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Pensions and benefits in Armenia will increase by 2,000-3,000 drams starting from September 1. Will the government decision help mitigate the impact of inflation on socially vulnerable citizens?

Economist Suren Parsyan, who heads the economic research office at the Armenian Revolutionary Federation (ARF) Armenia Bureau, believes that the government will once again “squander” public funds without achieving any serious social impact due to its untargeted social policy.

In an interview to Panorama.am on Tuesday, the economist recalled that last year the food prices grew by about 12%, while in January-July 2022 the food inflation ran at 13.2%. The government now plans to increase the basic pension by 7% which won't even cover this year's inflation, he states.

Thus, the economist believes no significant changes in pensioners' living standards should be expected.

"Extreme poverty in Armenia has deepened this year, and raising pensions by this amount will not help reduce the poverty rate. Though this step, the government once again tries to imitate implementation of social programs without assessing their effectiveness. I think we need a more targeted and proportional social policy," Parsyan noted.

The economist believes that the increase of pensions and other benefits is solely aimed at alleviating the growing public discontent, but it won't be of much use because the food inflation rate is rather high.

He highlighted that this year Russia has indexed pensions twice to tackle rising inflation. Whereas, the Armenian government takes belated steps, slightly increasing pensions eight months later.

"It won't ease the overall situation. In general, the government is pursuing a political goal by this step to show that they have done something," added the economist.

Touching on state wages, Suren Parsyan underscored that they have not changed for 5-6 years, while the government mainly tries to solve the problem by paying monthly or quarterly bonuses to employees. According to him, the government has turned the bonuses into a tool in its hands to win the sympathy of civil servants or to punish them.

He also noted that the number of people leaving the country has grown because of social problems, adding illegal immigration to the U.S., in particular, has dramatically increased.

"People are selling their homes and belongings to enter the United States illegally. Naturally, this is not done out of a life of leisure. In fact, people are leaving the country because of social and security problems," Parsyan said.