Armenia’s government discusses dram issues by partner financial institutions with a development mandate
International partners with a development mandate should issue dram-denominated securities in Armenia and can hedge exchange-rate risk using the natural hedge created by pension funds. Martin Galstyan, Governor of the Central Bank of Armenia (CBA), said this at the government session on November 12. According to Armenia’s Minister of Finance Vahe Hovhannisyan, foreign institutional investors’ portfolio of dram-denominated bonds already exceeds AMD 300 billion (about $832.22 million).
The discussion arose around Armenia’s participation in the capital increase of the Black Sea Trade and Development Bank. Armenia’s Deputy Prime Minister Mher Grigoryan, who chaired the session, proposed discussing, as a strategic matter, investments made in drams and noted that banks with a development mandate should pay attention to this. Asked by him whether that bank takes part in trading Armenia’s government bonds, the finance minister replied that it does not.
Hovhannisyan noted that the Ministry of Finance is discussing dram lending options with various international partners. “The price of dram lending sometimes turns out higher, but there are solutions, this has been done in different countries around the world, and it will happen in the near future,” he said.
Galstyan clarified that he was speaking not about a specific bank but about all partners with a development mandate: Armenia should negotiate with them so that their investments in the country are in the national currency. “A few years ago I would not have raised this issue, because a problem of hedging instruments could have arisen, but today, given the structure and logic of our pension funds, there is an opportunity for a natural hedge,” the CBA governor stressed. In his view, efforts should be aimed at having such partners issue in Armenia: their ratings are very high, AAA as a rule, and to hedge dram-dollar or dram-euro exchange-rate risk they will be able to use the opportunity arising from the opposite natural process at pension funds.
The topic matters to three groups. Borrowers can obtain long-term financing in drams without currency risk. Pension funds and other investors can obtain highly rated dram instruments. For the state it is a matter of capital market development: the deputy prime minister said competition in lending resources alone is not enough, since that competition is already settled at a fairly high level in Armenia.
In the finance minister’s view, foreign institutional investors’ interest and the portfolio above AMD 300 billion point to Armenia’s attractiveness and to confidence in its macroeconomic policy. BusinessDaily.am reported that in October government bond placements rose 2.4 times to AMD 109 billion, and that primary placements over the ten months of 2026 totalled about AMD 635.4 billion.
Grigoryan agreed with the CBA governor and noted that the market should be better informed about this hedging opportunity, since it is a clear opportunity for partners. In his words, financing in the national currency and participation in the capital market, including the debt market, in drams would make cooperation far more effective.
As practical steps, the deputy prime minister asked the finance minister to raise the issue with partners at the first opportunity, and the minister assured that work with international investors would be deepened. For issuers, banks and investors this means following the Ministry of Finance’s talks with international partners on dram lending and their possible dram issues in Armenia.
