Armenian short-sighted move plunges economy into chaos

By Azernews

By Abdul Kerimkhanov

Considerably positive news appeared in Armenia recently. However, if to go into the details of this news, it is possible to conclude that this is another short-sighted step by the present Armenian authorities.

Armenian Prime Minister Nikol Pashinyan announced on the eve of the Government’s meeting that pensions will increase in the country by 10 percent from January 1, 2020. Pashinyan considers the financial base for raising pensions should be the effect of inclusive economic growth.

In turn, Finance Minister Atom Janjughazyan said after a government meeting that about 25 billion drams ($52.3 million) would be required to raise pensions in the country.

However, the sequence of actions of the Armenian government causes great doubts. To achieve high rates of inclusive economic growth there is not even a roadmap in Armenia, but the decision to raise pensions has already been announced.

There are concrete figures how much the pensions will rise and how much funds will be required for this end. However, the specific sources of these funds are still not voiced. Moreover, even the overall approximate figure of the growth of Armenian budget revenues for the next year is not announced.

The UN issued a new forecast on Armenian demography. The Armenian population with a stable rate of negative migration balance by 2050 will noticeably grow old. By this date, the number of Armenian residents over 65 will double and make up 22 percent of the total population. The number of people over 80 will also increase significantly.

In short, Pashinyan again resorted to populism, not taking into account the realities. Raising pensions in a country with an aging population, where the percentage of young people is declining from year to year, without solving the problems of the economy as a whole, is a short-sighted step.

Meanwhile, Armenian experts received this news with doubt. Karlen Khachatryan, an economist, considers the macroeconomic indicators recorded do not give sufficient grounds to think that this decision is justified. He informed that over the past year, there has not been any positive shift and development in the Armenian economy. Moreover, individual indicators demonstrated a steady decline.

As an example, Khachatryan pointed to export volumes, which reduce every month compared to the same period of 2018. He added that import volumes are also low, as foreign investment has declined by about three times in January-April 2019.

Trying to follow Pashinyan’s thoughts, the economist suggested that it is possible that the government will increase pensions by reducing budget expenditures.

Thus, all these indicators demonstrate that in reality there is no positive shift in the economy and Armenian economy is not ready for pensions growth.