Saturday, October 22 2011 14:35
Armenian Government to reduce budget deficit to 1.7% due to increasing foreign debt to 50% in GDP
ArmInfo. The Government of Armenia is going to reduce the budget deficit to 1.7% against the targeted 2.4% in 2014 due to increasing the foreign debt in GDP to 50% from the current 40%, Armenian Prime Minister Tigran Sargsyan said at the first scientific conference of the Economic Association of Armenia on Saturday. The conference will last till October 24 at the State University of Economics.
He pointed out that over the 10 years preceding the global crisis, due to the satisfactory macroeconomic situation and availability of reserves in Armenia, the share of foreign debt in GDP was reduced to 17%. According to the premier, the international financial organizations, including the World Bank, Asian Development Bank, and the IMF, provided Armenia with loans, which allowed managing the budget deficit.
"Today the Government of Armenia attaches much importance to the macroeconomic stability and reduction of the budget deficit", Sargsyan said. He added that the achievement of the indices planned for the short-term outlook will allow creating a more sustainable macroeconomic environment and better preparing for the blows of the expected second wave of the crisis. He also pointed out that if it is envisaged to complete the year 2011 with at least 4.6% economic growth (over Jan-Sept 2011 it made up 5%), the forecast of GDP growth for 2012 is more restrained – 4.2%.
The premier said that in 2012 the Armenian Government is to work out several scenarios of resistance against the second wave of the global economic crisis. He reminded that the previous crisis, which started from the mortgage market of the U.S., did not affect the banking system of Armenia due to the high level of capitalization and liquidity. Moreover, the crisis in Armenia did not start from the financial system due to the lack of hot money, unlike Ukraine, Kazakhstan or Russia. The first wave of the crisis affected the real sector of the country, particularly, the construction, where annual decline has been observed since 2009, which made up 20% over Jan-Sept 2011 vs Jan-Sept 2010.
Given the fact that the program on development of Armenian economy and the measures against the new wave of the crisis should be worked out in line with the situation in the world economy, Sargsyan said that the world economy remains highly vulnerable, and the experts think that the crisis situation in the world will last for 5-6 years. "The global economic situation continues worsening. According to the latest publication of the WB, the forecast of the global economic growth is reduced by 0.5-0.6% for 2011-2013. These clarifications concern not only developed countries, but also the developing ones. The main risks are connected with the EU countries, and the most alarming situation in Italy and Portugal", the premier said.
The second important factor for Armenia's economy is the economic situation in Russia, which essentially depends on the export of ore products, and over 40% of Russia's budget is formed due to the export of oil, the world price of which, as the WB forecasts, will decline by 3% in 2012. "Taking this into account, one can say that the forecasts for economic growth in Russia - over 4.5% are realistic", Sargsyan said.
According to the National Statistical Service of Armenia, over Jan-June 2011 the foreign debt of Armenia grew by 4.4% to $3442.565 mln or 87.3% of the total national debt (1269.825 bln AMD). The budget deficit of Armenia, which amounted to 4.98% in 2010, will make up 3.95% in 2011, 3.1% in 2012, and by 2014 it will drop to 2.4%, the government forecasts. Over Jan-Aug 2011 the budget deficit amounted to 14.7 bln AMD. The budget revenues grew by 9.7% to 552.144 bln AMD, and the budget expenditures rose by 7% to 566.9 bln AMD.
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