By Samvel Avagyan

By the end of November 2010, Armenia`s gross international reserves had totaled U.S. $1.8 billion. The Central Bank of Armenia (CBA) is in charge of the country`s international reserves.

Securities constitute the greater part of Armenia`s international reserves - U.S. $1.3 billion or 72%. But the question is: how reliable are the securities? The global crisis in 2008-2009 showed that no securities are one hundred per cent reliable, and reliability criteria are rapidly changing. Even securities issued by some European Government were listed among risky. Among them are Greece, Portugal and Spain. Last year Greece was on the point of default, but was saved by Angela Merkel.

The CBA does not normally report information on the securities invested in international reserves and on profit. Armenian News-NEWS.am tried to find out if the CBA has Greek, Portuguese and Spanish bonds. The CBA informed us that Armenia`s international reserves are invested in highly reliable assets.

Armenia`s external reserves are managed following the three principles:

Security
Liquidity
Profitability

The CBA assured Armenian News-NEWS.am that Armenia`s external assets do not face any risks.

Such explanations could be acceptable before the crisis though the CBA-applied reliability criteria do not always prove their worth. We can only recall the explanations for the reasons for the sale of gold from the country`s external reserves. According to the CBA, gold was not a long-term profitable asset. At present, however, the entire world prefers gold as reserve assets.

Under Article 52 of the RA Law on Central Bank, the CBA, in managing international reserves, is to give priority to security ad liquidity. The law does not say anything about profitability. However, international reserves have become a rather serious source of profit. They are formed due to soft credits of the International Monetary Fund (IMF) to be invested in bonds later.


It is time for the CBA to make the international reserve management process more transparent. Nothing prevents the CBA from reporting more detailed information on international reserves.