Steep wage rise may provoke high inflation, Armenian Ministry of Finance says

YEREVAN, April 26. /ARKA/. A steep rise in salaries and pensions in Armenia may lead to high inflation, Armenia’s deputy minister of finance Vardan Aramyan said.

Earlier, Armenia’s former foreign minister Vardan Oskanyan who leads the list of Prosperous  Armenia party for the coming Council of Elders elections suggested increasing salaries and pensions by several times in the country.

“We do not agree with what Oskanyan proposed, as we should be very careful in raising pensions and salaries and find first of all resources required for the increase. If salaries and pensions are steeply increased at the account of rising taxes and debts, then it is extremely dangerous - it may lead to steep rise in inflation, and the economy will not manage to recover”, the deputy minister said.

Aramyan stressed that the ministry is pursuing a social program expansion policy and is increasing social payments but within a realistic policy.

A number of other issues brought up by Oskanyan, easing tax burden for small and medium-sized businesses in particular, is already under consideration, the deputy minister said.

According to the ministry of economy, the share of SME in the country’s GDP was about 43% as of the end of 2012. The government is taking active measures to improve this indicator through simplifying tax administering. In particular, the new turnover tax law came into force on January 1.

According to Armenia’s national statistical service, average monthly nominal salary was 140,015 drams in January 2013 (337 dollars based on the current exchange rate).  Average monthly pension was 28,000 drams.

Armenia’s inflation rate was 3% in January-March compared to the same period of the year before. Under the budget, inflation was planned at a 4% rate (±1.5%) and GDP was expected to grow by 6.2%. ($1=412.94drams). -0-