US embassy cable - 05YEREVAN973

UNCLAS SECTION 01 OF 02 YEREVAN 000973 
 
SIPDIS 
 
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E.O. 12958: N/A 
TAGS: KTDB, BBSR, BEXP, BTIO, AM 
SUBJECT: (IMI) ARMENIA, COMMERCIAL NEWS SUMMARY: 
MAY, 2005 
 
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SUMMARY 
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1.  This cable summarizes press reporting on 
commercial developments in Armenia for May 2005. 
Major headlines include: 
 
-- Germany to finance mortgage loan development 
program in Armenia; 
 
-- "Dun and Bradstreet" takes share of Armenian 
credit bureau; 
 
-- OPEC fund to invest in Armenia's private 
sector; 
 
-- U.S. foundation acquires a bank in Armenia; 
 
-- Draft law on venture capital ready for 
parliament's consideration; and 
 
-- May 2005 economic highlights. 
 
END SUMMARY. 
 
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GERMANY TO FINANCE MORTGAGE LOAN DEVELOPMENT 
PROGRAM 
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2.  According to Armenia's Minister of Finance 
and Economy, Germany will give 7.5 million Euros 
to develop Armenia's mortgage loan market in 
2005-2006.  The program plans to provide mortgage 
loans with terms of 7-8 years at 10 percent 
annual interest.  Currently mortgage loans terms 
are 3-5 years at 12-16 percent interest. 
 
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U.S. COMPANY TAKES SHARE OF ARMENIAN CREDIT 
BUREAU 
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3.  The Armenian Credit Reporting Agency (ACRA) 
and U.S. Credit Risk Company, Dun and Bradstreet 
Corporation, have signed an agreement in Yerevan 
giving the latter a 5 percent share in ACRA.  Dun 
and Bradstreet's Managing Director for Central 
Asia and the Middle East said that they plan to 
introduce modern technology to the Armenian 
company and give ACRA access to their global data 
network.  Established in 2004 by the U.S.-based 
Credential Inc., ACRA is the first private credit 
bureau in Armenia.  Germany's SCHUFA credit 
bureau is also a shareholder of ACRA. 
 
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OPEC FUND TO INVEST IN ARMENIA'S PRIVATE SECTOR 
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4.  The Government of Armenia (GOAM) has signed 
two agreements with the OPEC Fund for 
International Development (the Fund).  The Fund 
will provide a USD 5 million loan for a rural 
economic development project.  The International 
Fund for Agricultural Development (IFAD) will 
administer the loan through its existing USD 15.3 
million Economic Development of Rural Areas 
credit program, for a total program value of over 
USD 20 million.  IFAD will give USD 10 million in 
loans to family enterprises and SMEs, USD 310,000 
for the development of a network of organizations 
providing business services and USD 9.4 to 
restore infrastructure. 
 
5.  In February 2005, the GOAM and the OPEC Fund 
signed an Investment Encouragement and Protection 
Agreement within the framework of Fund's Private 
Sector Facility Program.  Through this program 
the Fund may finance private sector activities by 
lending or investing in equities or bonds.  The 
agreement still needs to be approved by the 
Constitutional Court of Armenia. 
 
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U.S. FOUNDATION BUYS COMMERCIAL BANK IN ARMENIA 
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6.  U.S.-based Cafesjian Family Foundation 
acquired Emporiki Bank Armenia, a Greek-owned 
bank in Yerevan.  The bank will be renamed 
Cascade Bank and will become a part of the 
Yerevan-based company, Cascade Capital Holdings, 
owned by Armenian-American businessman Gerard 
Cafesjian.  The Cafesjian Family Foundation has 
several commercial projects in Armenia, and is 
active in media, financial services, renewable 
energy, and construction. 
 
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DRAFT LAW OF VENTURE CAPITAL READY FOR PARLIAMENT 
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7.  With the assistance of the Eurasia 
Foundation, the Corporate Governance Center 
introduced a concept for a venture capital system 
in Armenia, as well as a draft law on venture 
capital.  The concept is based on an extensive 
study of the experience of many countries 
worldwide.  According to the Managing Director of 
the Union of Armenian Banks, who participated in 
developing the concept, both the concept and 
draft law will be presented soon to the National 
Assembly for consideration. 
 
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MAY 2005 ECONOMIC HIGHLIGHTES 
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8.  According to the Armenian National 
Statistical Service, from January to April 2005 
the country's real GDP grew by 8 percent to USD 
763 million.  Industrial production increased by 
2.6 percent January-April 2005 to USD 413 
million.  Agricultural output grew 1.7 percent to 
USD 119 million.  From January to April 2005, 
Armenia's foreign trade increased by 30.1 percent 
to USD 789.4 million.  From January to April 
2005, exports totalled USD 375.2 million, and 
imports USD 514.2, leaving a foreign trade 
deficit of USD 139 million.  Inflation was 3.6 
percent during the period of January to April 
2005 compared to the same period last year. 
GODFREY