YEREVAN, December 20. /ARKA/. IMF newly appointed Resident Representative to Armenia, Mark Horton, said today that value of Armenian dram has been somewhat overestimated.
He finds the current account deficit that makes up 15% of GDP too high for Armenia.
In his opinion, value of the national currency should be changed.
Pointing out that Armenian banks’ liquidity is very high, Horton assumed that this was perhaps due to high dollarization.
Banks have great dollar liquidity. This factor impacts exchange rates and supports the dram.
However, Horton thinks this situation is due to latest developments in the banking sector and changes in norms. He doesn’t rule out that the current situation is temporary.
The IMF resident representative said that banks had accumulated dollars over the summer thanks to changed reservation norms, but this dollar liquidity would dwindle later.
On April 14, the Central Bank of Armenia tightened capital adequacy and currency regulation norms.
As a result, banks ought to reserve 18% of their capital for risky loans now instead of former 12%.
Horton also said that deposit dollarization that reached its peak of 73%-75% six months ago has already fallen to 60%.
In his opinion, Banks should also attract deposits in drams.-0—
