Page 8 - bneMag Dec22

8 I Companies & Markets bne December 2022
to foster capital market development and deepen financial inclusion will continue to enhance the effectiveness of
the monetary policy transmission mechanism. The staff welcomes the CBA's continued commitment to the existing flexible exchange rate regime, which has served Armenia well in the face of successive external shocks, and to maintaining healthy reserve buffers."
The CBA is trying to tighten monetary policy. Its monetary policy scenario expects the 12-month inflation to decrease gradually and stabilise around the 4% target in the medium run. On November 1, CBA decided to raise the refinancing rate by 0.5ppt, setting it at 10.5%. In September, the 12-month inflation rate rose, amounting to 9.9%. The 12-month core inflation rate also increased, reaching 10.5%.
"The current account deficit, which has widened with the rapid growth of the economy, is expected to gradually narrow to around 5% of GDP. The risks to the outlook are mainly external," said the IMF.
IEA warns of major gas supply-demand gap in Europe next year
bne IntelliNews
It now looks increasingly likely that Europe will make it through this coming winter with sufficient gas supply. But the International Energy Agency (IEA) has warned of a 30bn cubic metre supply-demand gap next year in its latest analysis.
“Europe could face a gap of as much as 30 bcm of natural gas during the key summer period for refilling its gas storage sites in 2023 ... highlighting the need for urgent action by governments to reduce gas consumption amid the global energy crisis,” the Paris-based agency said in a report published on November 3.
Europe’s gas storage sites are currently filled to 95% of capacity, putting them five percentage points above the five- year average. But high storage levels, the recent drop in gas prices and unusually mild temperatures “should not lead to overly optimistic conclusions about the future,” the IEA said.
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Armenia's economy is on the path to growing by at least 11% this year on the back of soaring trade with and remittances from Russia, Finance Minister Tigran Khachatryan said on October 31.
According to the Armenian Central Bank, the remittances from Russia tripled to almost $1bn in the first nine months of this year. They accounted for just over two-thirds of total remittance inflows to Armenia. Consequently, the Armenian national currency, the dram, has strengthened against the US dollar by about 22% since the Ukraine war.
"Within the budget envelope, priority should be given to high-quality expenditure and strengthening the social safety net," reads the IMF statement. It adds: "Staff welcomes the CBA's plans to strengthen risk-based bank supervision and incentivise banks to improve their risk management capacity, as well as to develop an enhanced bank resolution framework."
The fund said the agreement is subject to approval by its executive board, which is expected to consider it next month.
The IEA has highlighted the future European gas supply-demand gap.
The agency warned that Europe’s success in filling storage sites this year benefited from factors that might not be repeated this year.
“These include Russian pipeline gas deliveries that, although they were cut sharply during 2022, were close to ‘normal’ levels for much of the first half of the year,” the IEA said. “Total pipeline supply from Russia to the EU in 2022 is likely to amount to around 60 bcm, but it is highly unlikely that Russia will deliver another 60 bcm of pipeline gas in 2023 – and Russian deliveries to Europe could halt completely.”
The IEA’s report also points to how much LNG China will free up for the European market. Chinese LNG imports are set for a record decline this winter, amid an industrial slowdown,
in part caused by Beijing’s draconian COVID-19 policy. But the agency notes that the country’s LNG imports could well recover to their 2021 level next year, which would capture