Subsidies for new natural gas tariffs must be carefully targeted, said the IMF Resident Representative in Armenia Guillermo Tolosa.

“The approach must be different for a guy who is heating his swimming pool, and a regular household,” he told journalists on June 3, on the conclusion of his mission to Armenia.

The IMF mission has not yet seen the action plan for the subsidies, and therefore is not ready to comment.

“We have only heard of a general intention to cover a part of the price, but we cannot shape an opinion unless we know the terms and coverage of this policy measure,” Tolosa said.

He commented on the question on the ability of state to collect enough fiscal space to fund subsidies (initially not incorporated in the Armenia’s 2013 state budget). Guillermo Tolosa told that the national tax policy, enshrined in the agreement with the IMF, is not supposed to change in the midterm.

However, the funds are not expected to be covered by Eurobond placement, announced recently by the Ministry of Finance.

To remind, the price for natural gas, imported from Russia, will increase by 50% (up to $270) per 1,000 cubic meters on July 1, 2013. The price bid of ArmRusgasprom CJSC, subsidiary of Russian Gasprom and  the sole gas distributor for the general Armenian market, calls for an increase by 67% for minor customers (those consuming less than 10,000 cubic meters per month), reaching AMD 221,000 ($529) per 1,000 cubic meters, and by 61% for large consumers. The bid has been lodged with the Public Services Regulatory Commission, who will announce the new gas tariffs on June 7.

The government of Armenia has pledged to subsidize 30% of the increased price.