International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2004
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(Position as of January 31, 2004)
Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: May 29, 1997.
Exchange Arrangement
CurrencyThe currency of Armenia is the Armenian dram.
Exchange rate structureUnitary.
Independently floatingArmenia has adopted an independently floating exchange rate regime. The Central Bank of Armenia (CBA) pursues a policy of monetary targeting, for which it manages the reserve money as its operational target and intervenes in the foreign exchange market only to smooth the fluctuations of reserve money. Foreign exchange transactions take place predominantly in the interbank market, in which the CBA also participates. Foreign exchange auctions in the stock exchange are not yet carried out, although the stock exchange infrastructure is in place.
Purchases and sales of foreign currency may be implemented through foreign exchange entities licensed by the CBA, including banks, foreign exchange dealers, credit institutions, and foreign exchange bureaus; or, in the case of the government, public agencies, and commercial banks, through the CBA itself, which acts as the government’s financial agent. Foreign exchange entities carry out foreign exchange transactions by setting their own buying and selling rates without any restrictions.
The exchange rate of the dram against the dollar is determined on the basis of exchange rates prevailing in the interbank market on the previous day. The official exchange rate is set as the average (midpoint) of the CBA’s buying and selling rates. The official exchange rate is used for accounting purposes and in daily operations with the treasury. Foreign exchange entities use the official exchange rate of the CBA for bookkeeping and revaluation purposes.
Foreign exchange entities and other business entities determine exchange rates for their operations independently.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketResidents and nonresidents may negotiate freely forward exchange contracts for both commercial and financial transactions in all leading convertible currencies in the domestic exchange market and at major international foreign exchange markets. However, for the time being, the forward exchange market in Armenia is still undeveloped, although some banks sign forward contracts in small amounts. On October 23, 2003, the CBA began to conduct foreign exchange swaps as a short-term instrument.
Arrangements for Payments and Receipts
Prescription of currency requirementsYes.
Use of foreign exchange among residentsResidents are prohibited from using foreign exchange as a means of payment within Armenia.
Payments arrangements
Bilateral payments arrangements
InoperativeArmenia maintains agreements with Russia and Turkmenistan.
Regional arrangementsArmenia is a signatory of the 1993 Treaty of Economic Union (with Azerbaijan, Belarus, Kazakhstan, the Kyrgyz Republic, Moldova, Russia, Tajikistan, and Uzbekistan), which provides for the eventual establishment of a customs union, a payments union, cooperation on investment, industrial development, and customs procedures. Armenia also joined the Agreement on the Establishment of a Payments Union of CIS member countries. Armenia is a member of the Black Sea Economic Cooperation, together with Albania, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine. Bilateral free trade agreements have been signed with Georgia, the Kyrgyz Republic, Moldova, Russia, Tajikistan, and Ukraine, though only the agreement with Russia is in operation. Armenia is an observer of the European Asian Economic Community.
Clearing agreementsThere is an arrangement with Turkmenistan for the importation of natural gas. In addition, bilateral clearing agreements with the Baltic countries, Russia, and the other countries of the FSU exist, but all have become largely inoperative.
Administration of controlThe CBA is the main body that formulates and administers exchange rate policy and that may issue foreign exchange regulations within Armenia. The CBA also has the overall responsibility for currency control, in close collaboration with the Ministry of Finance and Economy (MOFE). In general, the MOFE exercises authority over ministries and other administrative authorities, municipal authorities, budgetary organizations, and state funds. The CBA exercises authority over the activities of all other agents. Resident and nonresident currency dealers, including banks, may undertake foreign exchange transactions without restriction. There are no restrictions on current and capital movements unless otherwise specified by the CBA (in which case one month’s notice is required).
International security restrictionsNo.
Payments arrears
OfficialThe major part of the arrears to the Russian Federation was cleared through debt-equity swaps on August 7, 2003, and the remainder were cleared on January 29, 2004. Arrears to Turkmenistan were settled on December 2, 2003, through transfers of goods.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotes
On exports
Foreign currencyIndividuals are authorized to transfer, deliver, and export currency and securities denominated in foreign exchange up to the equivalent of $10,000 without any restriction. Exports of currency exceeding that amount are permitted through bank transfers.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Negative listImport licenses from the Ministry of Agriculture and the Ministry of Health are required and granted on a case-by-case basis to import medicinal preparations and pesticides. Imports of weapons, military equipment and parts, and explosives require special authorization from the government.
Import taxes and/or tariffsThere are two rates of customs duties: zero, which applies to most imports, and 10%, which applies to a variety of new materials and manufactured products. Products imported from countries in the CIS are exempt from import tariffs.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsAt present, there is no repatriation requirement; however, the CBA has the power, as specified by legislation, to impose such requirements on foreign exchange proceeds.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExport permits are required for medicines, wild animals, and plants. In addition, special government permission is required for the export of nuclear technology, nuclear waste, related nonnuclear products, and technology with direct military applications. Minimum threshold prices for the export of ferrous and nonferrous metals and the reexport of foreign-produced goods remain in force.
Without quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsThe CBA reserves the right to impose capital controls if necessary. New controls will be announced one month in advance.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsNonresidents are prohibited by the constitution from acquiring land in Armenia.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutionsYes.
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsEffective July 1, 2003, a 6% (previously, 8%) reserve requirement applies to deposits in both foreign and domestic currency. The reserve requirement is remunerated at an annual interest rate of 3%.
Open foreign exchange position limitsA limit of 25% applies to the gross foreign exchange position of lending institutions in convertible and nonconvertible currencies. Moreover, a limit of 5% applies to the net foreign exchange position of commercial banks in nonconvertible currencies.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 2003
Exchange arrangementOctober 23. The CBA began conducting short-term foreign exchange swap operations.
Arrangements for payments and receiptsAugust 7. The major part of the arrears to the Russian Federation was settled by debt-equity swaps.
Capital transactions
Provisions specific to commercial banks and other credit institutionsJuly 1. The reserve requirement applied to deposits in foreign and domestic currency was reduced to 6% from 8%.
Changes During 2004
Arrangements for payments and receiptsJanuary 29. The remaining arrears to the Russian Federation were cleared.

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