By Atom Markarian and Emil Danielyan
The Armenian government announced on Thursday a 14 percent rise in its tax revenues in the first half of this year, saying that it is on track to meet its annual fiscal targets and avoid yet another budgetary crisis.
Figures publicized by Finance and Economy Minister Vartan Khachatrian show that the ministry for state revenues and the customs department collected 89 billion drams ($156 million) in aggregate revenues from January through June. This is 3 percent more than had been projected by the government -- a rare case of fiscal surplus in Armenia.
“If things continue like this, we will be able to fully implement the 2002 budget and perhaps achieve more,” Khachatrian told a news conference. He said the government will spend 1.5 billion drams in extra revenues on repaying some of its debts accumulated in the past several years.
A large part of it are wage arrears in the public sector, notably health care and education. Khachatrian said doctors and scientists working for state-run institutions will soon receive their back salaries.
The government’s revenue target for the whole of 2002 is 194.4 billion drams or 16 higher than in 2001. Its failure last year to collect considerably more taxes and customs duties despite robust economist growth drew strong criticism from the World Bank and International Monetary Fund, Armenia’s two leading lenders. Both powerful institutions have said that the authorities in Yerevan should cut back on external budgetary borrowing by either boosting revenues or slashing their already modest expenditures.
Low-interest loans from the World Bank have covered about half of Armenia’s budget deficits in recent years. The bank will finance only just over a quarter of the 2002 gap projected at approximately $73 million. This is one of the reasons why Prime Minister Andranik Markarian’s cabinet set considerably higher budgetary targets for this year.
Armenia’s first-half fiscal performance was discussed on Thursday by President Robert Kocharian and the World Bank’s visiting managing director, Shengman Zhang. According to Kocharian’s press service, the two men also talked about the release of more budgetary and infrastructure loans.
Earlier in the day, Kocharian met with a high-ranking IMF mission headed by the deputy head of the fund’s second European department, Enrique Gilbart. Few details of the meeting were reported by the presidential office. It only said that Kocharian gave the IMF executives “some clarifications” about the macroeconomic situation in the country. He described Armenia’s cooperation with the IMF as “very important and useful.”
There was no word about the fate of two delayed loan tranches worth $26 million. They are part of the fund’s $87 million Poverty Reduction and Growth Facility (PRGF) loan which was designed to shore up hard currency reserves of the Armenian Central Bank.
The funds were originally due to be disbursed last fall but were delayed over the government’s poor tax collection. Khachatrian claimed that their release was postponed again in February after the IMF objected to the government’s decision to extend a $9 million emergency loan to the Armenian energy sector. The money has been used for making payments for natural gas deliveries from Russia.
Khachatrian said the energy ministry will soon repay the loan, after which the IMF “will be ready” to unblock the PRGF tranches.