Armenia is not facing a liquidity shortage; on the contrary, the market currently has excess liquidity, Central Bank of Armenia Chairman Martin Galstyan said at a press conference on September 15. He was responding to claims that insufficient liquidity is one of the main obstacles to the development of the capital market.
According to Galstyan, there is “a lot, a lot” of money in Armenia, and companies that are ready to attract funding, have ambitious projects and operate in an open and transparent way should apply for financing and use the resources available. In his words, both the money and the necessary infrastructure are already in place.
Galstyan also said the economy does not have to rely solely on bank lending for funding. He noted that many private-sector companies have already started issuing bonds and can also turn to other debt instruments if they choose.
“If they want to go down the path of bonds and debt instruments, they can do so: there are issuers, there are underwriters, there is an exchange and there is very large liquidity. If they want to go down the path of attracting equity financing, that is also possible,” he said.
At the same time, the central bank chief stressed that projects coming to the market must be of high quality, as investor requirements are changing and investors themselves are becoming more sophisticated. He said they now expect audits, ratings, a certain level of openness and the ability to maintain professional dialogue.
That, in his view, is where the remaining problems lie. In other words, Galstyan suggested that the main constraint on Armenia’s capital market development is not a lack of money, but whether businesses are ready to meet investors’ evolving standards.
Earlier, Landmark Capital CEO Gor Gevorgyan told ARKA that financing for Armenia’s economy is still largely built around bank lending. He described insufficient liquidity as one of the main constraints on the further development of the capital market.
