deal are
not yet publicly available, a Cascade press release quotes
General Director of Cascade Bank Levon Levonyan as saying
"with this acquisition, Cascade Bank will further strengthen
its positions in the financial markets in Georgia and
Armenia, and actively promote cross border financial
solutions for regional and international businesses."
Cascade Capital Holding was established in Armenia in 2004
by the Cafesjian Family Foundation. In addition to Cascade
Bank, the holding company includes: Cascade Credit,
supporting trade finance facilitation and leasing; Cascade
Investments, offering a broad range of private and corporate
wealth management programs; and Cascade Insurance, providing
comprehensive Life and Non-Life insurance protection to
individual and corporate clients.

--------------
DECEMBER 2005 ECONOMIC DATA
--------------


6. According to the preliminary data from the National
Statistical Service, Armenia's real GDP from January to
December 2005 grew by 13.9 percent year-on-year to USD 4.9
billion. Industrial production totaled USD 1,422 million,
showing an increase of 7.5 percent compared to the same
period last year. Gross agricultural output for the year
2005 grew by 11.2 percent compared to 2004, and amounted to
USD 933 million. The highest growth rate was in the
construction sector which grew by 34.2 percent compared to
2004 and was valued at USD 931 million. Foreign trade
turnover reached USD 2,718 million, with imports of USD
1,768 million and exports of USD 950 million. The average
USD/AMD exchange rate was 457.69.
EVANS