Thursday,
Armenian Government Plans Major Rise In Spending
• Sargis Harutyunyan
Armenia - Prime Minister Nikol Pashinian holds a cabinet meeting in Yerevan,
The Armenian government approved on Thursday the draft state budget for next
year calling for significant increases in its expenditures on infrastructure
projects, social programs, defense and national security.
Overall public spending is to rise by over 15 percent to almost 2.2 trillion
drams ($4.5 billion) in 2022.
The government at the same time pledged to cut the budget deficit through an
even sharper rise in its tax revenues.
“The 2022 budget is based on our three main priorities: reforming the national
security system, developing infrastructures and modernizing education and
science,” Prime Minister Nikol Pashinian said during a cabinet meeting in
Yerevan. “We will be paying a great deal of attention to national security,
without which it is impossible to achieve long-term development goals.”
Government spending on defense is projected to grow by about 11 percent to 345.4
billion drams ($707 million), reflecting lingering security challenges facing
Armenia after last year’s war with Azerbaijan.
The government wants to allocate another 42.6 billion drams to the National
Security Service (NSS), a year-on-year increase of about 23 percent. The NSS
oversees Armenia’s border guards deployed along some sections of the
Armenian-Azerbaijani border after the six-week war.
The draft budget presented by Finance Minister Tigran Khachatrian also calls for
a 31.6 percent surge in spending on road construction and other infrastructures
which would total nearly 279 billion drams.
Social security would remain the single largest recipient of public funds, with
almost 580 billion drams allocated for that purpose.
The spending increases are supposed to be more than offset by a nearly 25
percent jump in state revenue projected at 1.95 trillion drams. The budget
deficit would thus fall to 242 billion drams from 334 billion drams recorded
last year.
The 2021 deficit, equivalent to 5.5 percent of GDP, was much bigger than
expected due to a severe economic recession caused by the coronavirus pandemic
and compounded by the war in Nagorno-Karabakh. The Armenian economy shrunk by
7.6 percent, forcing the government to resort to additional external borrowing
to make up for a major shortfall in its tax revenues.
The economy returned to growth this year. Pashinian said in July that it is on
course to expand by at least 6 percent in 2021.
The recession also pushed up Armenia’s public debt to 63.5 percent of GDP.
According to the Ministry of Finance, the debt continued to increase this year,
reaching $8.95 billion in August.
Khachatrian expressed confidence that the ongoing economic recovery will allow
the government cut the debt-to-GDP ratio to 60.2 percent by the end of 2022.
Former Armenian Defense Minister Arrested
• Artak Khulian
• Naira Nalbandian
Armenia - Fromer Defense Minister Davit Tonoyan.
The National Security Service (NSS) confirmed on Thursday that it has arrested
former Defense Minister Davit Tonoyan in an ongoing criminal investigation into
supplies of allegedly faulty ammunition to Armenia’s armed forces.
In a statement, the NSS said that Tonoyan and Davit Galstian, an arms dealer
also arrested late on Wednesday, are accused of fraud and embezzlement that cost
the state almost 2.3 billion drams ($4.7 million).
Later in the day a court in Yerevan allowed the NSS to hold Tonoyan in detention
pending investigation. A lawyer for the former minister said he denies the
accusations and will therefore appeal against the decision.
“The criminal case contains plenty of information that disproves the
accusations,” Sergei Hovannisian told journalists.
Galstian also protested his innocence during a separate court hearing on his
pre-trial arrest.
Galstian owns several firms that have for years sold weapons and ammunition to
the Armenian military. He was already arrested in February on charges of
supplying the military with unusable artillery shells worth $1 million.
Armenia’s Court of Appeals released the businessman reputedly close to Tonoyan
from custody four months later.
It was not immediately clear whether or not Tonoyan, who served as defense
minister from 2018-2020, will plead guilty to the accusations.
The NSS statement said that criminal proceedings have also been launched against
other serving and retired military officials as part of “large-scale
operational-investigative measures” taken by its investigators. It did not name
those officials.
A deputy chief of the Armenian army’s General Staff, Lieutenant-General Stepan
Galstian, was summoned to the NSS for questioning late on Wednesday. According
to the Hraparak newspaper, investigators searched his and Tonoyan’s apartments.
In what appears to be a related development, the NSS also arrested late last
week the commander of Armenia’s Air Force. It claimed that the general abused
his powers to arrange for personal gain a $4.7 million contract for the supply
of outdated rockets to the armed forces.
According to the security service, the Defense Ministry had refused to buy the
same batch of rockets from a private intermediary in 2011.
Armenia -- Prime Minister Nikol Pashinian and Defense Minister Davit Tonoyan
(second from right) inspect the new canteen of a military base in Armavir, July
19, 2019.
Prime Minister Nikol Pashinian appointed Tonoyan as defense minister immediately
after coming to power in the May-April 2018 “velvet revolution” that toppled
Armenia’s longtime leader, Serzh Sarkisian.
Tonoyan had served as a deputy defense minister and minister of emergencies
during Sarkisian’s rule. In April 2018, one of Pashinian’s close associates,
Ararat Mirzoyan, described him as a “real professional” and “person of
integrity” who will quickly modernize the Armenian army.
Tonoyan was sacked in November 2020 less than two weeks after a Russian-brokered
agreement stopped the Armenian-Azerbaijani war over Nagorno-Karabakh. Some
senior pro-Pashinian parliamentarians blamed him for Armenia’s defeat in the
six-week war. The prime minister faced angry opposition demonstrations and
fought for his political survival at the time.
Later in November, the then chief of the army staff, Colonel-General Onik
Gasparian, said four days after the outbreak of the war he warned Armenia’s
political leadership to urgently reach a truce agreement with Azerbaijan to halt
the hostilities. Pashinian subsequently denied Gasparian’s claim.
However, Tonoyan not only confirmed the warning issued by the army top brass but
also said that it was “agreed with me.”
Reprinted on ANN/Armenian News with permission from RFE/RL
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