The Armenian government unveiled on Monday its draft state budget for next year calling for an 8 percent rise in public spending which Prime Minister Tigran Sarkisian said will primarily benefit social security, education and healthcare.
The bill presented by Sarkisian to the standing committees of the National Assembly commits the government to spending 1.24 trillion drams ($3.1 billion), up from 1.15 trillion drams projected for this year. Budgetary revenues would similarly rise by around 10 percent to over 1.13 trillion drams.
The budgetary targets are based on the assumption that the Armenian economy will grow by 5.2 percent in 2014.
Addressing committee members, Sarkisian made clear that the government will not seek to ensure the sizable revenue increase through a further toughening of tax administration. He said tax authorities will instead focus on “risky” sectors of the economy where they think tax evasion is particularly widespread. This will be done through more frequent tax audits of companies suspected of grossly underreporting their earnings, he said.
The remarks prompted concern from some lawmakers critical of the government’s economic track record. In particular, Naira Zohrabian of the Prosperous Armenia Party (BHK) said she is worried that the State Revenue Committee (SRC) could penalize entrepreneurs at odds with the government. “Will there be any political motives there?” she asked.
The BHK leader, Gagik Tsarukian, is a wealthy businessman who has long been accused by his critics of tax evasion. Zohrabian insisted, however, that her concerns do not relate to Tsarukian’s businesses.
Sarkisian told lawmakers that the planned spending boost would translate into increases in public sector salaries and pensions. He spoke of 10 percent pay rises for military and security personnel and civil servants that would take effect in January and July respectively. He claimed that the pension rises, effective from January 1, alone would bring 32,000 elderly Armenians out of poverty.
The draft budget also envisages greater efficiency in the use of budgetary funds set aside for other social benefits. Sarkisian said the government would put a greater emphasis on helping unemployed Armenians find jobs, as opposed to providing them with financial assistance.
In that regard, the premier defended government plans to abolish modest monthly benefits paid to thousands of jobless people. He said government research has found that as much as 94 percent of individuals who have received those benefits in recent years are not eligible for such assistance.
Artsvik Minasian of the opposition Armenian Revolutionary Federation (Dashnaktsutyun) described this claim as a “crime report” that must be investigated by law-enforcement bodies. He at the same time questioned the veracity of the waste alleged by Sarkisian, calling it a mere excuse to abolish the unemployment payments. The BHK, Dashnaktsutyun and other opposition groups are against the proposed measure.