2006 PROGRAM OF MONETARY AND CREDIT POLICY OF ARMENIA PRESENTED AT RA
NATIONAL ASSEMBLY

YEREVAN, MARCH 23, NOYAN TAPAN. At the March 23 sitting of the RA
National Assembly, Chairman of the Central Bank of Armenia (CBA)
Tigran Sargsian presented the 2006 program of Armenia’s monetary and
credit policy, which was taken into consideration. Particularly, the
CBA Chairman noted that since January 1, 2006, the CBA has used a new
approach to inflation control – the inflation targeting strategy
instead of the monetary aggregates strategy which was used since the
second quarter of 1994. The CBA will forecast inflation for a future
period by means of an inflation model, assess its deviation from the
target index and aim its policy at reducing the difference between the
target and forecast indices. Based on the principles of the indicated
policy, the CBA will not set the target index of broad money any
more. The main directions of the 2006 monetary and credit policy have
been developed, taking into account the forecast demand for money
under conditions of the current microclimate, giving priority to the
task of ensuring the index of a maximum 3% inflation.

According to T. Sargsian, under conditions of the above mentioned
strategy, special importance is attached to the accountability and
transparency of the CBA – the CBA is obliged to publish the forecast
index of inflation regularly and to present quarterly reports on the
strategy implementation process. It was noted that 2006 is viewed as a
year of shifting to the inflation targeting strategy and the CBA will
not be able to present a report on the 12-month inflation index until
December 2007.