Armenian Minister of Economy: “We make sure not to fall under sanctions”

Vahan Kerobyan

– With whom did you have meetings in Moscow and to what extent was the topic of special military operation and the effect it has on the bilateral economic relations among other things discussed?

– I met with my colleagues from four ministries – economic development, industry and trade, digitalisation (Ministry of Digital Development – RBC) and agriculture. We had an extensive agenda everywhere and, of course, it has been adjusted to the new situation. You know that our countries are strategic partners; Russia is Armenia’s largest trading partner. And for us the current situation is a big challenge, but also some opportunities.


– How many Russian and Ukrainian citizens have come to Armenia since the start of the military operation? How long do you think they will stay in your country? Are there any restrictions on how long they can stay in Armenia?

– As for the citizens of Ukraine, mainly the Armenian diaspora came and they returned. Ukrainians by nationality are not very numerous, maybe a couple of thousand, no more. As for the flow from Russia, according to the latest data, it is about 75 thousand people, of which again about half with Armenian passports. We don’t know how long they will stay in Armenia. When I flew to Russia from Armenia, there were a lot of Russians on the plane, who had arrived in Yerevan some time ago and were now returning. So to say that the figure quoted is the number of people who decided to stay and live in Yerevan, I would not take the risk. As for time, you can live in Armenia for 180 days without any special documents. But if you live longer, it simply means a monetary fine. All these regulations are defined by the EEU legislation. In general, Armenia, you know, is a hospitable country, all the more so for citizens of the Russian Federation to live and work freely.


– Aren’t you afraid that in your hospitable country there will suddenly be some hotbeds of tension or violence between citizens who have come from Russia and Ukraine?

– We had a day when people who opposed the special military operation and people who supported it held two different rallies. And many people wondered: how can it be? But we have a democratic country and everyone has the right to speak out.


– With so many Russians coming to Armenia, can we expect to see more Russian investment in the Armenian economy?

– Russia is already the biggest investor in Armenia. And we think, based on many factors, that the rate of investment should be at least the same. It is clear that the economic situation is a little bit complicated due to sanctions and so on. But I think that economic activity of our cooperation should not decrease, but rather it should increase.


“We are very careful to avoid sanctions”

– In March, about 27 thousand new accounts were opened in Armenian commercial banks, non-resident, in different currencies. Most likely, the vast majority of these accounts are Russian, non-resident…

– So it is, yes.


– How are such accounts audited? In theory, can a Russian who is on the sanctions lists in the EU or the US freely open an account in an Armenian bank?

– Our banks carry out a thorough KYC, that is, the “know your client” procedure. Even deeper than we would like. In terms of customer service, they are probably too bureaucratic about it. But we understand them. They don’t want to feel the secondary sanctions on themselves. And that’s why it takes a little longer than usual for KYC to happen. But the number of accounts you mentioned indicates that banks are mostly opening accounts anyway. I have hardly ever heard of any cases of account opening being refused. Sometimes it drags on, some people try in several banks at the same time, but in the end it all works out.


Is the Russian Mir card accepted everywhere in Armenia now? Or are there refusals from Armenian banks?

– As far as I know, there are no such problems amongst the problems faced by Russians. That is, the Mir card is accepted in almost all payment points and in many ATMs too.


– If you have had contact since the end of February with European or American representatives, have they advised you not to help Russia circumvent the sanctions? The Kazakh leadership, let’s say, was firm in saying that they would not help Russia circumvent the sanctions.

– In fact, we are very careful not to get sanctioned, because it is not in our interest in any way. We want to work to avoid that. European and American colleagues have made it clear to us that they do not want to use negative instruments against Armenia.


– A subsidiary of Russia’s VTB bank, VTB Armenia, is operating in Armenia. Will it continue its work? What will happen to Teghut copper-molybdenum deposit it owns?

– You know VTB is under sanctions in Armenia as well. Both the shareholder, the creditor and the main buyer are all under sanctions, and the mine now stands idle. We are working out several options for development, but there is one invariable factor in all of them – the company must work. We are in a situation now where we can’t afford the luxury of closed mills. So we are ready to help the shareholders and the company itself so that operations can resume as soon as possible.

The bank is under sanctions, it is working, but certainly not to the extent that it was before. I think there are several development scenarios in this sense: merger with another bank, buyout by another shareholder, new shareholders, etc. That is, these issues are also being actively discussed now so that the company will continue to operate on its own.


– What are the options concerning the oil field? VTB will have to sell it to a non-sanctioned entity or company? Or, perhaps, permission from the U.S. authorities may be obtained?

– This is one of the options.



Vahan Kerobyan was born on 1st of October 1976 in Yerevan. In 1998 he graduated from the Mathematics Department of Yerevan State University.

He has worked as computer systems engineer, network information specialist in the information-publishing department of the Government of Armenia, and as a specialist in Trustbank and HSBC Bank Armenia. From 2006 to 2012 he was the Executive Director of Star Divide CJSC.

In 2012 he founded and until 2020 headed Menu Group, a food delivery company operating in Armenia and Belarus.

Since November 2020 he has been the Minister of Economy of Armenia.

Married, with five children.


“Companies come in, integrate very quickly”

– You mentioned 75,000 Russians coming. That is a lot. In your opinion, is it a burden on Armenia’s infrastructure or its economy or, on the contrary, an opportunity for revitalisation, particularly in the consumer or rental housing sectors?

– Rental housing is the most problematic issue. And now we are working to significantly increase supply in this segment in order to bring prices down, because it is an additional burden for those people who are already in a difficult situation. And we would not want those people who are in Armenia to incur additional expenses because of this rate hike. And it seems as if we manage to normalise the situation, to slow down the growth. I think there will be good news in the near future – we will see a small, but decrease in prices.


– Can you tell us a little about these measures? You can’t deliver 100 new houses, can you?

– We work intensively with developers and with realtors. And it is clear that not all flats in new buildings are lived in. Developers proactively contact the owners of houses and flats, so that if they do not intend to live in them in the near future, they can take over the management of these properties and put them, so to speak, on the rental housing market. In Yerevan, for example, there are several tens of thousands of uninhabited secondary flats, not new, and realtors are also proactively looking for owners of these houses. There are problems – some have gone to America, Russia etc. But anyway, these flats, which were just locked up, are now being opened up, renovated, to add supply to the market.


– Many Russians who are now temporarily emigrating from the country belong to the skilled professionals, the creative class. Some of them complain on social networks that they lack some Moscow-based services in Armenia, such as food delivery, etc. Do you think such requests from Russians can have a positive impact on local businesses?

– As for food delivery, you probably know that, before I became minister, I was a funder of one such service, which worked in several countries. On food delivery everything is fine, I assure you. But I realise that, for example, banking services in Russia are much more advanced. It is interesting that sometimes the Russians themselves solve all these problems. We see that in some sectors guys quickly expand their business to Armenia as well. For example, I know a girl, Anastasia Faizulenova, who is the founder of the Checkme service. She made such sales in Armenia that everyone was very surprised. She managed to sell voluntary health insurance to Armenian companies in a way that is unimaginable.

We see that these kinds of companies come in and integrate very quickly, amazingly quickly, I would say. And business in Armenia is very open to cooperation from their side and this cooperation certainly gives good results.


“The Russian market has become freer and less competitive”

– This year, according to the official forecasts of the EAEU, the economy of the union was expected to move to real growth. What is your prognosis now?

– Last year we had good growth, trade between all the countries increased significantly. And we expected this growth to continue this year. But, look, due to the fact that many Western companies or some Western companies have decided to leave the Russian market, part of this load is being transferred to EAEU partners. Initially the prognosis is that there should be no decline in mutual trade. But there is a big question here, which is the predictability of the ruble exchange rate. Because somewhere around 60% of export contracts from Armenia were concluded in Russian rubles. And we can see that exporters are highly concerned about the uncertainty of the ruble exchange rate. Though, in January and February we had a huge increase: imports from Russia grew by 70% and exports by about 50% during these two months. But in March we see a strong deviation, i.e. a decrease in sales. And that is why we need to resolve this issue as soon as possible, which will give a positive impetus to the restoration of the previous level.


– What are your expectations on remittances made by migrants working in Russia to Armenia? That is about 6% of the country’s GDP.

– This again is a complex issue. Our migrants were sending money, but it is not really good money, I would say so. Because those people who receive this money, they did not work, they did not create economic activity. In addition, mostly migrants worked in the construction sector in the Russian Federation, and there are many vacant positions in the construction sector in Armenia. We see that there is some reduction in labour migration, but we think this will help the relevant sphere in Armenia, where we have an acute labour shortage. So these are both pluses and minuses again.


– According to the Russian Central Bank, somewhere around 47% of Russian exports to Armenia in 2021 were in US dollars, and about a third of Russian imports from Armenia were in dollars. How could the currency structure of these settlements change from 2022? And will it be a problem to switch, to expand trade in rubles, in national currencies in general, given that confidence in the ruble is not increasing right now?

– You said “in national currencies” – and this is the right expression, because you should not exclude Armenian Dram or Kazakh Tenge from possible payment methods. We think that countries’ central banks should create an appropriate environment so that payments in national currencies with visibility or with predictability of exchange rates can take place. Of course, central banks initially say that their main objective is to control inflation, but it is the facilitation of trade that affects price levels. If given the appropriate tools to loosen up trade, let’s say, then we can expect costs to be lower or prices to be lower too.


– Last year, according to the trade statistics, Armenia received $414 million worth of natural gas from Russia, and about $270 million worth of oil products. Will Russian gas supplies continue after 2022? In what currency are they delivered and do the parties intend to change it?

– As far as I know, the last few payments have been made in roubles, but at the appropriate exchange rate. That is, the pricing is in dollars, but the payments are now made in rubles, if I’m not mistaken. As for further issues regarding pricing or payment, I think there is an understanding that we should move to national currencies. And I think there is a move in this direction from the Russian side as well.


– Recently Moody’s Investors Service rating agency downgraded the forecast for the Armenian GDP growth from 5 to 1.8 percent this year. What are your GDP forecasts for Armenia this year and next?

– We initially budgeted GDP growth of 7% for 2022. But in the first two months we had 12% growth. We had a very sharp start this year, and we were aiming for much more than the budgeted 7%, and the preconditions were and are in place. As for the rating agencies, when there is a lot of uncertainty, they start lowering their forecasts sharply. And I know that international financial organisations do this too. When we discuss with them the methodology, how they do it, they usually say: “Maybe so-and-so scenario will materialise”. That is, they always take the worst-case scenarios with uncertainties and put that into the new forecast, so to speak.

We don’t really change our targets. And we are aiming for that 7% growth. We should also take into account that now, at a time of strong growth in food prices, the cost of the consumer goods basket is increasing and large segments of the population may find themselves below the poverty line. In Armenia, the prognosis is that poverty may increase from the current 27% to 42%. Of course, there is economic growth, but it is very difficult to make sure that economic growth is directed to the pockets of the vulnerable. Usually some people benefit from economic growth and others lose from inflation. And the government’s job is to make sure that economic growth changes the lives of the poorest people.


– Last year the trade turnover between Russia and Armenia was $2.5bn…

– $2.6 billion.


– Can the sanctions against Russia serve as a driver of growth in any categories of trade turnover? Or will they only make it worse?

– As I said, the fact that the Russian market has become freer and less competitive is certainly a big opportunity. Of course, with that said, there is a big challenge in dealing with companies that have been hit by sanctions. But we still have to look in detail at specific cases and make sure that risks are not realised and opportunities are realised. It helps a lot here that the team we have at the ministry, mostly from business, understands the essence of the issue and has the ability to solve these problems. My two deputy ministers are natives of Russia, they worked in Russia for a long time. One of them has made a career in the Ministry of Industry and Trade, the other in the government of Moscow Region. They know Russia very well, they communicate easily with their colleagues, and so do I. And I think we are doing all we can to both be useful as much as possible and to achieve growth in turnover as a whole.


“The immediate effect of economic growth could be as much as 30%”

– There has been a lot of news recently about negotiations concerning normalization of relations between Armenia and Turkey. Have you calculated any economic effect in case the borders are opened?

– Yes, of course. Our team and the Economic Institute are thinking about it, working on it. Besides, we have international expert assessments in this regard. We expect that after the opening, the immediate effect of economic growth could be up to 30%. This is the immediate effect of the unblocking of communications. We see that now in fact import from Turkey is possible and allowed into Armenia, but export is not. So in this respect we will only benefit. Of course, the political component is very important, so that we have a long-term peace. And now together with the neighboring countries we are having intensive negotiations regarding this issue. As you know, recently the Prime Minister of Armenia met with the President of the European Council and the President of Azerbaijan in Brussels and it was decided to establish a bilateral working group on delimitation and demarcation by the end of April.


– Turkey has become the hub through which Russians enter the world. Armenia could also be a hub if its airlines were not on the EU’s blacklist. Are you taking any action to get Armenian airlines off the blacklist?

– We have recently emerged two new airlines. One of them is already active, the second will start operating in May. One is a joint venture with a Moldovan airline, the other is a joint venture with Air Arabia. The state supports these new airlines so that they actively develop and work. As for the hub, yes, we now have more than 20 flights to Russia every day, and in one way or another, the passenger flow is big enough. And if there is demand, we will work to meet this demand.


– Don’t you have any understanding when Armenian air companies may fly to the EU?

– As a matter of fact a lot of airlines now fly from EU to Armenia. I cannot say exact dates, we are working in this direction. It is really not easy.

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