By Hrach Melkumian
Meeting for an emergency session, the Armenian parliament began on Friday debates on the government’s draft budget for next year that seeks to offset an expected fall in foreign assistance with improved collection of taxes.
The spending bill calls for 287 billion drams ($508 million) in net revenues and 311 billion drams ($550 million) in expenditures. This is approximately 6 percent less than had been budgeted for this year.
The government attributes the decrease to the fact that 2003 was a peak year in the implementation of multimillion-dollar infrastructure projects financed by the Lincy Foundation of U.S.-Armenian billionaire Kirk Kerkorian. Its 2003 budget included roughly $80 million worth of Lincy funds mainly spent on the construction and repair of highways and residential buildings across the country. It is not known whether Kerkorian will continue the lavish assistance to his historical homeland which has already totaled over $165 million.
The government also anticipates less “structural adjustment” loans from the World Bank that have covered a large part of its budget deficits for the last several years. It has received $40 million worth of such funds this year. The World Bank is nonetheless expected to remain the principal source of closing Armenian fiscal gaps in the years to come.
Despite the overall drop in projected expenditures the government plans to spend more on education, health care and social programs next year. This is due to be achieved through higher tax revenues which are projected to grow by 16 percent to 256 billion drams.
The government has attached to its draft budget a package of amendments to Armenia’s tax legislation that impose tougher penalties for rampant tax evasion by businesses. It has also pledged to make its tax collecting agency more efficient.
The promised extra revenues were dismissed as insufficient by the National Assembly’s main opposition faction, Artarutyun. Its members argued that the record-high rate of economic growth claimed by the authorities should have resulted in much bigger public expenditures. One of them, economist Tatul Manaserian, said: “The economic growth of 15.2 percent in the first nine months of the year is not reflected in this draft budget.”
The budget was also criticized by some lawmakers representing the parliament’s pro-government majority. Still, its approval by the majority seems a forgone conclusion. The parliament vote is expected on Saturday.
(Finance and Economy Minister Vartan Khachatrian presenting the bill to lawmakers.)