On February 15 on the initiative of the Standing Committee on Financial-Credit, Budgetary and Economic Affairs the legislators, the representatives of the National Statistical Service and the Central Bank (CB), as well as interested specialists gathered in the parliament to discuss the inflation in Armenia.

Opening the hearings on “The Inflation in Armenia,” Gagik Minasyan, the Committee Chairman mentioned that numerous questions have arisen on (related to) the rise and fall in goods price as well as the influence of dram-dollar value. Stepan Mnacakanyan, Head of the National Statistics Service and Tigran Sargsyan, Chairman of the Central Bank made explanations on these questions.

Before that Artur Baghdasaryan, NA President in his speech touched upon the discussion of this socially significant problem. When at the end of the year the Chairman of the Central Bank introduced the problems on inflation, NA President proposed to organize parliamentary hearings on inflation in order to understand the tendencies observed in Armenia, particularly the principles laid in the basis of the inflation policy as well as the situation in the country on the inflation problems. NA President believes that it is important to support the society with comprehensive information on these problems. He mentioned that there are different viewpoints: e.g. the Chairman of the Central Bank declares that there is no inflation in Armenia. The mass media is flooded with information on the rise in consumer goods prices every day in our republic. According to Artur Baghdasaryan, the hearings will allow to listen to the motivations for the viewpoints, to get familiarized with the information of the Statistical Service. According to the Parliament President, there is inflation in Armenia concerning different kinds of goods and the state should try to contribute to the stabilization in the prices of the necessary goods of priority in the market by using permissible tools. Mr. Baghdasaryan believes that the problems of export and import, as well as of the local and foreign producers should also be touched upon. According to NA President, the corruption risks in the country contribute to the rise in prices. He says that all these questions should be given exhaustive answers. He expressed a hope to come to a right conclusion as a result of the hearings and effective discussions in order to implement it in law making and political activities in future.

The head of the National Statistical Service touched upon 3 questions in his speech, namely: what is the index of consumer prices (inflation), how is it calculated and why? Those present were mostly interested in the question why a number of goods even those of home production had become more expensive under the circumstances of dram evaluation and dollar devaluation. In response to Samvel Balasanyan’s question on this problem who is the head of the faction Country of Law, Mr. Mnacakanyan informed that calculations are made by internationally accepted methods when they study only the goods included in the minimum consumer basket. Parliamentarian Tatul Manaseryan’s question on the volume of the minimum consumer basket was answered by the speaker: the food basket formed by the Ministry of Health lies within the limits of 18 thousand drams and the minimum consumer basket is 29800 drams. These are the latest records of the previous year, which are made by studying 6800 households and 400 goods assumed as a basis for calculation. According to the data of 2005, there is a 0.2 percent fall in prices, namely deflation has been recorded, which seems unreal to the parliamentarians.

Tigran Sargsyan, Chairman of the Central Bank said that the inflation set out by each year’s budget is focused on both by the government and the bank. As the CB Chairman estimated, the figures of the Statistical Department correspond to the reality: the bank in its turn has made studies and analyses and has got the same level of deflation. He introduced the method and structure of calculating the records, which explained the difference between the calculated and real inflation. In the previous year the prices of some kinds of goods, namely fish product, eggs, sugar, were lowered. The price of the grain was reduced by 4.2 % and the price of the fruit was reduced by 1.7%. As for non-food goods there is 2.1% inflation and the service prices have increased by 1.9%. There is a drastic rise in apartment prices. However, the prevailing (predominant) part is not included in the consumer basket. The homonymic records of the past years’ are remarkable (noteworthy): in 2003 86% and in 2004 2% inflation was registered. The level of the inflation of 2006, defined by the law on budget shouldn’t surpass 3%. In January 2.6% inflation was registered. During the hearings the chairman of the CB informed that there was a 0.2% rise in dram purchasing power in the previous year.

In the speeches on the question voiced a unified viewpoint on the usefulness of public discussions and the specialists’ clarifications. Mr. Manaseryan observed that the minimum consumer basket shouldn’t be a simple record (index), the minimum salary and the pension should be the basis of its calculation. The independent analyser Eduard Aghajanov envisages that the CB will have difficulties in controlling the inflation which are conditioned by the rise in the gas and grain prices as well as by the autumn sowing damage (Russia has already declared a 7 dollar rise in 1 ton of grain). In order to reduce the agitations to the minimum he offers to reserve a great number of these kinds of goods in storehouses. Mr. Sargsyan, dean of the Economics Faculty of the Yerevan State University proposes to go on with such discussions and provide comprehensive solutions for the problems. He believes that the economy of Armenia is still in the transition phase as far as sound competitive conditions have not been established. As for the success of the inflation policy he believes that it depends on the establishment of the market, when the level of the inflation will be conditioned by the real salary.

Summing up the hearings Gagik Minasyan, Chairman of the Standing Committee on Financial-Credit, Budgetary and Economic Affairs mentioned that the phenomenon “inflation” should be introduced to the society without any irrelevant terminology. They should find out whether there is inflation or not. With this regard he considered the hearings accomplished and succeeded.