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Government Delays Spending Amid Revenue Shortfall


By Hovannes Shoghikian
Faced with a shortfall in revenues resulting from a deepening economic crisis, Armenia’s government rescheduled on Thursday 131 billion drams ($359 million) in planned expenditures to the fourth quarter of this year.

The figure is equivalent to almost 14 percent of total government spending envisaged by the Armenian state budget for 2009. The government was supposed to meet this record-high spending target by ensuring a 21 percent rise in its tax and other revenues. However, those revenues fell by about 11 percent in January as the country’s Gross Domestic Product shrunk for the first time since the early 1990s.

“Given the current difficulties with the collection of taxes, the government shifted expenditures scheduled for the first, second and third quarters to the fourth quarter,” Deputy Finance Pavel Safarian told reporters after a weekly cabinet meeting held in the Aghveran holiday resort in central Armenia. “This allows us to spend as much money as we have at our disposal and to avoid accumulating liabilities,” he said.

The measure, which was proposed by the Finance Ministry, needs to be endorsed by parliament. It is widely seen as a prelude to budgetary cuts expected later this year.

Safarian did not rule out such possibility. “We wouldn’t be able to make the envisaged expenditures with fewer revenues,” he said. He added that the government will likely use some of the hundreds of dollars in emergency loans promised by foreign governments and lending institutions to partly make up for the revenue shortfall.

Safarian also made clear that the government will not cut pensions, public sector salaries and other social spending. He said the delayed expenditures were mainly earmarked for procurements for various state agencies.

Prime Minister Tigran Sarkisian said earlier this month that those agencies must operate in a “regime of strict economy” until Armenia overcomes the effects of the global economic slump.

(Photolur photo)
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