ARMENIA’S DRAFT BUDGET: REVENUES, EXPENDITURES, EXCHANGE RATE

news.am
Oct 30 2009
Armenia

Next year Armenia will enter the economic stabilization stage, RA
Minister of Finance Tigran Davtyan stated in Parliament. He added that
Armenia has actually entered this stage. "I would like to point out
that the budget is a most realistic one, all the budgeted indicators
are minimal and may be raised in the future," Davtyan said.

The RA Government forecasts 1.2% economic growth in Armenia next year.

The deflator index is expected to reach 2%, and budget deficit 5-7
per cent of GDP – quite a high indicator as compared with this year.

The budgeted AMD/USD exchange rate is 376 AMD/US $1.

The budgeted revenues are 701.8bn AMD (21.8% of the GDP against
22.2% this year). "It is 40bn AMD less than forecast for next year,"
Davtyan said.

The budgeted expenditures are 884.7bn AMD (27.5% of the GDP against
the previously forecast 23.2%). The budgeted current expenditures are
736.6bn AMD (85.7%), and capital expenditures 123bn AMD (14.3%). The
draft budget of Armenia’s communities is 82.3bn AMD (4.6bn AMD more
than this year).

The draft budget provides for actual budget revenues totaling 676.7bn
AMD, and on-budget expenditures totaling 859.7bn AMD.

Tax revenues and duties are to constitute 78.8% of budget revenues
(533bn AMD, far less than in previous years, but more than forecast
by the Government), grants 15.6% (15bn AMD), with other revenues to
total 24.4bn AMD.

The budgeted deficit is 183bn AMD (6.5% of GDP). According to Davtyan,
internal and external sources of financing the budget deficit are
available (credits by the International monetary Fund (IMF) and the
World Bank (WB), as well as the stabilization fund accumulated due
to the Russian credit).

Foreign credits are to total 124bn AMD, and financial assets 31.7bn
AMD.

"Before the crisis on-budget expenditures constituted 20-21 per
cent of GDP, they reached 26-27 per cent in 2009-2010, which means
that the Government will increase its participation in the economy,"
Davtyan said.

The draft budget provides for 2.644bn AMD imports (44.4% of GDP),
and 760.6bn AMD exports (16% of GDP). Unfavorable foreign trade
balance is to reach U.S. $1.903m.

Taxes revenues are to constitute 16.6% of GDP, and Armenia’s national
debt46.3% of GDP (U.S. $3.960bn). By the end of this year it will
constitute 33.7% of GDP. Armenia’s foreign debt will constitute 89.6%
of the national debt or 41.5% of GDP. Minister Davtyan pointed out
that credits have mostly been channeled to the real economic sector
this year. The compulsory social payments are to total 105.2bn AMD
(3.3% of GDP).

The Government plans full-scale implementation of social programs. The
financing will be increased in case of better economic indicators.

Budgeted social expenditures (social, education, health systems) will
constitute 45.7% of on-budget expenditures. The education budget is
95bn AMD, which will allow the Government to maintain salaries and
current expenses at this year’s level. Armenian science will receive
8.4bn AMD – as much as this year. A total of 54.1bn AMD are intended
for the health system. Social security expenditures will total 239.8bn
AMD (305 of the budgeted expenditures).

A total of 15.1bn are intended for the cultural, recreation and
religious spheres. The RA Government’s budget is 50.2bn AMD (3bn AMD
less than this year), with 4.7bn AMD to be channeled from credits and
grants. "The financing has been reduced to a minimum. Less financing
would affect government officials’ normal work," Davtyan said.

Expenses on defense, national security and maintenance of public order
will constitute 18.5% of the total on-budget expenditures. 15.9%
of the funds will be channeled to various economic sectors, with
4.5% of the on-budget expenditures intended for covering Armenia’s
national debt. Other expenses will constitute 9.8%. Aa total of 24bn
AMD will be allocated to construction work in the earthquake zone,
and 31bn AMD to the Nagorno-Karabakh Republic (NKR).