Lawmakers in Nagorno-Karabakh approved on Wednesday the Armenian-controlled territory’s state budget for next year that projects greater fiscal discipline and continued robust economic growth.
The budget calls for a less than 1 percent increase in public spending which is due to total 70.3 billion drams ($184 million). Budgetary revenues are projected at 65.1 billion drams.
Annual subsidies from Armenia will continue to account for most of those revenues. The subsidies, officially called an “inter-state loan,” will reach about 36 billion drams in 2012.
The spending bill does not include funding for infrastructures projects in Karabakh that has long been provided by the worldwide Armenian Diaspora. The bulk of that assistance has been channeled into the disputed territory through the Hayastan All-Armenian Fund.
The pan-Armenian charity based in Yerevan has received over $30 million in mainly Diaspora donations this year. Most of that money is due to invested in 2012 in the ongoing reconstruction of Karabakh’s water distribution network.
“It’s going to be a tough year and we need to toughen [fiscal] discipline,” Ara Harutiunian, prime minister of the self-proclaimed Nagorno-Karabakh Republic (NKR), told his cabinet earlier this month.
“We will be carrying out essential social expenditures in the first instance,” Harutiunian said.
The budgetary targets are based on the assumption that the Karabakh economy will grow by 9 percent in 2012.
The NKR government anticipates the same growth rate this year. According to Spartak Tevosian, the finance minister, virtually all sectors of the local economy have posted major gains.
Karabakh’s Gross Domestic Product is mostly generated by agriculture and food processing.
Armenia’s Prime Minister Tigran Sarkisian praised Karabakh’s “impressive” macroeconomic performance when he visited Stepanakert last August. “The existing indicators give us reason to hope that in the coming years Nagorno-Karabakh’s economy will enjoy a steady pace of development,” he said.
Karabakh has grown politically, militarily and economically integrated with Armenia since winning de facto independence from Azerbaijan in the 1991-1994 war.