President holds consultation to discuss ways of mitigating price hike consequences

 President Serzh Sargsyan held a consultative meeting to discuss the price hike for some goods in the country and ways mitigating the consequences of rising prices.

The meeting was attended by Deputy Prime Minister, Minister of International Economic Integration and Reforms Vache Gabrielyan, Chief of Presidency Staff Armen Gevorgyan, Central Bank Chairman Arthur Javadyan, Minister of Economic Development and Investments Suren Karayan, Minister of Agriculture Ignaty Arakelyan, Chief Presidential Adviser Aram Gharibyan, Head of Control Service of the President of the Republic of Armenia Hovhannes Hovsepyan, State Revenue Committee Chairman Vardan Harutyunyan, Chairman of State Commission for Protection of Economic Competition Artak Shaboyan.

Stressing that the heads of some government agencies in attendance of the meeting are also responsible for ensuring free and fair competition for economic entities, the President noted said he expected the responsible officials to exercise strict control over the increase of prices for individual goods, while maintaining competitive conditions. Serzh Sargsyan also stressed that the State has all the necessary tools to do that.

The President urged the speakers to present solutions aimed at mitigating the consequences of price increases and regularly informing the public about the processes in the consumer market in addition to discussing the objective reasons behind the price hike.

“Dear Colleagues,

I hope you have combined the New Year celebrations with the constant monitoring of the consumer market and market developments. Consumer price fluctuations for a number of products have become the subject of broad public discussions and concerns over the past few weeks. I addressed this very issue in my interview of December 12, 2017. Your response was that the price fluctuations were primarily motivated by changes in prices of some goods on the international market.

But about a month passed since December 12, and you had the opportunity to study this process in all detail. Therefore, now I will carefully listen to the analysis of each of you. But first I want to draw your attention to three important circumstances.

The first circumstance is that while market relations are established in Armenia, and the State does not interfere in pricing processes, but it has the duty of creating a competitive environment and fair price management. Secondly, we have a complete toolkit for surveying the activities of those economic entities that hold a dominant position on the market. And thirdly, we have many levers to determine whether the fluctuations in the market are actually the result of objective processes or whether it is a consequence of economic entities’ discretionary attitude.

The next circumstance is our obligation to constantly inform the public about consumer market developments, permanently, and not to be satisfied with individual statements of certain officials regarding the reasons for the rise in prices.

All of us, everyone sitting here, are obliged to inform the public about these processes. I am convinced that people will see whether what we say is objective or not. Moreover, along with presenting these explanations, we must always make predictions, and each of us is responsible for his predictions.

Those responsible for pricing processes in Armenia should always make forecasts and assure the public at large that the State budget targets will be fulfilled; that while a product has been marked up, another one has depreciated in fact.
If we do not do that, others will fill the gap. And many, in some cases due to their professional abilities, others due to lack of information, the third, by other circumstances, are trying to strain the situation somewhat.

I repeat, every citizen of the Republic of Armenia, including those sitting in this room, has the right to get accurate information on all-inclusive reasons.

The next circumstance: if the price hike for a number of goods proves to have objective reasons, we must consider how to mitigate these consequences. I do not want to offer a prescription now, but I want to give an example: over many years, we have subsidized prices for diesel fuel for farmers. I believe that this is a very good tool and we need to continue using it, but this is not compulsion. That is each of us should think how to mitigate the consequences.

The other point is that assurances are needed, not in words, but in practice, that all the proposed budgeted revenues will be collected. Already in the second half of the year, we will see what additional problems of social importance we can solve, so that inflation does not affect painfully, first of all the representatives of vulnerable groups. I see such opportunities, but I am sure that you have a keen eye on all these issues,” the President said, opening the meeting.

The Central Bank Chairman reported on the rise in the market price of some consumer goods at the end of 2017 and the first decade of 2018. The Vice Prime Minister presented an analysis of the reasons behind the price hike and proposals for mitigating the consequences. Chairman of State Commission for Protection of Economic Competition Artak Shaboyan presented the results of monitoring prices for basic consumer goods or goods of great social importance.

Following the meeting, the President gave a number of instructions to responsible persons. In particular, he instructed the government to compile a list of socially important goods, continually study the dynamics of prices for these goods, presenting the objective and subjective factors that cause price changes, assess risks of increasing their value and propose measures to mitigate the impact of rising prices, and periodically report back the results to the public.

It was also proposed to suggest ways of mitigating the impact of inflation on socially significant goods, which have risen in price as a result of tax or other legislative changes.

First of all, a comprehensive program shall be elaborated and presented for the development of local production and import substitution for socially important agricultural products, which will provide an affordable level of prices, while at the same time encouraging local production.

When initiating legislative changes, as a result of which substantial changes in prices for socially important goods may occur, the government should take measures to mitigate the effects of inflation.

The government was also instructed to monitor the markets for compressed gas, gasoline and diesel fuel and present the identified problems to the State Commission for the Protection of Economic Competition for taking decisive action.

The State Commission for the Protection of Economic Competition was instructed to take decisive measures in the event of unreasonable price increases in commodity markets, study pricing on the grain and flour market and submit appropriate proposals in the event of problems.