By Atom Markarian
The Armenian government hopes to increase its tax revenues by more than 13 percent to 220.5 billion drams ($395 million) next year in line with its efforts to reduce its budget deficit and dependence on external borrowing, Finance and Economy Minister Vartan Khachatrian said on Thursday.
Khachatrian said increased tax revenues will allow the government to bring the deficit down to 2.6 percent of Gross Domestic Product in 2003. “This is a figure which is considered normal in developed countries of the world,” he said, adding that the deficit equaled 5.1 percent of Armenia’s GDP in 2000.
The government posted a 14 percent rise in the tax revenues in the first half of this year, putting it on track to avoid yet another fiscal crisis later this fall. Officials said in July that they will meet the annual tax collection target of 194.4 billion drams.
Khachatrian declined to specify the amount of budgetary expenditures envisaged for next year, saying only that the government’s chief priority is to cut the deficit. Low-interest loans from the World Bank have covered about half of Armenia’s budget deficits in recent years. But this year bank is due to finance only just over a quarter of the spending gap projected at approximately $73 million.
Both the World Bank and International Monetary Fund have emphasize over the past year that the authorities in Yerevan should cut back on external budgetary borrowing by either boosting their revenues or slashing the already modest expenditures.
At just over 14 percent of GDP, the level of various taxes and customs duties collected in Armenia each year is among the lowest in the former Soviet Union. It reflects the huge scale of the country’s shadow economy and is a key reason why many Armenians do not feel benefits of continuing economic growth.