Official statistics institutions have not published information on inflation during May. That information will be published in the end of the month and will be fully available with details next month.
People who were saying that there would be inflation following the elections can already say that tendencies have started. During the Easter the prices of eggs did not go up and many people said that it was because of the fact that elections were coming up and the prices would grow after May 6. Now they see that they were not mistaken. We do not mean the rumors that on the night after the election rumors said that prices of some types of products have gone up; what we mean concerns more official indicator, which is the exchange rate. As it was expected, the national currency is rapidly going down. Before the elections the market was full of foreign currency, which was exchanged to drams to take care of formal and other expenses related to elections, now the reverse process s going on. The price of dollar is rapidly growing. Yesterday in the NADAQ OMX stock market of Armenia 2.7 million dollars were sold and the average rate was 394.47 drams. This is the first time during this year that the exchange rate is exceeding the limit of 394 drams. In exchange points one US dollar was bought at 393.5 and offered at 395 drams.
How is it connected with inflation? There is a direct connection. The national currency inflation will result in growth of the price of imported products. Our economy is import dependant. For example, during the past year the import capacity was 4.1 billion dollars, which is by 1.5 times more than the capacity of produced goods and services during the past year, and more by 1.7 times than the agricultural products. This means that the exchange rate is going to have serious impact on imported products, thus on the entire economy and prices as well. However, let’s not run before the time as the Central Bank has a role too and has instruments to influence on exchange rates. Going back to elections, it is logical to connect the inflation with elections but not absolutely true. For example, after the parliamentary elections on May 12, 2007, the official statistics reported not inflation but the vice versa. Following the presidential election 2008 there was inflation, which made 4% for the next three months. We were thinking that there would not be inflation, especially in consideration of the fact that presidential election was coming up in one year. We were thinking that the authorities would do their best, even on the account of the money of oligarchs to resist the inflation processes, but the processes following the elections are going in a different direction.
The authorities are standing in their positions so firmly that after this victory even the opposition could not find powerful facts to go against the power and agreed to take the mandates and at least be able to be in the parliament. This means that the authorities are sure in their victory and there are no doubts that the presidential election will differ from the manner of the parliamentary elections. Despite any inflation rate or economic situation the governmental candidate is going to win the presidential election. In the meantime, we think that the presidential election will proceed in a manner that will be praised by international and domestic observers. In a word, the authorities may not make efforts and spend resources on bright promises and other shiny things. Our experience shows that any negative attitude of the society to the authorities is forgotten soon before the elections as fast as they forgot the double-digit inflation of prices during the past year. Right before the election it turned out that everyone loves this government. In a word, the principle is the following: the worse the better. The worse for the country, the better for the people on power.
The authorities do not have a serious motive to resist or fight against the inflation tendency. The only thing we can hope for is their good attitude to people.
Maybe the authorities have not learnt how to govern a country, but they have learnt how to violate elections. In politics everything is done for being elected and the final results.