The Armenian government stood by its projections that economic growth in the country will accelerate to 4.5 percent next year as it presented its 2018 budget proposal to lawmakers on Monday.
The draft state budget approved by the government in late September calls for over 1.46 trillion drams ($3.1 billion) in total expenditure, up by 7.6 percent from the government’s 2017 spending target. Most of the extra spending planned by the government would be channeled into various infrastructure projects.
The spending bill calls for an even sharper rise in tax revenue that would reduce the budget to 2.7 percent of Gross Domestic Product.
Prime Minister Karen Karapetian and Finance Minister Vartan Aramian defended this budgetary strategy as they addressed several standing committees of the Armenian parliament. Karapetian insisted that it will “lay the groundwork” for an average economic growth rate of 5 percent “in the future.”
“We must seek 5 percent growth, not 3 percent growth, because several analyses show that 3 percent growth would not allow us to consistently address our economic problems,” Aramian said for his part. He said the government still expects the Armenian economy to expand by 4.5 percent in 2018, up from 4.3 percent projected for this year.
In its latest World Economic Outlook released earlier this month, the International Monetary Fund forecast more modest growth rates for Armenia: 3.5 percent in 2017 and 2.9 percent in 2018. The IMF anticipated slower growth in the country earlier this year.
The draft budget was criticized by opposition lawmakers representing the Yelk alliance and businessman Gagik Tsarukian’s bloc. They said that it will not ease hardship in the country because the government is not planning to raise public sector salaries and pensions next year.
“The people are sick and tired of your numbers,” said Gevorg Petrosian of the Tsarukian Bloc.
“We are confident that we are keeping the country on the right track,” countered Aramian. He said that boosting capital spending is a more efficient way of speeding up growth than raising salaries and pensions.
“Without capital spending it’s not possible to expect development,” agreed Aghvan Vartanian of the Armenian Revolutionary Federation, President Serzh Sarkisian’s junior coalition partner.