By Ruzanna Khachatrian
Armenia’s parliament overwhelmingly approved on Friday the government’s budget for next year which envisages a more than 20 percent cut in the fiscal deficit through a sizable rise in revenues.
Deputies voted by 85 to 21, with four abstentions, for the bill projecting 260 billion drams ($465 million) in expenditures and 219 billion drams in revenues. It will bring the fiscal deficit down to 3.2 percent of the forecast gross domestic product.
The 2002 budget envisages only a modest increase in public spending from this year’s level. The revenues are, by contrast, projected to rise by 13 percent.
However, the International Monetary Fund has cast doubt on the government’s ability to achieve its revenue objectives for next year. The Fund is blocking release of more World Bank and IMF loans to Yerevan until it enacts additional legislative measures that would make it more difficult for businesses to evade taxes.
Still, the fiscal targets are in line the recommendations of Western donors which want
the Armenian government to improve its tax collection record and reduce its dependence on external borrowing.
“The 2002 budget is far less dependent on external borrowing. It will be really small,” Prime Minister Andranik Markarian stressed in his address to the National Assembly.
Low-interest loans from the World Bank have covered much of Armenia’s budget deficit for the past several years. The bank will finance just over one quarter of the 2002 budget deficit worth approximately $73 million.
Meanwhile, World Bank officials said on Friday they are still considering IMF objections to the disbursement of the second $15 million tranche of their SAC-4 loan included in this year’s budget. “Let there be no misunderstanding that we are not appreciative of the very good economic performance of this country,” the World Bank’s resident’s representative in Armenia, told reporters.
The bank is understood to be favoring a softer position on the issue than the IMF which insists that the amount of taxes collected by the authorities is unacceptably low.