IMF INDICATES LOWEST INFLATION IN ARMENIA IN CIS
ARKA
Feb 22 2008
YEREVAN, February 22. /ARKA/. The lowest inflation in the Commonwealth
of Independent States (CIS) was recorded in Armenia – 6.6%, Nienke
Oomes, IMF Resident Representative in Armenia, told reporters.
According to her, the main cause of inflation was by a 4.5% rise in
prices for food products and bread.
One of the reasons for low inflation is that the Central Bank of
Armenia (CBA) is implementing the right policy of inflation targeting,
Oomes said.
She also pointed out that in all the countries Central Banks have
to choose between low inflation and the revaluation of national
currencies.
The CBA decided that maintaining low inflation is more important for
the country than a stable exchange-rate, Oomes said. She added that,
although the national currencies were more stable in the other CIS
countries, they recorded very high inflation.
The IMF Resident Representative also pointed out the importance of
CBA’s transparent activities. She also pointed out that the CBA is
implementing a rather transparent policy by regularly reporting on
its further activities.
Oomes also said that the RA Ministry of Finance and Economic
Development is implementing a tough fiscal policy.
In 2007, Armenia’s budget deficit was smaller than in that of the
other CIS countries, she said.
Another reason for low inflation is the prices for gas imported to
Armenia from Russia.
However, after the government stops subsidizing gas-supply, the prices
will rise, which, in turn, may cause inflation rise.
Oomes also pointed out that the rise in inflation results from global
processes,, such as increased food consumption in China and India,
whose population is 40% of the world’s population. She also pointed
the role of the rise in oil prices.
Oomes pointed out the necessity for stepping up competition among
banks in Armenia, reducing dollarization, encouraging the development
of the country’s financial market, raising public awareness of bank
and stock operations.
Oomes also believes that in some cases the CBA should not change the
inflation targets and explain the reasons for the price rise at the
end of year.
Moreover, the INMF Resident Representative pointed out the necessity
for reducing state expenses and increasing tax revenues.
The CBA was the first CIS bank to launch an inflation targeting
policy in 2006. Interest rates, particularly refinancing rates,
are the principal instruments of this policy.
In the context of the inflation targeting policy, the CBA, in
cooperation with the RA Government, elaborated a strategy for the
next three years. The strategy envisages 4%±1.5% inflation in
2008-2010.
–Boundary_(ID_qp+JB62uArcDRW0EFtTn Rw)–