Devaluation Should Have Been Gradual, Says ARF Rep.

YEREVAN (Yerkir, Yerkir Media)–The devaluation of the Armenian currency should have happened earlier and gradually, said Armenian Revolutionary Federation parliamentary bloc member and economist Ara Nranyan.

He said at this juncture the Central Bank had no other choice by to devalue the dram.

“Wouldn’t it have made more sense that we took this step a while ago gradually?” asked Nranyan adding that the current sudden devaluation will create obstacles for businesses.

At a press briefing Tuesday, Nranyan discussed Tuesday’s decision to devalue the dram and other issues related to the effects of the global economic crisis on Armenia. He expressed opposition to the proposed tax increases on imported raw materials for domestic production and output, which he said would slow production and would impact prices for locally produced goods.

Nranyan said local production and exports should be encouraged and the government should provide incentives for local production of goods in order to balance prices in these economic conditions.

Nranyan noted that the ARF had recently met with Prime Minister Tigran Sargsyan and representatives of his economic team to discuss his party’s proposal for the economy, adding that the ARF has always advocated support for local production and encouraged exports of locally-produced goods and services.

“If these steps were undertaken three to four years ago, then the impact of the economic crisis would have been less,” said Nranyan who acknowledged that certain steps to correct the situation are being undertaken but it may be too late.

Nranyan said that the artificial inflation of the dram has primarily hurt local production and only importers have benefited from it.

The ARF parliament member also touched on a recent report by the World Bank, which predicted zero economic growth in Armenia for 2009 and government estimates that place growth at three to four percent.

He said the current economic crisis has demonstrated that the government’s continued touting of a double-digit economic growth was baseless, at best, adding that even if there is slight growth it would be better if it is stable rather than “registering self-serving economic growth.”

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