ACADEMICIAN AGHANBEGIAN CALLS ON TO CURB INFLATION

Noyan Tapan
Feb 17, 2009

YEREVAN, FEBRUARY 17, NOYAN TAPAN. Overcoming the global financial
and economic crisis is a difficult and long process, and any
factors to promote growth of the global economy are not visible
so far, Academician of the Russian Academy of Sciences Abel
Aghanbegian expressed an opinion at a round table on anti-crisis
management. According to him, the crisis is likely to enter a stage of
stagnation (the absence of economic growth), and a painful stagflation
– inflation under conditions of the absence of economic growth awaits
those countries that will not curb inflation in 2009-2010. A.

Aghanbegian attached importance to conducting a correct policy on
the Armenian dram with respect to foreign currencies in conditions
of curbing the inflation.

In his words, the crisis has invaded Russia in 5 directions and left
quite a serious impact on its economy. In particular, the turnover
on the Russian stock exchange has declined 4 times, and a liquidity
crisis has began as the conditions of credit provision to companies
have worsened.

Besides, as a result of the expected fall in prices of oil, metals
and gas, Russia’s exports will decline by about 100 billion USD,
while the state budget will have a deficit of 1.5-2% of GDP instead
of the previous surplus of 6% of GDP.

In parallel with the fall in prices of exported goods, the foreign
demand has declined as well, followed by a decline in the absolute
volumes of industrial production, construction and investments.

50% appreciation of the dollar against the Russian ruble has encouraged
the local production. At the same time the foreign reserves of the
country have decreased from 597 billion USD to 300 billion USD as
the Central Bank of Russia has allocated considerable resources to
control the panic moods caused by the dollar’s appreciation.

Academician Aghanbegian said that some crisis phenomena are more deeply
perceived in Russia than in the US, big European countries and China.

Deputies of the RA National Assembly, experts, and representatives
of the business community took part in the discussion on the subject
"Anti-Crisis Management in Current Conditions. Problems and Solutions"
organized by the Higher School of Corporate Management of the Republic
of Armenia.

According to analyst Vahram Ghushchian, the crisis in Russia may have
a considerable impact on Armenia because remittances of the annual
amount of 1.4 billion USD from Russia to Armenia may decline.

He underlined the importance of implementing the North-South
railway-motor way construction project in terms of job creation.

The Executive Director of the Republican Union of Employers Gagik
Makarian spoke about the necessity of measures for business development
and improvement of the business environment. In particular, he
proposed taking steps to create a united business database, ensure
the accessibility of financial resources, reduce bureaucratism and
red tape, and increase state assistance.

In the opinion of G. Makarian, the reduction of the current 20% rate
of VAT and the social payments for salaries of up to 100 thousand
drams will help improve the competitiveness of Armenian producers,
keep the current jobs and create new ones.