Tadevos Avetisian, a member of the opposition Hayastan faction, made this statement in an interview with RFE/RL’s Armenian Service late on Tuesday amid an admission by the Central Bank of Armenia (CBA) that the country’s economy will significantly slow down this year because of the indirect effects of Western sanctions imposed on Russia over the war in Ukraine.
Russia is Armenia’s number one trading partner. Consumer demand in Armenia is also largely shored up due to remittances wired by Armenian migrant workers in Russia back home. The depreciating Russian ruble and expected fall in the purchasing power of the population in Russia may also cause problems for Armenian exporters.
The CBA on Tuesday revised its forecast for Armenia’s annual economic growth in 2022 from 5.3 percent down to 1.6 percent. Martin Galstian, the governor of the CBA, said that certain problems are currently observed in Armenia’s mining and processing industries, while the construction sector is also somewhat shrinking.
Avetisian said that in such conditions the government should take urgent steps to prevent the economic situation from further deteriorating.
“It is incomprehensible that the government is not bringing a full anti-crisis program now, because we are again facing an imminent economic crisis,” the opposition lawmaker said.
Avetisian, in particular, called for an urgent revision of the state budget in favor of spending more on anti-crisis measures. “There are numerous programs and funds that were included in the budget, to put it mildly, for populist motives. In ordinary conditions those programs perhaps would have been understandable. But in the current conditions those programs should be revised to provide more stimulus for the economy,” he said.
Government officials in Armenia have not yet reacted to opposition calls for ‘anti-crisis’ steps. The government is likely to address some of the difficulties stemming from the global geopolitical and economic situation during its next session due on Thursday.
Meanwhile, to curb inflation, which stood at 6.5 percent in February, the CBA on Tuesday raised its benchmark interest rate by 1.25 percentage points – to 9.25 percent.
“In the current situation, the CBA’s governing board considers it expedient to increase the refinancing rate by a relatively large step,” the regulator said.
The CBA expects that as a result of such policy measures Armenia’s 12-month inflation will gradually decrease, reaching the target of 4 percent.