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Armenia Ups Defense Spending Due To Karabakh War


Nagorno-Karabakh -- An Armenian officer hugs a soldier during heavy fihting with Azerbaijani forces along the Karabakh "line of contact," September 28, 2020.

The Armenian parliament unanimously approved on Wednesday a government proposal to increase Armenia’s defense spending this year by roughly 13 percent because of the war in Nagorno-Karabakh.

The 2020 state budget called for 301 billion drams ($620 million) in military expenditures when it was passed last December. Under a government bill passed by the National Assembly, the Armenian military will receive an additional 40 billion drams ($82 million) this year.

The government cited the ongoing large-scale hostilities around Nagorno-Karabakh when it presented the bill to lawmakers on Tuesday.

Arkadi Khachatrian, the chairman a parliament committee on budgetary affairs affiliated with the opposition Bright Armenia Party, said the measure is justified even though it will lead to a further rise in the country’s public debt. Defense and national security is now Armenia’s top priority, he said.

The state budget was already amended in April to take account of 150 billion drams ($310 million) in coronavirus-related relief measures planned by the government and a shortfall in tax revenues which was projected to total 170 billion drams.

Finance Minister Atom Janjughazian told lawmakers that the Karabakh fighting will lead to a sharper-than-anticipated contraction of Armenia’s Gross Domestic Product. The domestic economy is now projected to shrink by 6.8 percent in 2020, he said.

Janjughazian said this will also translate into an additional shortfall in tax revenue projected at 35 billion drams. As result, the budget deficit will widen to 459 billion drams ($946 million), or 7.4 percent of GDP, added the minister.

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