ACCORDING TO CBA CHAIRMAN, RISKINESS OF 2008 STATE BUDGET IS GREATER AS COMPARED WITH PREVIOUS ONE

Noyan Tapan
Oct 29 2007

YEREVAN, OCTOBER 29, NOYAN TAPAN. The RA minister of finance and
economy Vardan Khachatrian takes the view that although the 2008
state budget contains some risks, they are not considerable as
compared with previous years, in particular, with 2007. However,
in the opinion of the chairman of the Central Bank of Armenia (CBA)
Tigran Sargsian, the riskiness of the 2008 state budget is greater –
due to influence of international markets.

According to him, next year’s risks can be divided into several
groups. The most important ones are pressures that come grom the
global market and have an essential impact on the macroenvironment:
in particular, dangerous phenomena form in the financial sector and
can grow into a global crisis.

Among risks are the depreciation of the dollar againt other currencies,
as well as a sharp rise in prices of oil, oil products, foodstuffs
in international market, which will also affect Armenia importing
these goods.

T. Sargsian said that in 2008 the CBA and the Armenian government have
a lot to do in terms of managing the level of prices and controlling
specific commodity markets. In his opinion, among external risks are
structural problems arising in financial markets in connection with
a number of big financial institutions that do not have sufficient
liquidity.

Another group of risks is conditioned by internal factors in Armenia.

Particularly, in case of high inflation pressures, a necessity arises
to raise interest rates, which naturally hinders development of
financial mediation, large-scale provision of business credits, which
in its turn affects the economic growth. Another factor contributing to
risks is the problem of financing a budgetary deficit as the financing
from domestic sources will sharply grow in 2008. Besides, the fact
that tax collection lags behind GDP growth rates causes some problems.