70 Percent of the Population Are in Extreme Poverty or at the Poverty Threshold, Economist Warns Social Conditions May Worsen

Inflation will continue until this spring, and the increased pension amount will provide only a modest compensation in the context of rising prices, said economist Gagik Makaryan in an interview with Factorinfo.

It is worth noting that as of January 1, the minimum pension amount has increased from 26,500 drams to 28,600 drams. The economist mentions that the increase of 2,000 drams in the minimum pension will have a negligible positive impact, especially since the number of low pension recipients is not significantly high among all pensioners.

“If we consider that a person lives alone, without a family or helpers, it means they are in the group that is at the edge of extreme poverty. In other words, they will continue to remain in extreme poverty and this increase will not change much,” noted Gagik Makaryan.

He added that it would have been better to have a significant increase in the pension if the state had the opportunity. The economist believes that the government does have such potential but needs to optimize its expenditures more effectively to realize this.

“In the coming years, these increases will not have significant importance, because they will nearly coincide with inflation and will not substantially improve people's lives. If we look at the families listed as electricity bill payers, we see that about 70,000 families consume up to 200 kWh, which means 25 percent of families. They are the poorest families because they consume electricity in the most economical manner. Another 330,000 families use between 200 and 400 kWh,” said Makaryan.

The economist pointed out that the funds allocated in this year's budget for social programs have been reduced compared to previous years. Gagik Makaryan believes that if there is no significant economic progress this year, there will be no success on the social front either.

“We will have nearly the same level, as poverty is over 30 percent and unemployment is at 20 percent. I believe that under such dynamics, the social situation may even worsen slightly. The economy needs to activate; we must have double-digit economic growth. The government needs to prioritize sectors whose development will create jobs,” noted the economist, adding that the biggest problem will be the management system.

According to Gagik Makaryan, today our biggest issue lies within the management system. He stated that the deputy ministers, heads of departments, and ministers are quite weak in terms of knowledge and experience, and frequent staff changes lead to a constant break in institutional memory.

The economist mentions that although the economy has become more active compared to 2020, it is still lagging behind 2019's indicators. “In any case, in addition to the development of those sectors of the economy, we should also ensure that the entire state budget and internal resources are used effectively,” summarized Gagik Makaryan.