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                     Key Economic Indicators
       (Billions of Russian rubles unless otherwise noted)

                                  1991      1992      1993  /1
Income, Production
 and Employment

Real GDP (1991 prices)             15.920     7.593     4.973
Real GDP growth (pct.)             -8.8     -52.3     -34.5
GDP (at current prices)            15.920    59.068   329.27
 By Sector (pct.)
  Agriculture                      19.7      31.8      49.2 
  Industry                         34.8      37.6      22.3
  Construction                     11.1       4.3       4.1
  Transportation                    2.5       1.3       0.8
  Trade and Catering                3.9       3.3       1.5
  Other                            47        21.5      22.1
Real Per Capita GDP ('91 rubles)   44,070    20,605    13,314
Labor force (000s)                  2,054,4   2,194,5   2,080,0 
Unemployment Rate (pct.)           n/a        3.4       5.8

Money and Prices
 (annual percentage growth)

Money Supply (M2)                  n/a       n/a       n/a
Base Interest Rate                 n/a      8-10       46.5
Personal Savings Rate              n/a      9-10       n/a
Retail Inflation                  274.1     728.7     930.0
Wholesale Inflation                n/a       n/a      990.0
Consumer Price Index              175       828.7     940 
Exchange Rate (Rubles/$)
    official  /1                   n/a          400     2,020
    parallel  /1                   n/a          400     2,050

Balance of Payments and Trade                           

Total Exports FOB                   2.661    14.905    53.758
 Exports to U.S.                        0     0.206     0.318
Total imports CIF                   4.505    28.204    40.816
 Imports from U.S.  /2                  0     0.203     2.608
Aid from U.S. ($ million)          n/a       45.1 /3   93.2 /4 
Aid from Other Countries
 (million U.S. dollars)            n/a       n/a      112.5
External Public Debt (mil $)       n/a       n/a      220
Debt Service Payments (paid)       n/a       n/a        0
Gold and Foreign Exchange
    Reserves ($ million)           n/a       15,9      n/a
Trade Balance      /2              -1.844   -13.299    12.941
 Balance with U.S.  /2                  0     0.003    -2.290   


1/ Data for the first nine months of 1993.
2/ Grain and fuel imports not included.
3/ Other US assistance was available through regional programs
for which a country-by-country breakdown is not available.
4/ Transportation costs not included.

Figures are from the Armenian Ministry of Economy, the Armenian
State Statistical and Analysis Committee, the Parliament
Committee on Finances, and from international financial

1.  General Policy Framework

    In 1993, Armenia continued its halting transition to a
market economy.  An economic blockade by neighboring Azerbaijan
and Turkey and the frequent interruption of energy and freight
shipments passing through Georgia greatly hindered economic
development.  A continuing stand-off on economic policy between
the Armenian parliament and the government resulted in the
enactment of only modest economic reform legislation in 1993. 
Parliament did manage to adopt an ambitious social and economic
development program, which increased government assistance to
export-capable industries, attempted to aid the private sector,
and attempted to stabilize personal income.  The program has
been largely unsuccessful.  As a result, Armenia's economic
crisis continued unabated in 1993.  Shortages of electricity,
fuel, raw materials, and expensive, unreliable transport routes
have brought many of the country's factories to a virtual
halt.  Eighty to ninety percent of the labor force remains
either idle or under-employed.  Gross Domestic Product
continued its steep decline, to an estimated one-third of its
1991 level, while the inflation rate, at an estimated 930-990
percent per annum, remained stubbornly high.

    The continued blockade has radically reduced the importance
of the industrial sectors to Armenia's shrunken economy.  An
ambitious farmland privatization program has helped propel
agriculture to the economic forefront.

    During the initial six months of 1993, Armenia remained 
part of the ruble zone.  In mid-1993, Russia withdrew all
pre-1993 banknotes from circulation and refused to include the
other members of the CIS in the new ruble zone.  With no
currency of its own, Armenia has found itself in a critical
situation.  In October, it signed a new agreement with Russia
on joint financial policies which calls for the eventual
harmonization of its fiscal and monetary policies with those of
Russia and the other members of the CIS.

    The deficit is extremely high, by some estimates as much as
fifty percent of Gross Domestic Product.  Until the Russian
government introduced its "new" ruble in mid-1993, the deficit
appeared to be financed largely by the Russian government's
practice of printing money and extending credits and loans. 
Ruble credits from the Armenian Central Bank in 1993 are
estimated at 290 billion rubles.  In November, Parliament
resolved to distribute the remaining 39 billion rubles of
unused credits to the areas of export promotion, construction
of small hydroelectric power plants, and transportation of
agricultural products.  Since the introduction by new Russian
government of its "new" Russian rubles, runaway inflation, a
precipitous decline in economic activity caused by the blockade
and the break-up of the USSR, a virtual absence of fiscal
discipline, and ineffective revenue generating and collecting
mechanisms have contributed to the size of the deficit.
    The government is currently operating with 1961-1992 rubles
inherited from the Russian government.  A decree issued at the
end of October attempts to regulate money supply by limiting
the amount of rubles that can be brought into Armenia.  The
government does not print Russian rubles and appears to have no
other means of controlling the money supply.  The Central Bank
exercises little influence over monetary policy.

2.  Exchange Rate Policy
    In 1993, the government ended the monopoly of its central
bank on foreign currency exchange operations by granting
exchange rights to a number of commercial and state banks.  In
addition, the vibrant currency black market that emerged in
1993 competes with the banks and appears to influence
government exchange policies.  The introduction of the "new"
Russian ruble in Russia in 1993 increased speculative pressure
on the "old" ruble in Armenia.  At the end of October, the
government declared the "old" ruble to be the only valid
currency in Armenia.  The government, in joining the Russian
new ruble zone in October, signed a number of agreements that
are intended to eventually harmonize the fiscal and monetary
policies of all the members of the CIS.

    Armenian residents are currently permitted to take a
maximum of $500 with them when they leave the country. 
Permission to export foreign currency in excess of $500 is
granted only upon presentation of a document proving that the
money was purchased officially, or legally obtained.

3.  Structural Policies

    U.S. exports are more affected by the Azerbaijani and de
facto Turkish blockade and the conflict in Nagorno-Karabakh
than by Armenia's tax and regulatory policies.  Foreign
businessmen exercise the same rights in owning businesses, and
are subject to the same taxes and regulations as Armenian
resident businessmen.

    Armenian taxes include a VAT, a tax on profit (12-60
percent), an excise tax (5-70 percent), and a personal income
tax.  In 1993, the VAT was reduced from 28 percent to 16.6-20
percent.  A new law on property taxation is being discussed in

4.  Debt Management Policies

    In 1992, Russia assumed responsibility for managing
Armenia's share of the former USSR's external debt of $561.6
million.  In 1993, Armenia incurred ruble and hard currency
external debt totalling $220 million.  In 1993, the World Bank
approved a $1.2 million loan to the energy industry, $12.0
million for institutional building purposes, and continued
financing for construction in the earthquake zone.  IBRD loans
in 1993 comprised $55.1 million dollars.

    Debt service payments will start in 1994 and are estimated
by the government to be $15 million for that year.

5.  Significant Barriers to U.S. Exports

    At present, foreign entities have a right to establish in
Armenia all forms of businesses envisaged by Armenian laws for
local businesses - sole proprietorships, partnerships, limited
partnerships, and joint stock companies.  The share of foreign
assets in an enterprise is unlimited.  There is no restriction
on repatriation of profits out of Armenia.  However, local and
foreign businesses who receive their revenues in hard currency
are obliged to sell 50 percent of their hard currency profits
to the State for rubles at the official exchange rate.

    No duties are imposed on the import of raw materials, goods
and services to Armenia.  There is a strict licensing procedure
for the export of raw materials and some products from
Armenia.  The export customs fee is 0.15 percent of estimated

    In 1993, the Armenian Parliament and U.S. Senate ratified a
bilateral investment treaty.  An Overseas Private Investments
Corporation (OPIC) incentive agreement, which allows OPIC to
offer political risk insurance and other programs to U.S.
investors in Armenia, was concluded in 1992.

6.  Export Subsidies Policies

    In 1993, the Parliament adopted an economic and social
development program, which increased government assistance to
export capable industries.  As was the case during the Soviet
period, the government subsidizes state enterprises and
provides resource discounts to producers in critical industries.
In November, unused credits were appropriated in order to
promote export operations of state-owned enterprises.

7.  Protection of U.S. Intellectual Property

    An agreement on trade relations between Armenia and the
U.S.A. signed in 1992 states that the parties shall ensure that
domestic legislation provides for protection and implementation
of intellectual property rights, including copyright on
literary, scientific and artistic works including computer
programs and data bases, patents and other rights on inventions
and industrial design, know-how, trade secrets, trade marks and
service marks, and protection against unfair competition.

    In August 1993, the Armenian parliament adopted a Law on
Patents and the government established a Patent
Administration.  Patents are granted for a period of 20 years. 
Appropriate laws on Trademarks and Copyright are being
considered by the Parliament.

    By the end of 1993 Armenia plans to join the Paris
Convention for the Protection of Industrial Property, the
Madrid Agreement concerning international registration of
trademarks, and the Patent Cooperation Treaty (PCT).

8.  Worker Rights

    a.   Right of Association

    The 1992 Law on Employment guarantees employees the right
to form or join unions of their own choosing without previous
authorization.  At the same time, many large enterprises,
factories, and organizations remain under state control and
voluntary, direct negotiations between unions and employers
without the participation of the government can not take place.

    b.   Right to Organize and Bargain Collectively

    The 1992 Law on Employment guarantees the right to organize
and bargain collectively.  Armenia's high unemployment rate
makes it difficult to gauge to what extent this right is
exercised in practice.

    c.   Prohibition of Forced or Compulsory Labor

    The 1992 Law on Employment prohibits forced labor.

    d.   Minimum Age for Employment of Children

    The statutory minimum age for employment is 16.

    e.   Acceptable Conditions of Work

    The minimum wage is set by governmental decree and was
increased periodically during 1993.  Employees paid the minimum
wage cannot support either themselves or their families.  The
vast number of enterprises are either idle or operating at only
a fraction of their capacity.  Those still on the payroll of
idle enterprises continue to receive two-thirds of their base
salary.  The overwhelming majority of Armenians are thought to
live below the officially recognized poverty level.

    f.   Rights in Sectors with U.S. Investment

    There is currently no appreciable U.S. investment in

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