Armenia’s Government Failed in its Inflation Policy: Nranyan

The policy on inflation adopted by the Armenian government has failed: if the government announces today that the main reasons for inflation are increases in the price of foodstuffs and other goods in global markets, then influencing these prices through reducing the demand of purchasing power, that is, reducing income, in Armenia is absurd, said Armenian Revolutionary Federation (Dashnaktsutyun, or ARF-D) MP Ara Nranyan, assessing inflation in Armenia at a press conference in Yerevan today.

“What is the government doing, making the value of money in Armenia more expensive, doing everything for citizens’ incomes to be low, thinking, if salaries are low, then it’s natural, prices must drop? But a question arises, if, for example, the price of wheat depends on the policies of China, Russia or Canada in the outside market, then how are you preparing to reduce international prices through reducing the demand for purchasing power in a country of 3 million? This is simply absurd,” he said.

According to the politician, if the government’s conviction that international prices are influencing Armenia’s inflation is correct, then unequivocally, it won’t be possible to provide for a reduction of these prices through a policy of low incomes. “If we say it’s determined by international prices, then we have to carry out appropriate steps toward changing our economic structure.”

Nranyan asks, what should the government do, and then responds:

“In the first place, if we say that we’re largely dependent on imports, a question arises, where are the state reserves? According to RA law, through the provision of the state, during inflation, this transition can be organized through non-shocking ways. We’re not doing anything in terms of ensuring food safety either: today we produce 35% of our demand for wheat, 65% is imported, though we have the resources; in particular, there are areas in the Republic of Nagorno-Karabakh which can be used to grow wheat. Using this agricultural resource can greatly increase our food security,” he said.

In Nranyan’s opinion, reducing the Armenian dram supply, in turn, reduces the possibility of economic development:

“The government, basically, limits citizens’ incomes, restricts economic growth, reduces working capital in the economy, so that it can fight against inflation, when it perhaps should’ve done the opposite; that is, encourage inflation, encourage economic activity and increasing citizens’ incomes. The steps are many, but the government is guided by only one principle: managing the money supply, its failure having already been proven.”