RFE/RL Armenian Report – 09/30/2021

                                        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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