“Armenia’s fiscal deficit substantially rose in 2009 when we significantly eased socioeconomic consequences of the [economic] crisis by taking more loans and the deficit-to-GDP ratio reached 7.5 percent,” Gabrielian told journalists.
“We have since been lowering our budget deficit. This means that we are able to manage the spending gap,” he said.
The Armenian government’s budget for 2011 calls for a deficit-to-GDP radio of 3.9 percent. The government plans to bring it further down to around 3 percent in 2012.
According to the Ministry of Finance, the deficit totaled only 6.5 billion drams ($17.8 million) in the first half of 2011, falling well short of 56.3 billion drams projected by the budget. This was the result of improved tax collection and the fact that the government met less than 90 percent of its first-half spending target.
Gabrielian said the falling deficit was one of the reasons why the international risk assessment agency Fitch this week kept Armenia’s sovereign debt rating unchanged at “BB-” despite a more than doubling of the country’s foreign debt since late 2008. “That means Fitch considers Armenia’s debt burden manageable,” he said.
Fitch downgraded the long-term foreign and national currency Issuer Default Ratings from “BB” in August 2009, citing the severe impact of the global recession on the Armenian economy.
Armenia’s overall public debt is projected to reach $4.3 billion by the end of this year, up from $3 billion in late 2010 and equivalent to 41.3 percent of GDP.