The Armenian government plans to ensure a 3.2-percent growth of the Gross Domestic Product (GDP) in 2017, Prime Minister Karen Karapetian told lawmakers as discussions of the next year’s state budget opened at parliamentary committees on Monday.
“Given the economic environment as well as economic passivity anticipated during the election year, significant efforts will be required from us in order to achieve that. But we are going to do everything to ensure that index,” the head of the government said.
Karapetian described the situation in Armenia’s economic as very ‘complex’ shortly after assuming his post as prime minister in September. It is widely believed in Armenia that his appointment was primarily conditioned by the need for better handling of Armenia’s economic affairs in conditions when the country’s successive governments have failed to meet economic growth targets set by President Serzh Sarkisian. This economic underperformance has taken place against the backdrop of allegations of widespread government corruption and abuse.
Presenting next year’s top financial document to parliament members, Karapetian stressed that his government’s fiscal policy should be “transparent and understandable to every taxpayer and member of the public.”
“Our approach is clear: the budget revenues provided by the taxpayers must be used as sparingly and purposefully as possible, and the results must be visible to the public,” the premier said.
In Karapetian’s words, during the past two years Armenia’s economy was characterized by such negative shocks “coming from the outside world” as Russia’s economic decline and a significant drop in global copper prices.
“In that situation, the fiscal policy aimed at ensuring economic growth and stability was anti-cyclic, in which case the rise of public debt was inevitable. In 2017, the government will carry out all the necessary steps to ensure macroeconomic stability that is a prerequisite for ensuring growth,” said the prime minister.
He added that since under the Law on State Debt his government will be operating “under restrictions”, “the 2017 budget will include an approach of debt stabilization through a decreasing deficit.”
A number of economists and opposition politicians in Armenia have sounded an alarm in recent years about the risks that the rising level of public debt may present to the country’s economy.
Earlier this month Finance Minister Vardan Aramian admitted that Armenia’s state debt will amount to $6 billion, or over 50 percent of its GDP, by the end of the year. He, however, downplayed concerns about possible complications caused by this circumstance, considering that the government plans to reduce the budget deficit in the coming year.
Later, the Central Bank of Armenia responded to a public statement made by former President Levon Ter-Petrosian, who predicted a “real economic disaster” in the form of a “hidden default.”
In a rare statement issued in reply to a politician’s remarks the country’s financial regulator emphasized that “the Republic of Armenia has fulfilled its obligations without any obstacles and in the future there are no looming risks connected with the country’s inability to fulfill its obligations.”