2024-03-21 10:25:24
As of May, inflation in Armenia was 9 percent. If nothing unusual happens, the Central Bank estimates that inflation will be lower at the end of the year, according to Armenpress, Central Bank Chairman Martin Galstyan said this to the National Finance, Credit and Budget Committee. at the session of the permanent committee of issues, addressing the questions of the deputies.
“We have 9 percent inflation in Armenia in May, which is an extremely high number considering the historical developments of Armenia’s economy and in general. Of course, the inflation rate in our neighboring or partner countries is much higher than in Armenia, but we must understand that 9 percent inflation, a 9 percent increase in the consumer price index implies that the inflation of basic necessities is much higher,” Galstyan said. :
Referring to the developments observed in the exchange rate market, he emphasized that the Central Bank does not have any influence on the formation of the exchange rate. The Central Bank could have an impact only if it sold foreign currency, but during the year it did the opposite, acquiring foreign currency equivalent to about 100 million dollars from the market. “We made interventions only when we noticed distortions of certain market mechanisms in the market,” Galstyan noted.
The exchange rate is formed on the basis of free supply and demand in the market. Galstyan is sure that if the Central Bank goes against its mandate, enters the market and artificially devalues the dram, Armenia will face another wave of inflation. As for what solution is needed, the president of the Central Bank says that international best practice suggests that in such situations, the implementation of sectoral policies is very important.
“There are sectors that suffer in the current situation or have a certain decline in competitiveness, these sectors should be supported. It can be under certain policies of the government,” he said, noting the possibility of additional subsidies, reduction of certain taxes.
Galstyan noted that inflation brings with it additional tax revenues, and through the redistribution of additional revenues, perhaps, we should respond to the created problem.
Turning to the question why the prices are not adjusted in the case of the created exchange rate, when the dram has appreciated, the Central Bank president answered that there are two factors. At this stage, when the exchange rate has appreciated, the international prices of goods have risen sharply, for example, due to the Russian-Ukrainian war, wheat is at an all-time high. There is a very large rise in international prices for essential commodities. The second problem is that exporters face transportation problems. “For them, the exchange rate is not the primary problem, but the problem of the total increase of Lars capacity or transport costs,” said Galstyan.
According to Galstyan, geopolitical events lead to the idea that the inflationary environment will continue in the coming months. “But according to our projections, the current 9 percent inflation may show some upward trends in the next few months, but if nothing new unusual happens, we will have lower inflation at the end of the year than we have now.” , – He said: