The National Assembly has adopted Armenia’s government-drafted state budget for next year which calls for relatively modest increases in public spending and tax revenue.
The bill, which was passed by 71 votes to 46 late last week, commits the Armenian government to increasing its expenditures by over 5 percent almost 1.31 trillion drams ($2.9 billion) in 2015. Projected at 1.19 trillion drams, state revenue is to rise at virtually the same rate. The resulting budget deficit would be equivalent to less than 3 percent of Gross Domestic Product.
The government based these projections on the assumption that the Armenian economy will grow by 4.1 percent.
The International Monetary Fund (IMF) expects a lower growth rate: 3.3 percent. A senior IMF official pointed last week to increasingly visible spillover effects of a looming recession in Russia, a key trading partner of Armenia and the main source of cash remittances supporting a large part of its population.
The government’s spending and revenue targets had risen by roughly 10 percent annually in previous years. Its reluctance to set higher targets for 2015 appears to stem from the worsened economic outlook.
Speaking during parliament debates in Yerevan, Prime Minister Hovik Abrahamian said his cabinet will seek to spur growth by “substantially improving the business environment” in a way that would result in a level playing field “in all areas.” Opposition lawmakers have repeatedly dismissed such government pledges, saying that some key sectors of the domestic economy remain monopolized by wealthy businessmen close to the ruling elite.
Abrahamian also emphasized the fact that around half of the expenditures planned for next year will be channeled into social security, healthcare, education and culture. Social programs alone will absorb over 392.6 billion drams in government funding.
The Armenian military will continue to be the second largest recipient of public funds, a fact reflecting the unresolved conflict over Nagorno-Karabakh. The 2015 budget sets aside almost 200 billion drams for national defense. Another 100 billion drams is to be spent on law-enforcement.