By Atom MarkarianThe Armenian government approved on Friday its draft budget for next year that envisages an 18 percent increase in public spending which will largely be channeled into social security, health care and education.
The 2005 budget, though still modest in absolute terms, will be the largest ever in Armenia’s post-Soviet history, with net revenues projected at 328 billion drams ($655 million) and expenditures at 375.4 billion drams.
“The increase in projected revenues will primarily benefit social security, health care and education,” Deputy Finance Minister Pavel Safarian told reporters. He said it is expected to result from an 8 percent economic growth forecast by the government and a further improvement in tax collection.
Armenian school teachers, who have gone through massive cost-cutting lay-offs over the past two years, stand to gain the most. Their average monthly salary is to jump by 65 percent to 50,500 drams ($100) in the course of next year. Overall government spending on education would accordingly grow by 22.6 percent to 55.4 billion drams.
The government also would like to spend 32.3 billion drams on health care next year. This is 32 percent more than was budgeted for this year. The proposed 2005 budget would thus raise the average wage of public sector doctors and other medical staff from 33,500 to 37,500 drams. Similar pay rises are envisaged for the employees of state museums, libraries and other cultural institutions.
The extra social spending will also affect poverty benefits paid to tens of thousands of socially vulnerable Armenian families. Their minimum amount is due to grow by nearly one third to 12,600 drams. The government likewise plans to raise the average pension, paid from a separate state fund, from the current 8,300 drams to 9,700 drams by the end of 2005.
The bulk of Armenia’s budget deficit, projected to reach 47 billion drams in 2005, will continue to be financed with external loans and grants. Donna Dowsett-Coirolo, the World Bank’s director for the South Caucasus, said in Yerevan on Friday that the bank’s governing board will likely approve one such loan worth $20 million next month. She said the board is also expected to disburse two other loans designed to improve water supplies in Yerevan and irrigation networks in rural regions of Armenia.
The World Bank is Armenia’s single largest foreign creditor, having provided it with a more than $800 million in cheap credit over the past decade. Dowsett-Coirolo said the practical impact of those lending programs was recently assessed by a team of World Bank experts.
“The independent evaluators overall found that Armenia was one of the best users of our credit resources,” she told a news conference.
The World Bank official, who met with President Robert Kocharian later in the day, also praised Armenia’s macroeconomic performance. Official figures show the Armenian economy expanding by 10 percent during the first nine months of this year.