In another sign of a coronavirus-driven recession in the country, the Armenian government reported on Thursday a 4.6 percent fall in its tax revenues in the first half of this year.
The State Revenue Committee (SRC) said it collected 680.3 billion drams ($1.4 billion) in various taxes and customs duties, down from 713.3 billion drams collected in January-June 2019.
The drop came after several consecutive years of rapid increase in Armenia’s tax revenues. It reflects a sharp economic downturn that began with the onset of the coronavirus pandemic in March.
Vahagn Khachatrian, a veteran economist, said the pandemic and the resulting economic disruptions made the tax shortfall inevitable. “This situation is expected to continue because we still don’t know what how long the coronavirus crisis will last,” he told RFE/RL’s Armenian service.
“This is a cause for serious concern,” another economist, Gevorg Parsian, said of the shortfall. He construed it as further proof of a serious economic crisis in Armenia.
Parsian also said that the SRC failed to meet its revenue target not only because of the pandemic but also tax cuts that took effect in January.
Finance Minister Atom Janjughazian predicted a revenue shortfall already in April, saying that it will total 170 billion drams ($350 million) this year. Shortly afterwards, the government amended its 2020 budget to take account of the lower-than-projected tax receipts as well as 150 billion drams ($310 million) in coronavirus-related relief measures financed by it.
The government plans to borrow more than $530 million from mainly foreign sources in order to cover the extra budget deficit. It secured a $280 million loan from the International Monetary Fund in May.
The governor of the country’s Central Bank, Martin Galstian, forecast last week that the Armenian economy will contract by 4 percent this year due to the negative impact of the pandemic. But he said it should recover and grow by 5.5 percent already next year.