The National Assembly approved on Thursday a revised and final version of Armenia’s state budget for next year that commits the government to boosting actual spending despite the continuing economic crisis.
The government-drafted budget calls for 935.5 billion drams ($2.44 billion) in expenditures and 742 billion drams in revenues. The resulting budget deficit would be equivalent to roughly 6 percent of Gross Domestic Product which the Armenian authorities expect to grow by 1.2 percent in 2010. The bulk of the deficit is expected to be covered by external loans.
The spending target represents an almost 9 percent increase from the initial version of the budget which was submitted to the Armenian parliament last month. Finance Minister Tigran Davtian told lawmakers that the government plans to finance the increase with additional tax revenues and U.S. economic assistance provided within the framework of the Millennium Challenge Account program.
The state budget for this year, drafted before Armenia was affected by the global credit crunch, envisaged 947 billion drams in expenditures. Officials have made clear, however, the government will at best spend 911 billion drams this year because of a serious shortfall in tax revenues.
The Armenian military will be one of the main beneficiaries of the upward revision of the 2010 budgetary targets. It is due to receive 131 billion drams, up from 111.6 billion drams initially budgeted by the government.
The 2009 budget set the country’s military budget at 149.6 billion drams. The actual amount of defense spending this year is not yet known.
The planned rise in government expenditures will not translate into further pay rises for public sector employees. Nor does the government plan to raise pensions.
Leaders of the parliament’s pro-government majority endorsed the budget before it was overwhelmingly passed by lawmakers. “For a country in economic crisis, this is the kind of a financial document that should allow us to achieve a breakthrough and switch from decline to recovery,” said parliament speaker Hovik Abrahamian.
The opposition minority represented by the Dashnaktsutyun and Zharangutyun parties voted against the budget. Both factions were angered by Davtian’s remark that the government did not accept any budget-related amendments proposed by Zharangutyun deputies because their party is “against the budget in any form.”
“No Armenian government has ever displayed such a hostile attitude [to the opposition,]” said Vahan Hovannisian, Dashnaktsutyun’s parliamentary leader. “I am asking the prime minister to pay attention to that statement. If he doesn’t share that opinion, then I think some disciplinary measures should be taken.”
But Prime Minister Tigran Sarkisian unequivocally defended his finance minister. “Tigran Davtian gave all answers in a respectful manner,” he said. “There was no display of hostile attitude on the part of Tigran Davtian in this chamber.”