Armenian government continues “fake” economic moves

/By AzerNews/

By Laman Sadigova

Armenia entered 2016 with big economic problems, multiplied by the new challenges caused by the global crisis and unwise governmental policy. Under these circumstances, the statements about economic stability seem insane and funny.

Andranik Grigoryan, the head of financial system stability and development department at the Central Bank of Armenia, continues to repeat that the Armenian economy has been and remains stable, despite the fact that everyone except him has noticed the unreality of such statements.

The authorities in their assessment of the financial system refer to the fact that in Armenia, “thanks to a consistent financial and credit policy,” devaluation of dram was about 15 percent with an inflation rate of 3-4 percent, which is less than in other countries of the region.

But experts believe that such stability is a fake and the Central Bank’s policy is criminal and irresponsible, especially given the decision of the U.S. Federal Reserve to raise the refinancing rate from 0-0.25 percent to 0.25-0.5 percent. The U.S. will continue to increase the benchmark interest rate and until the end of the year it will amount to 1.5-1.6 percent. If the government continues the policy of fixed exchange rates, it will seriously damage the already weak economy of Armenia.

Even today there can be named a couple of factors that do not contribute to the strengthening, but on the contrary, weaken the drama. Firstly, reduction of transfers from Russia in 2015 compared to 2014 by 40 percent. Secondly, further reduction in volume of investment in the economy, and the third factor is the reduction of the already low volume of exports by 2.2 percent.

Armenia has the lowest rate of dollar against the national currency on the territory of the Eurasian Economic Union.

The situation with the illicit financial outflow is not better in this post-Soviet country. Global Financial Integrity, a non-governmental organization based in Washington, D.C., has recently published a report, where Armenia ranked the 70th among other developing countries for “Illicit financial flows”.

These funds, if they stay in the country, could provide economic development and effective social protection systems as well as health services, job places, and much more.

Armenian opposition members believe the artificially maintaining dram rate by foreign exchange reserves, in fact, has a political subtext, which is based on the idea of the current power reproduction. The policy of strong drama aimed at curbing potential social discontent of the population that can develop into political protests.

Thus, the policy of a strong dram becomes a guarantor of a possible social explosion Armenia's economy is being sacrificed for the upcoming 2017 parliamentary elections.