Ukraine

Armenian Investment is Working

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Increased Investment Opportunities for Armenia

Good news for Armenian investments. According to the country’s parliament chairman, Hovik Abrahamian, attempts are being made to push for investments in the transport and energy sectors throughout the BSEC countries.* As well, the greater cohesion between BSEC member countries, the better for all, especially since this is the current goal of the National Assembly of Armenia. This is bound to lead to an increase in investment opportunities for the country.

Armenia Develops Iranian Energy Cooperation

When Armenia attempts to work with Iran, according to Armen Movisyan (the former country’s Energy Minister), around 80 percent of cooperation between the two countries comes from the energy sector, at an estimated volume of $450 million. If a third transmission is built and a hydroelectric power plant on Araks River, this will further connect the two countries which could also ultimately lead to the goal of establishing a “North – South” transport corridor.

Armenia and Energy Security

According to Sevak Sarukhanyan (Armenia’s Deputy Director of Noravank Foundation), “energy security is the most important issue for Armenia, as the country was probably the first state in CIS and the post-Soviet area to be hit by a severe energy crisis.” The two factors that basically led to this crisis were the closing of the Metasmor nuclear power plant in the late 1980s and the shifting of the country’s energy production to thermal power plants utilizing natural gas and fuel oil.

So it does seem today that there is much work to be done in terms of political and economic cohesion between Armenia and other BSEC countries, as well as Iran. At the end of the day – political affiliations and aspirations aside – most countries want the best for their citizens and that usually means working with neighboring countries to acquiesce the best investments.

*Established in 1992, the BSEC comprises Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey and Ukraine with Austria, Germany, Egypt, Israel, Italy, Poland, Slovakia, Tunisia, France, the Confederation of European Energy Charter and the International Black Sea having observer status.

Boost to Azerbaijan’s Investment Options

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Good news is potentially on the horizon for Azerbaijan.  According to experts the country looks set to move from a “stable” to a “positive” status suggesting the country will become “an investment-grade territory” in the very near future.  This is within the backdrop of the country showing general improvements vis-à-vis the government’s fiscal and external positions.  This has been most noted in the country’s acquisition of State Oil Fund of Azerbaijan’s assets.

<h3>Other Great Economic Stats</h3>

Simultaneous to this good financial news for the country is the fact that its government “registered a fiscal surplus of 14 percent of GDP in its consolidated budget,” a substantial change from its figure in 2010 of 30 percent.  Further, the government has been  making investments in other (non-oil based) sectors which are likewise starting to reap benefits with a 7.9 percent jump last year, more than double of the figure for the year before.

<h3>Need for Economic Freedom</h3>

While this of course is all great news for Azerbaijan, the country is still a long way from becoming a true global economic player.  Before that has even a hope of happening, the country  will be forced to engage in some major renovations and liberations of its economic structure.  Further the country’s securities need to be worked on which will take some efforts from its PashaBank vis-à-vis a portfolio diversification.  Because it plans on joining the overseas capital markets, there is an expected 5-y percent worth of profits from operations with securities this year.  Currently the bank’s investment portfolio stands at 31 percent of securities assets (bonds, etc.).  Experts have noted that the country needs to make it a priority to show its interest in “investing in sovereign bonds of foreign countries….particularly in Russia, Ukraine and Central Europe.”

Financial things are a-changing in Azerbaijan, that’s for sure.  But it’s going to take time.  There are a lot of economic factors that are beginning to work well in the country but its deeper political issues (i.e. the required infrastructure reform) is still a subject with which to contend.