Penny for a Pound?: Government offers plan to compensate lost deposits

It is estimated that when the Soviet Union collapsed approximately 1 million Armenians had bank accounts holding a total of 6.5 billion rubles. At late 1980s exchange rate the amount would have made about $5-6 billion. Real market value of the money ranges as high as $800 million.

When communism disappeared, so did the Armenians’ money, lost to hyperinflation and in accounts that were frozen.

On Wednesday, during an address to the National Assembly of Armenia, Prime Minister Andranik Margaryan, unveiled the Government’s plan to help people get their money back – although only a fraction. The Government plans to allocate about $2 million in next year’s budget to finance the payback.

Citizens such as Vrezh Minasyan, 68, listen with interest, but without much hope.

By 1990, Minasyan, a construction engineer, had saved 10,000 rubles – approximately $9,000 at that time.

Minasyan estimates that he and his wife saved at a rate of about 1,000 rubles a year. Still, the amount would have been enough to by a new Niva. The amount he might expect back would hardly be enough to buy tires -- $460. (The Government plan would compensate accordingly: up to 1000 rubles, $200; 1000-3000 rubles, $340; 3000-5000 rubles, $420; 5000-10,000 rubles, $460; more than 10,000 rubles, $480.)

Opposing a bill put forward by the coalition party Orinats Yerkir that called for spending $83 million on all deposit holders, the Government plan would compensate depositors in stages, beginning with those who are now receiving State welfare. No dollar figure has been calculated for the overall Government plan.

The scheme is hardly anything for those such as Minasyan to get excited about. Nor does it impress opposition politicians, who, for years have raised the issue as evidence of the Government’s inability to care for its constituents.

National Assembly deputy Hmayak Hovhannisyan, who is the most active among non-partisan opposition deputies in the matter of returning deposits, is not satisfied with the plan.

“If only $1 billion are envisaged to be spent from the budget next year, then that makes only 0.2 percent (allocated for compensation). And it is ridiculous, if we take into account the fact that the total deposited sum subject to return makes 8 billion, 200 million Soviet rubles (about $7 billion – at Soviet-era rates),” says Hovhannisyan.

(In some post-Soviet states deposits were returned at different values. For example, in Russia 1,000 Soviet rubles were compensated with $34, in Belarus – with $77, in Kyrgyzstan – with $6.5, in Moldova with $74 and in Lithuania, with $250.)

According to Hovhannisyan, for a fair return of deposits it is necessary to compensate at least at a ratio of 1 to 10, i.e. $100 for 1,000 rubles. In this case, $820 million will be needed.

“The terms of returning deposits should be within the limits of common sense, for example within ten years, but not 400 years (according to his $820 million figure),” the deputy says.

Markaryan said the State will determine on a year-by-year basis how much will be allotted from budgets. Already, next year’s proposed budget represents an increase of nearly 20 percent in pubic spending.

Meanwhile, Vrezh Minasyan isn’t out shopping . . .

“We understand that the returning of deposits is a luxury for our state today,” he says. “But at least they could compensate it in a way that a person should not feel disappointed about the life that he has lived.”