VZCZCXYZ0020
RR RUEHWEB

DE RUEHYE #0421/01 0850724
ZNR UUUUU ZZH
R 260724Z MAR 06
FM AMEMBASSY YEREVAN
TO RUEHC/SECSTATE WASHDC 2770
INFO RUCPDOC/USDOC WASHDC
RUEHMO/AMEMBASSY MOSCOW 1053
RUEHSI/AMEMBASSY TBILISI 1692
RUEHKB/AMEMBASSY BAKU 0826
RUEHAK/AMEMBASSY ANKARA 0995
RUEHIT/AMCONSUL ISTANBUL 0454
RUEHBS/USEU BRUSSELS

UNCLAS YEREVAN 000421 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EUR/CARC, EUR/ACE 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KTDB CCSR BEXP BTIO AM
SUBJECT: ARMENIA COMMERCIAL NEWS SUMMARY:  MARCH 
2006 
 
 
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SUMMARY 
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¶1.  This cable summarizes press reporting on 
commercial developments in Armenia for March 2006. 
Major headlines include: 
 
-- Microsoft opens a subsidiary in Armenia; 
 
-- GOAM approves new technopark in Gyumri; 
 
-- Germany issues Armenia a USD 9.7 million loan; 
 
-- Public Services Regulatory Commission (PSRC) 
approves new gas tariffs for local consumers; 
 
-- February 2006 economic data. 
 
END SUMMARY. 
 
--------------------------------------- 
MICROSOFT OPENS A SUBSIDIARY IN ARMENIA 
--------------------------------------- 
 
¶2.  On March 3, Microsoft Corp. opened a subsidiary 
in Armenia headed by a full-time, locally-based 
representative.  The company plans to release 
Armenian-language versions of MS Windows and MS 
Office, to develop Microsoft based solutions for 
local business, to promote the use of licensed 
software in government offices and educational 
institutions and to provide training courses.  The 
subsidiary also hopes to expand Microsoft's 
distribution network in Armenia.  Currently, a local 
electronics company, Bi-Line, is the only licensed 
distributor of Microsoft products in the country. 
Microsoft has approximately 80 subsidiaries world- 
wide.  Its offices in Azerbaijan and Armenia are 
managed by the Central and Eastern European Division 
of Microsoft headquartered in Munich, Germany. 
 
---------------------------------- 
GOAM APPROVES TECHNOPARK IN GYUMRI 
---------------------------------- 
 
¶3.  In early March, the Armenian National Assembly 
approved a project to establish a technopark in 
Gyumri, Armenia's second largest city.  According to 
Deputy Minister of Trade and Economic Development 
Armen Gevorgyan, the technopark is designed to 
encourage information technology (IT) companies to 
open offices in Gyumri by promoting collaboration 
between companies and by providing high-quality 
office space, utilities and infrastructure support. 
Over the longer term, the government hopes that this 
project will contribute to sustainable regional 
development of high-growth industry outside of the 
capital city.  Currently, most of Armenia's IT 
companies are based in Yerevan. 
 
--------------------------------------- 
GERMANY ISSUES USD 9.7 MLN LOAN TO GOAM 
--------------------------------------- 
 
¶4.  On March 9, the Minister of Finance and Economy 
Vardan Khachatryan and the German Ambassador to 
Armenia signed an agreement on financial cooperation 
under which Germany will provide Armenia with a USD 
9.7 million (Euro 8 million) loan through the German 
KfW bank.  The majority of the loan, USD 7.2 million 
(Euro 6 million) aims at further developing the 
local mortgage market by extending mortgage terms to 
ten years and reducing interest rates.  The 
remainder (USD 2.4 million) will be used to 
rehabilitate water and sewage treatment plants in 
the cities of Gyumri and Vanadzor.  According to 
Minister Khachatryan, the interest rate for the KfW 
loan is 0.75 percent and the term is for 40 years 
with an automatic 10-year grace period. 
 
----------------------------- 
PSRC APPROVES NEW GAS TARIFFS 
 
----------------------------- 
 
¶5.  On March 10, Armenia's Public Services 
Regulatory Commission (PSRC) approved new consumer 
tariffs for natural gas imported from Russia.  The 
new tariffs will be enforced as of April 10, 2006, 
and raise the residential rate for a cubic meter of 
gas from USD 0.13 to USD 0.20 in Armenian dram 
equivalents.  The industrial rate is scheduled to 
increase from USD 0.08 to USD 0.1465 per cubic 
meter.  The new rates significantly increase the 
cost of natural gas for Armenian consumers (up by 52 
percent for residential consumers and by 85 percent 
for industrial consumers).  According to press 
reports, the government is still negotiating with 
Russian Gazprom to find ways to reduce the impact of 
the price increase on the local market. 
 
------------------------------- 
ECONOMIC DATA FOR FEBRUARY 2006 
------------------------------- 
 
¶6.  According to preliminary data from the National 
Statistical Service, Armenia's real GDP for January- 
February 2006 grew by 7 percent year-on-year to USD 
364.6 million.  Industrial production totaled USD 
198.7 million, down by 0.6 percent compared to 
January-February 2005.  Gross agricultural output 
for the January-February 2006 grew by 2.7 percent 
compared to January-February 2005, and amounted to 
USD 54.4 million.  Construction reached USD 28.14 
million, a 14.5 percent increase.  Foreign trade 
turnover was valued at USD 364.6 million, with 
imports constituting USD 251.1 million and exports, 
USD 113.4 million.  The average USD/AMD exchange 
rate was 450.93.  There was 3.8 percent inflation 
compared to December 2005, and deflation of 1.5 
percent in January-February over the same period of 
in 2005. 
 
GODFREY