Economist: Today`s price increase in Armenia is laid down in the Tax Code adopted in 2016

ArmInfo. Today's increase in prices for certain groups of goods, in particular, diesel fuel, gasoline, liquefied gas, alcoholic beverages and cigarettes was laid in the new Tax Code, adopted in 2016. Economist Atom Margaryan expressed opinion during the press conference on January 12.

According to the expert, the changes in the TC were primarily due to the difficulties in servicing the public debt in 2018, 2019 and 2020. Second, in 2018, expenditures in the strategic sphere will be increased by 38 billion drams. In addition, this year the issue of ensuring social stability was sharply raised, given that the budget does not provide for additional expenditures in this area," he explained.

According to Margaryan, the government expects to receive about 16.5 billion AMD of additional funds through increasing indirect taxes, first of all, fuel, alcohol and cigarette excises. However, on the other hand, the government risks thereby reducing the consumption of these goods, for example, tobacco products and spirits. Speaking about the impact of tariff increases on the consumer basket, Margaryan noted that the most significant impact will be borne by the rise in price of liquefied gas, which is used by 80% of the country's auto brand. One option for solving this problem, according to the economist, can be to ensure the diversification of imports. Given the gradual increase in excise taxes in Russia, which will affect the cost of energy in Armenia, the expert is considering the option of importing energy resources from Iran, taking into account the opportunities provided in the framework of the creation of a free economic zone in Meghri.

When asked what will happen next, the economist noted that it is not worth politicizing the issue, putting it out in the field of inflationary expectations, or solving it through rallies. "This will all be like the struggle of Don Quixote with windmills. In this case, it is necessary to use long-term institutional tools," Margaryan said. According to the National Statistical Service of Armenia, for the consumer market of Armenia in 2017 was inflationary - 2.6%, after two years of deflation - 1.1% in 2016 and 0.1% in 2015. This was mostly caused by an increase in prices of food products (including alcohol and cigarettes) by 5.3% and non-food products by 1.7%, while tariffs for services decreased by 0.5%. The average monthly increase in consumer prices in January-December 2017 was 0.2%, against a decline of 0.1% a year earlier.