These days the financial market has not been stabile again. The national currency that had been growing in the price stopped its growth and its price went down a little. The press covered information about some cloudy processes in the field of currency exchange market. Again, they started speaking the name of the Central Bank. On October 3, the Central Bank organized a board meeting. Everyone that reads that information remembers about the Soviet times. After each year of heavy harvest in agriculture, the ministries were confused and were asking everyone to coordinate everything effectively since the harvest was too much. They made everyone, even students and scientists, to go to the fields and collect the harvest. Heavy harvest was something unexpected and bad that changed everything in people’s life. On the basis of the CB board’s announcement we may assume that there are two negative things in the Armenian economy now. The first one is the double-digit economic growth. “The CB estimates that there will be double-digit economic growth in 2006, which will be followed by strong inflation pressure”. In fact, the double-digit growth that we are proud of has become a negative factor for us and it would be better not to have it at all so that to be protected. Otherwise, inflation will press so hard that there will be many negative results. Furthermore, the inflation process is stipulated by some internal and external powers as well. The first one, according to the CB, is the world prices of oil. We wander why they worry about the world prices of oil since those prices are falling down. Just the day of the mentioned board meeting the international press covered information writing that the OPEC had cut down the oil export capacities. They are afraid of the rapid fall of prices. At the end of summer the price for one barrel was $75.5, now it is $62. “The inflation risks coming from the foreign sectors are still keeping”, writes the board and brings the example of the high prices of energy production and sugar. The market of sugar is the most monopolized business of Armenia and belongs to MP Samvel Alexanyan. Everyone knows this and we hope the CB knows this too. It is not justified and correct to explain the high domestic prices on the basis of the example of the international markets. The problem is the fact that according to the information of the New York and London stock markets, the prices of sugar are falling down. Please see the chart. The prices were high in July (reduction from 490 point to 370). According to the CB, the other foreign reason of inflation is the fact that “the grain harvest capacities in Russia and Ukraine are expected to fall down”. Please note that this text was written on October 3. Please imagine how many good specialists have spoken about the expected harvest in Ukraine and Russia that day during the board meeting. Neither of them managed to inform the participants that the harvest season of grain in those countries is July-August. In October, they should not speak about the expected harvest, but about the capacities.
After the mentioned difficult analysis of foreign factors, the board announced that they thought the process of “de-dollarization” in the economy was going fast and suggested the following solution: “In these conditions the CB is ready to meet the demand to AMD by buying foreign currency in the domestic market”. It is time to discuss the second possible danger in our economy. I mean dollar. Many countries are doing their best to create an exporting economy and export their production to get money. Our case differs from this one. We are trying to export to other countries and are getting money from outside now. They have officially announced that the money capacity transferred to Armenia will cover $1,5 billion. This is the money that they say is dangerous for the economy. Of course, it is not correct to argue the CB to take a certain capacity of foreign currency out of circulation and thus solve big problems. Our country does not have such strong economy. The CB can buy several million dollars only. It is trying to do that now. However, these actions are small steps that don’t help the problem much. The only influence those actions may have is increasing the AMD capacity in circulation. Nevertheless, in order not cause illusion, following its previous announcement the CB informs that later it will take out of circulation the AMD capacities that will deem to be extra after those actions. Even more, it means not only the money capacities issued within the framework of its actions, but as well as the money spent within the framework of governmental programs (budget money). By issuing obligations, the CB is taking out of circulation almost 10 billion AMD each month.
The only factor influencing on the economy that can’t be argued is the fact that the agriculture is falling down. The statistical services have calculated the changes in agriculture and said that the field was developing like a “tiger jumps”. Now it seems that the authorities have realized that because of that information our country may be taken out of the list of countries receiving aid. They may not provide either the support in the framework of the “Millennium Challenges” program. It will become more difficult to make the Diaspora believe that they should help villages as well. Based on the abovementioned facts I may assume that the “tiger of our economy” will stop jumping so fast and will become lame in the future. The existing authorities and the CB will start speaking about the “jumping tiger” in the fields of construction and services only. The economic growth is evident, but the field of services is impossible to analyze.
P.S. I think it is not correct to connect the mistakes in this article and as well as the growth of AMD exchange rate with the absence of the CB president, Tigran Sargsyan, from Armenia.