The interview of former Armenian FM Vardan Oskanyan is presented by “Civilitas” Foundation.

- Mr. Oskanian, for the government of Armenia today, the main challenge is inflation and control of prices on goods.  The government proposes to implement changes in the “Law on Trade and Services”; the goal of which is to control price increases on essential goods.  The Prime Minister has admitted that such a practice is not desirable and rarely applied, yet on the other hand has a positive affect on the marketplace.  Do you believe that this new legislative instrument will work?

- I don’t believe that the government’s approach is correct. Government interference through price control has never been effective.  On the contrary, this approach may have a very negative impact on the markets. The government should not pursue legislative changes; rather they should implement reforms instead.  Inflation has two sets of causes – internal and external.  Domestically, when demand is higher than supply, prices naturally go up.  But in Armenia today, that’s not the case. Demand is low; the economy is growing at a very slow pace.  Purchasing power has also declined.  What we have today is stagflation – inflation even with a stagnant rate of growth.  Armenia’s inflation is imported. Because global prices are on the rise and we rely heavily on imported goods, we are, of course, affected.  But, at the very least, the Armenian government can work to eliminate the rights of certain oligarchs to maintain monopolies on those basic products on which we all depend.  If there is competition on basic import items like food and oil, then the price increases that we experience will at least be subject to competition and excessive price hikes will be restrained.

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