Economic growth in Armenia is on course to accelerate to 7 percent this year and remain relatively robust next year, Prime Minister Tigran Sarkisian said on Tuesday, presenting his government’s draft 2013 budget to lawmakers.
The Armenian economy expanded by 4.7 percent last year and in the first quarter of 2012. Official statistics showed growth accelerating in the following months on the back of strong performances of the manufacturing and agricultural sectors as well as a slower contraction of the domestic construction industry still reeling from the 2009 recession.
Addressing standing committees of the National Assembly, Sarkisian said the growth reached 7.5 percent in September and will not fall below a full-year level of 7 percent. Gross Domestic Product is projected to increase by 6.2 percent in 2013, he said.
The growth forecast is part of the draft state budget for 2013, which would increase public spending by roughly 10 percent to 1.15 trillion drams ($2.85 billion). Finance Minister Vache Gabrielian told deputies that this will not entail any further rises in public sector salaries, prompting criticism from some opposition lawmakers.
They said consumer price inflation will lower real incomes of hundreds of thousands public sector employees. Gabrielian countered that the government will make an additional 31,000 such employees eligible for a package of other state benefits, including free medical insurance.
The government also plans to cut the budget deficit to a level equivalent to 2.6 percent of GDP. According to Sarkisian, the 2012 deficit-to-GDP proportion will stand at 2.8 percent.
The spending gap is supposed to be narrowed through a 13 percent rise in tax revenues. Sarkisian admitted that the government could struggle to meet this target despite the anticipated growth.
“We have an agreement with the World Bank to the effect that if there is negative global influence on the execution of our budget we will be able to anticipate a $100 million financial assistance,” revealed the premier.