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Power problems will haunt Armenian government

Monday, July 13, 2015

Significance

In a bid to quell the protests, President Serzh Sargsyan has announced that the government will subsidise the increase until the completion of an independent audit into the operations of Russian-owned Electric Networks of Armenia (ENA). The 'No To Plunder' campaign, which has played a key role in the protests, is dissatisfied with the concession. The numbers of protestors have fallen sharply in recent days, but the government is becoming increasingly unpopular.

Impacts

  • Higher electricity costs will lead to a rise in inflationary pressures for a wide range of goods and services.
  • This will depress domestic demand as businesses and households are already struggling with the dram's sharp depreciation against the dollar.
  • The slowdown in economic growth this year is likely to see public support for the authorities fall further.

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