Currency fluctuation affects World Vision Armenia’s
operations
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A street in Yerevan, Armenia’s capital, showing the board with exchange rates
World Vision MEERO, http://meero.worldvision.org
World Vision MEERO, http://meero.worldvision.org
Rapid exchange rate
fluctuations, in which the Armenian national currency (dram) has significantly strengthened against the US dollar during the past two and a half years, remain a source of concern for World Vision
Armenia.
Like other charity and humanitarian organisations operating in the country who budget in US dollars, World Vision Armenia has significantly lost its purchasing power.
'We work on the basis of dollar commitments from our support offices. However, within a year the money allocated for projects depreciates dramatically in dram equivalent,' said Shaghik Mahrokhian, World Vision Armenia Area Development Program (ADP) Operations Manager.
The World Vision Armenia Finance Department has so far managed to balance the situation so that no programhas been suspended due to dollar depreciation. The difference between the planned and actual cost of projects was covered by significantly cutting administrative expenses and indirect project costs. 'In 2006, the loss from exchange rate fluctuations amounted US$730,000, which is 13%of the total cash budget. If the dollar depreciation continues, we are not sure we can keep cutting administrative and indirect expenses for much longer; there are already programs that require additional fundraising,' said Hasmik Baghramyan, World Vision Armenia Finance Director.
The US dollar lost more than 14% in 2004, 7% in 2005 and 19% in 2006 in relation to the Armenian dram. The rapid rise of the dram's value against major global currencies has hit a large part of Armenia's population who live on money from relatives living abroad. The rise also threatens to stifle the country's exports. Meanwhile, virtually no prices have fallen in local currency since 2003.
Like other charity and humanitarian organisations operating in the country who budget in US dollars, World Vision Armenia has significantly lost its purchasing power.
'We work on the basis of dollar commitments from our support offices. However, within a year the money allocated for projects depreciates dramatically in dram equivalent,' said Shaghik Mahrokhian, World Vision Armenia Area Development Program (ADP) Operations Manager.
The World Vision Armenia Finance Department has so far managed to balance the situation so that no programhas been suspended due to dollar depreciation. The difference between the planned and actual cost of projects was covered by significantly cutting administrative expenses and indirect project costs. 'In 2006, the loss from exchange rate fluctuations amounted US$730,000, which is 13%of the total cash budget. If the dollar depreciation continues, we are not sure we can keep cutting administrative and indirect expenses for much longer; there are already programs that require additional fundraising,' said Hasmik Baghramyan, World Vision Armenia Finance Director.
The US dollar lost more than 14% in 2004, 7% in 2005 and 19% in 2006 in relation to the Armenian dram. The rapid rise of the dram's value against major global currencies has hit a large part of Armenia's population who live on money from relatives living abroad. The rise also threatens to stifle the country's exports. Meanwhile, virtually no prices have fallen in local currency since 2003.
[ Any views expressed in this article are those of the writer and not of Reuters. ]