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Armenia opens direct investments opportunities through pension fund assets
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YEREVAN, NOVEMBER 25, ARMENPRESS. The pension funds assets can be directed to the funding of the Armenian economy through direct investments, Central Bank Vice Governor Armen Nurbekyan told lawmakers while presenting a bill on amending the law on pension funds.
“There is currently a limitation on making direct investments in the Armenian economy, investments can only be made through registered funds, and direct investments can’t be made. The main reason for this was our goal of risk management in order for an institution to be present between our funds and the final investments,” he said.
Currerntly investment programs are mainly financed through unlisted financial assets. Whereas investments in unlisted assets can only be made indirectly, through other investment funds, which limits the opportunity of pension savings investments in the economy and decreases efficiency of the management of the funds, according to the central bank's bill. The bill envisages expansion of possibilities of the investments by the funds, enabling to direct the assets of the funds to the financing of the Armenian economy through various financial instruments.
Direct investments in unlisted financial instruments are allowed to be made only indirectly through investments in other funds, with a maximum 10% limit. The 10% is maintained but the direct investments instruments are opened.
“One of our funds has signed a memorandum of understanding with an international organization, and they can be a direct co-investor in Armenian infrastructures or companies,” the central bank official said.
In case of a conservative fund, equity investments can be made up to 25%. The bill envisages 35%. The cenbank official said the 35% is even highly conservative compared to international standards.
According to the current regulations, the investments made in a foreign country cannot exceed 15% of the given mandatory pension fund’s assets. The bill envisages the opportunity for the central bank and the finance ministry to define the level of participation of specific countries, and set a higher limit, but no more than 30% of the fund’s assets, taking into account the given country’s rating or level of development of its financial system.
“The United States has a very big role in the capital market, and the 15% limits our funds from making proportional investments in the capital market,” Nurbekyan said.
The volume of the pension funds continues to grow rapidly, he added.
“The volume of the pension funds has already reached approximately 1 trillion drams, which is a very serious figure. The volume continues to grow at very high pace,” the official told lawmakers. He said the funds play a very significant role in terms of investments made in government securities and high-quality corporate securities.
The number of participants in the funds, which accumulates pension tax from salaries, is approximately 460,000.
The bill was approved by the parliamentary committee on financial-credit and budgetary affairs. It will be debated at the plenary session.
Published by Armenpress, original at https://armenpress.am/en/article/1205822?fbclid=IwY2xjawGyPxdleHRuA2FlbQIxMQABHcQLsDhREmCVjYE7w4LlloCtkeo3dcXlQdqDMYIZLHqID9jgVvju2mpmCg_aem_Vm7fUVVZ-D-YCNCiWKpkZA