Armenia is a candidate default country
By Laman Sadigova
Armenia almost announced itself bankrupt after Nerses Yeritsyan, the Deputy Chairman of the Armenian Central Bank, reported to the parliament the absence of the nation’s gold reserves.
He did not clarify where and how the reserves had disappeared, but made the revelation that the country is insolvent.
The first discussions over the fact that Armenia has lost its gold reserves began in 2004, when it became known that the Central Bank sold off the country’s 1.4 tons of gold. The price at which Armenia sold its gold was a paltry $200 per ounce, despite the true cost being much more.
Gold reserves are held by national central banks as a store of value and as a guarantee to redeem promises to pay depositors or to secure the national currency. In other words, gold reserves are a type of cushion that works to cover the country in its harshest days.
Furthermore, since gold can be used as a method of payment at any time, gold reserves is a way to achieve economic independence. At a time when Armenian gold reserves are equal to zero, the country will be unable to carry out financial policy and cope with emergency situations.
In other words, if any shocks were to occur, no one will accept their national currency, the dram, which is nothing more than paper, and will instead request gold, which the Armenian Central Bank lacks.
The most interesting thing is that nobody knows who ordered the selloff and who is to be blamed for the country’s desperate situation.
Stable countries like Germany, Italy and France keep more than 60 percent of their state assets in gold. The Armenian government, however, has shamelessly plundered its state coffers, bringing the country to the precipice.
As to who should be held responsible for the country’s bankruptcy, remains a question to tackle. But the people should now think more about their futures, which seem doomed to fail...
Where is all the money, and where has the Armenian government spent all the national reserves?
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