The National Assembly ended on Friday two-day debates on the Armenian government’s draft budget for next year which calls for a reduction in public spending strongly criticized by the parliamentary opposition.
The proposed budget commits the government to spending a total of 1.36 trillion drams (about $2.9 billion), down by almost 17 billion drams from this year’s spending target. Unveiling it on September 29, Prime Minister Karen Karapetian said, however, that budgetary expenditures will actually decrease by as much as 100 billion drams ($210 million).
The discrepancy suggests that the government will fail to meet the 2016 target because of worse-than-expected tax collection.
Under the budget proposal, the government is to collect 1.21 trillion drams in taxes and other revenue in 2017. The 2016 budget calls for a state revenue of almost 1.19 trillion drams.
Karapetian said that budgetary revenue will rise by 70 billion drams in real terms, a further indication that tax collection this year will fall short of the target. Finance Minister Vartan Aramian predicted on September 30 that the 2016 shortfall in tax revenue will total approximately 80 billion drams.
Aramian defended the spending cuts, saying the government needs to rein in a growing budget deficit which projected to reach almost 6 percent of Gross Domestic Product in 2016. The proposed budget would bring the deficit down to 3 percent of GDP in 2017, he said.
Armenia - Finance Minister Vartan Aramian attends a parliamentary hearing in Yerevan on the Armenian state budget for 2017, 31Oct2016.
Presenting the spending bill to lawmakers on Thursday, Aramian reiterated that its key targets are based on the assumption that the Armenian economy will grow by 3.2 percent next year. “Manufacturing will be the main driving force [of growth,]” the minister said. “We expect it to grow by 5.5 percent.”
Opposition deputies strongly criticized the draft budget and, in particular, the spending cuts sought by the government, which mean that public sector salaries and pensions will not be raised next year. They said that the government could collect far more tax revenue if it was really serious about tackling tax evasion and breaking up economic monopolies.
“You will waste this country’s last resources in the most inefficient way,” Levon Zurabian of the opposition Armenian National Congress (HAK) charged on Friday. “The bill which you have brought here amounts to a resignation manifesto.”
“Everyone can say nice words. The key thing is actions, which we don’t see,” said Naira Zohrabian, the chairwoman of the Prosperous Armenia Party (BHK).
Another opposition faction, Orinats Yerkir, also made clear that it will vote against the bill. “The bill makes it clear that no positive change in the economy is anticipated next year,” claimed its parliamentary leader, Heghine Bisharian.
Lawmakers representing the parliament’s pro-government majority rejected the opposition criticism. “I am calling on our colleagues to also see positive things,” said Vahram Baghdasarian, the parliamentary leader of the ruling Republican Party (HHK).
Armen Rustamian of the Armenian Revolutionary Federation, the HHK’s coalition partner, said that government spending will be smaller but more efficient next year. “The volume of the budget is indeed modest,” he said. “But even a big one can be wasted in case of inept governance.”
The parliament will vote on the budget later this month.