Dollarization of bank loans in Armenia

Armenia's economy witnessed significant dedollarization for much of the past decade, that is until it was hit hard by the unravelling global financial crisis. The foreign exchange (FX) share of commercial bank loans to private non-financial businesses declined from the mid 70s down to 50 percent by early 2007. More impressively, the FX share of loans to households declined from about 90 percent down to 20 percent in summer of 2008.


By the first quarter of 2009, the FX share of loans to both businesses and households reversed its trend. The business share is now in the mid 80s, whereas that of households has risen to the mid 30s only, as illustrated in the figure below.

I am sure that it will take some time to reverse this pattern. But in the mean time, this is likely to add to the risk (foreign exchange) of doing business in Armenia, in particular for those with Dram denominated earnings and loans in a foreign currency.


FX share of commercial bank loans to households and private non-financial businesses: Jan 2000-Feb 2013

 Data can be downloaded from here (xls).