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Citing improved tax collection, the Armenian government said on Thursday that it hopes to spend roughly 50 billion drams ($103 million) more than expected this year.

Prime Minister Karen Karapetian and Finance Minister Vartan Aramian announced those plans at a weekly cabinet session in Yerevan.

“We can increase our tax revenue [projected for] this year by around 50 billion drams and spend as much on capital projects so that we can target much faster economic growth for 2018,” Aramian said at the meeting.

“We need more capital spending in this country so that we can ensure faster economic growth,” he told reporters afterwards. He did not specify which concrete projects the additional tax revenue, which totaled 11.5 billion drams in the first quarter of this year, will finance.

Armenia -- Finance Minister Vardan Aramian at a cabinet meeting in Yerevan, 6 April, 2017.
Armenia -- Finance Minister Vardan Aramian at a cabinet meeting in Yerevan, 6 April, 2017.

According to government data, economic growth in Armenia slowed to 0.5 percent last year amid a continuing recession in Russia. Karapetian’s cabinet has forecast that it will accelerate to 3.2 percent this year.

The planned extra spending would be equivalent to about 4 percent of overall expenditures envisaged by Armenia’s 2017 state budget. The government had decided to cut public spending this year in order to curb a widening budget deficit that exceeded 5 percent of Gross Domestic Product in 2016. The 2017 budget also calls for higher tax revenue.

The State Revenue Committee (SRC) reported on Thursday that it collected 255 billion drams in taxes and customs duties in the first quarter, a year-on-year increase of 10.5 percent. The SRC attributed the increase to a tougher fight against corporate tax evasion and ongoing reforms of tax administration.

Vartan Harutiunian, the current SRC chief appointed in October, said in December that he plans to remove “corrupt and unhealthy elements” from the SRC. Karapetian, for his part, spoke in February of “fundamental” changes planned within Armenia’s tax and customs services making up the SRC. Corruption among tax and customs officials has long been endemic.

The prime minister said on Thursday that he expects the new SRC leadership to come up soon with a “plan for the second phase of reforms” of tax administration.

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