By Atom Markarian
The Armenian parliament rubber-stamped on Thursday the government’s budget for next year which promises a major increase in public spending through improved tax collection and greater external assistance.
The final version of the bill calls for 334 billion drams ($574.2 million) in net expenditures and 287 billion drams in revenues, or about 30 percent more than this year.
Despite the projected sizable increase in expenditures, the authorities hope to bring the budget deficit down to 3.3 percent of Armenia’s 2003 Gross of Domestic Product by collecting more taxes. A package of laws and legislative amendments, also passed by the National Assembly on Thursday, is meant to further complicate widespread tax evasion.
Western lending institutions, which will cover a large part of the spending gap, have long pressed the Armenian government to clamp down on the huge informal sector of the economy. The government hopes that the approved fiscal measures will allow it to increase the tax revenues by 20 percent in 2003.
The budgetary targets are based on government expectations of a continued GDP growth which is forecast to hit a record-high rate of 12 percent this year. According to the Finance and Economy Ministry, the growth will make up at least 6 percent in 2003.
Despite several consecutive years of economic growth, Armenia is still reeling from a drastic economic slump of the early 1990s, with at least half of its population living below the poverty line.
The Armenian military and other defense institutions will continue to receive the largest share of government expenditures: 46 billion drams. This is roughly 20 percent more than in 2002. By comparison, the government will spend 30.8 billion drams and 25 billion drams on education and social security respectively.
The initial version of the budget approved by Prime Minister Andranik Markarian’s cabinet on October 31 was smaller by 53 billion drams. It rose to the current level after ministers included in the budget some $80 million in assistance to be donated to Armenia by the Lincy Foundation of Armenian-American billionaire Kirk Kerkorian.
The funds will go to pay for various infrastructure projects. Lincy’s assistance to the impoverished country amounted to $60 million this year.