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By Atom Markarian
The Armenian government unveiled on Thursday plans for a nearly 4 percent increase in public spending this year which will be financed with resources saved up during the implementation of its 2003 budget.

Ministers decided to seek parliament approval for raising the projected 2004 expenditures by 12 billion drams to almost 330 billion drams ($580 million). The measure would mark the first-ever growth of the Armenian state budget mid-way through a fiscal year.

Officials said the extra money was largely freed by Armenia’s debt settlement agreements with Russia and Turkmenistan which reduced the amount of funds set aside for external debt servicing last year. They said the government also economized on state procurements.

According to Finance and Economy Minister Vartan Khachatrian, most of the additional expenditures, 7 billion drams, will be channeled into the construction and repair of secondary schools across the country. The rest of the money will be spent on the reconstruction of the country’s northwestern regions still reeling from the 1988 earthquake and improving supplies of water and natural gas in rural areas.

Government spending, which is still too small to meet Armenia’s socioeconomic needs, will be further boosted with a new $20 million budgetary loan which the World Bank is expected to disburse in October. The money will likely be included in the state budget for next year, though.

Khachatrian revealed that the Armenian government would like to receive within the next five years $700 million in assistance from the United States under Washington’s Millennium Challenge Account (MCA) program of promoting political and economic reforms around the world. He said Yerevan expects to secure $100 million as early as this year and to invest it in education, health care and social services.

“We want to focus on direct investments in the economy, especially in the rural areas,” Khachatrian told reporters.

Armenia is among 16 developing nations of the world that were recently selected by the U.S. to be eligible for the additional aid. Its allocation and amounts will depend on specific proposals to be made by their governments. The top executives of the Millennium Challenge Corporation, which is administering the scheme, visited Yerevan last week to discuss ways of using the potential extra aid with government officials and civil society representatives.

Senior officials from the U.S. State Department have made it clear that the Armenian authorities must also improve their “poor” human rights record if they are to benefit from the MCA.
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