PFA Policy Forum Armenia: The panic in Russia is channeling itself into the Armenian financial market as expected. Banks with significant lending in foreign exchange will be the first ones to be affected. The contagion is likely to spread to others soon after. The devaluation/inflation spiral and inability of banks to collect on loans will likely result in a series of bankruptcies and freeze economic activity. Compounded by a very low credibility of the Central Bank, lack of fiscal space to act as a buffer, and--more importantly--absence of a professional team of economists to manage a crisis, we predict dire consequences for the Armenian economy. Time to rethink the current model and replace those who have gotten the country to this point.
Posted on: Tue, 16 Dec 2014 18:16:35 +0000
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