YEREVAN, February 4. / ARKA /. About $1.728.5 billion were sent to Armenia in 2014 as private money transfers for non-commercial purposes through the banks, the Central Bank reported saying the amount represented a 7.5% or $141.1 million drop from the previous year.

According to a statement on the regulator’s official webpage, about $339.5 million were remitted from Armenia to other countries, up from $324.2 million remitted in 2013. The rise was 4.7 percent. The net inflow of remittances thus amounted to about $1.388.9 billion, down from $1.545.6 billion in 2013.

In December 2014 some $127.3 million were sent to Armenia as private money transfers, by 9.1 percent more form the previous month, however, it was 24.5 percent less than in 2013 December.
As usual, the bulk of money transfers - about 82.9 percent or approximately $1.434.2 billion - came from Russia. When compared to 2013 their amount was 10.7 percent down. In the meantime the amount of money remittances to Russia grew by 12.6 percent to $203.2 million.

Economists explain the decline in private remittances by continuing economic stagnation in Russia that experiences also the negative effects of Western sanctions imposed over the crisis in Ukraine. The continuing devaluation of the Russian ruble is cited as another major reason for the decline in the amount of private remittances to Armenia as the ruble today can buy fewer dollars and Euros.

Money transfers from Russia to Armenia in 2014 November decreased by 35.4% from November 2013 to approximately $95.1 million, while the amount of remittances from Armenia to Russia increased by 13.5% to $17.5 million.

The downward trend in remittances from Russia was observed for the sixth consecutive months. Remittances along with foreign investments are among major factors of Armenia’s economic growth. According to the Central Bank, transfers to Armenia in 2013 totaled $1.869.7 billion or about 17.3% of GDP.

The decline in remittances made international financial institutions revise downward their forecasts of Armenia’s economic growth for 2014. For example, IMF lowered its earlier forecast to 2.6 percent from 4.3 percent, Moody's lowered it to 2.1 percent from 3.2 percent, the Asian Development Bank cut it to 3.8 percent from 4.6 percent, the EBRD dropped it to 3 percent and the World Bank to 2.6 percent from its earlier forecast of 5 percent.

Their forecasts for 2015 are neither optimistic. The World Bank, for example, expects Armenia’s economic expansion to be 3.3 percent(the Armenian government projection is 4.1 percent). The most recent EBRD projection for Armenia suggests a zero growth for 2015, compared to 3.5 percent growth projection in its September report. The new projection is based on depreciation of the ruble and worsened economic situation in Russia.

Moody's Investors Service downgraded in January Armenia's issuer and government bond rating to Ba3 from Ba2, and changed the outlook to negative from stable because of Armenia's increased external vulnerability due to declining remittances from Russia, an uncertain outlook for foreign direct investment (FDI), an elevated susceptibility to exchange rate volatility.

On January 30 Fitch Ratings agency downgraded Armenia’s long-term foreign and local currency Issuer Default Ratings (IDRs) from ‘BB-‘ to ‘B+’, with outlook kept stable. The issue ratings on Armenia's senior unsecured foreign and local currency bonds were also downgraded to 'B+' from 'BB-'. The Country Ceiling was revised to 'BB-' from 'BB' and the Short-term foreign currency IDR affirmed at 'B.'-0-