Armenian Government Plans Further Spending Increase

Radio Free Europe, Czech Rep.
June 2 2005

02/06/2005 09:02

The Armenian government’s budgetary expenditures will grow further
in the next few years but they will still make up a small share of
the country’s Gross Domestic Product, officials said on Wednesday.

A three-year program approved by ministers calls for a major increase
in tax revenues which should allow the government to boost its modest
public spending. Under that plan made public by Deputy Finance Minister
Pavel Safarian, the tax revenues will equal 15.9 percent of the GDP
in 2008, up from 15.1 percent projected for this year.

The proportion is very low even by ex-Soviet standards and is the
most vivid indicator of the scale of tax evasion in Armenia. The
authorities announced a major crackdown on the endemic practice last
year, with President Robert Kocharian personally warning the country’s
leading businessmen that they should stop grossly underreporting
their earnings.

The crackdown is aimed at ensuring a 25 percent rise in the proceeds
from the collection of taxes and import duties. They are projected
to total 307 billion drams ($690 million) in 2005. They government
now appears on track to meet that target.

Safarian told reporters that the tax revenues are projected to grow by
another 53 billion drams next year. He said at least half of the extra
money will be used for raising public sector wages and social security
benefits. Similar hikes are envisaged for 2007 and 2008, he added.

Safarian also said the program’s successful implementation is based
on expectations of annual economic growth of 6 percent. According to
official figures, the growth rate has averaged 11 percent in the last
four years and slowed to 7.8 percent during the first quarter of 2005.

From: Emil Lazarian | Ararat NewsPress