Labor and Social Affairs Minister Artem Asatrian defended on Monday the Armenian government’s decision not to raise public sector salaries and pensions next year despite a planned rise in its overall expenditures.
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 would be channeled into various infrastructure projects. By contrast, the 2018 budget would practically not increase public spending on social programs.
Prime Minister Karen Karapetian and other officials have said that increased spending on capital projects is a better way to ease socioeconomic hardship as it would stimulate economic activity in the country.
Asatrian echoed these arguments at a meeting with standing committees of the Armenian parliament that focused on the draft 2018 budget. Their opposition members strongly criticized the government’s reluctance to spend more on salaries, pensions and poverty benefits, which were most recently raised in 2015.
Asatrian insisted that the government cannot opt for more such rises for now without additional borrowing that would only add to Armenia’s mounting public debt. “Raising pensions by just 1,000 drams would require an extra 5 billion drams in spending,” he said.
The opposition lawmakers were unconvinced, however. Nikol Pashinian, a leader of the Yelk alliance, said stagnant pensions and salaries mean lower living standards and greater poverty.
“The biggest impact on poverty reduction comes from economic growth,” said Asatrian.
“This budget will not reduce poverty,” countered Pashinian.
“The people’s social plight is worsening,” Gevorg Petrosian of the Tsarukian Bloc said for his part.
Deputy Finance Minister Atom Janjughazian denied Petrosian’s claim. He said that unemployment in Armenia fell from 19 percent to 17.8 percent in the first half of this year.
According to government projections, economic growth, which all but ground to a half in 2016, will reach 4.3 percent this year and 4.5 percent in 2018.