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Armenian Budget For 2018 Approved By Parliament


Armenia - The Prime Minister's Office and Finance Ministry buildings in Yerevan, 30Sep2017.
Armenia - The Prime Minister's Office and Finance Ministry buildings in Yerevan, 30Sep2017.

The National Assembly approved on Friday Armenia’s state budget for next year which will increase government spending by more than 7 percent but keep public sector salaries, pensions and other social benefits unchanged.

The budget drafted by the Finance Ministry in late September calls for over 1.46 trillion drams ($3 billion) in total expenditure, up by around 100 billion drams from the government’s 2017 spending target. It commits the government to ensuring a sharper rise in tax revenue that would reduce the budget, projected at 158 billion drams, to 2.7 percent of Gross Domestic Product.

Most of the extra spending planned by the government will be channeled into various infrastructure projects. The remainder will mainly be spent on national defense. Armenia’s defense spending is to rise by 18 percent to 248 billion drams ($514 million).

The spending bill was backed 64 members of the 105-seat parliament representing the ruling Republican Party of Armenia (HHK) and its junior coalition partner, Dashnaktsutyun. Thirty-five other deputies affiliated with the opposition Tsarukian Bloc and Yelk alliance voted against it.

The opposition minority strongly criticized the caps on social spending during parliamentary debates that preceded the vote. They said that will only increase poverty in the country in 2018.

“The groundwork is not laid not only for economic growth but also economic development,” said the Tsarukian Bloc’s Mikael Melkumian. “Furthermore, spending on social programs, education and science is juxtaposed against capital spending.”

Government ministers and HHK lawmakers insisted, however, that increased spending on capital projects is a more efficient way to ease socioeconomic hardship as it would stimulate economic activity in the country.

“We have promised one thing in our program: we have said that if we have economic growth we will adequately solve economic problems of our people,” said Finance Minister Vartan Aramian. He indicated that the government may well raise pensions and salaries in 2019.

The budgetary targets are based on government projections that economic growth in Armenia will reach 4.5 percent in 2018. The government has forecast a 4.3 percent growth rate for this year.

“The growth forecast is too optimistic,” said Mane Tandilian, a deputy from Yelk. “I think it will not materialize.”

In its latest World Economic Outlook released in October, the International Monetary Fund forecast more modest growth rates for Armenia: 3.5 percent in 2017 and 2.9 percent in 2018. The IMF had anticipated slower growth earlier.

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