Agreements with Russia on natural gas to enable Armenia to down inflation to projected rate in 2014
YEREVAN, December 25. /АРКА/. Agreements with Russia on natural gas import and exemption from customs for oil products will have favorable impacts on Armenia’s economy in 2014 and will make it possible to down its inflation to the projected 4% (±1.5%), the Eurasian Development Bank (EDB) said in its CISC Macro Monitoring for December.
According to the document, after reaching its peak of 9.3 percent in August 2013 the inflation triggered by increase in the price for Russia-exported natural gas subsided to 8.2%.
“The central bank, taking into account non-monetary nature of this inflation and the limited impacts of monetary factors and slowdown in the economy, didn’t tighten its monetary policy,” the Eurasian Development Bank said.
EDB analysts say that despite the season price hikes in November 2013, the annual inflation shed to 6.6% prompting the central bank to review its forecast to 6.5-7%.
They also stress that Armenia’s structural payment balance problems need more substantial reforms, and the country’s authorities have complicated short-term and long-term tasks.
In their opinion, amid transport isolation and limited opportunities to use fiscal and monetary policy instruments, the authorities should spur GDP growth, build up exports and develop infrastructures, solving poverty problem along with that.
“Armenia’s decision to join the Customs Union should contribute to solution of these grave problems…,” the document says.
On December 23, Armenian National Assembly ratified the agreement signed between Russian and Armenian governments on duty-free export of natural gas, oil products and rough diamonds by Russia as well as on price for natural gas and delivery of 20% of ArmRosgazprom company’s shares to Russia’s Gazprom.
The Russian gas holding will provide up to 2.5 billion cubic meters of natural gas to Armenia every year over a period between 2014 and 2018.
In the 2013 government budget, inflation in Armenia is projected at 4% (±1.5%) and GDP growth at 6.2%.
The same inflation rate is projected in the 2014 budget, but with 5.2% GDP growth..-0---