FORECASTS: IMF VS. ARMENIAN GOVERNMENT

news.am
April 12 2010
Armenia

Guillermo Tolosa, IMF Resident Representative in Armenia, recently
informed the Armenian public of the IMF’s forecasts.

Specifically, the IMF forecasts an inflation rate of 6.2%, which
is entirely contrary to the RA Government’s forecasts – a budgeted
inflation rate of 2.5%-5.5%.

This January-March, the consumer price index "set a record" by reaching
108.2% over the recent years. The April 1 rise in the gas price is
expected to push up inflation and, later, prices. Under circumstances,
might the consumer index fall down to the level forecast by the IMF?

Last year, which is a basis for calculations of the consumer
price index, was marked by relatively low inflation. Specifically,
in February, as well as in the summer, the chain index even fell
below 100%. With a low price base considered, the annual inflation
will hardly go down to the level forecast by Mr. Tolosa, to say
nothing of the budgeted inflation. This requires a sharp reduction
in the prices for products and services with a large share in the
"statistical basket." It is only possible on paper.

As regards forecasts, they, as a rule, are conveniently forgotten. Let
us recall a couple of forecasts made last year, after the Armenian
dram was "allowed to flow." The then Chairman of the Central Bank
of Armenia (CBA) stated that the GDP was to be "several percent" in
Armenia in 2009. The day before, Nienke Oomes, the then IMF Resident
Representative in Armenia, issued a less optimistic forecast, a 1.5%
decrease. Both the forecasts proved blatantly false. Armenia registered
the first largest decline in GDP (14.4%) in the Commonwealth of
Independent States (CIS).