Bagrat Asatryan: Budgets of 2015 and 2016 raise poverty level in Armenia

ArmInfo. The budget of 2015 and the draft budget of 2016 are the result of the flawed political system in Armenia and raise the poverty level in the country, ex-head of the Central Bank of Armenia (CBA) Bagrat Asatryan said at a press conference on November 10.  

He thinks at the yearend of 2015 the poverty level will grow by 1.5-2% and the economist expects a similar growth in 2016 (35% of Armenia's population are below the poverty line - editor's note).

"Let's not believe in the fairy tale that the budget of 2016 is socially oriented. It is not socially oriented because: first, the social expenditures will increase by 3.8% only, while the expenditures on other items will grow more; second, the authorities have stated clearly that pensions will not be increased in 2016," said Asatryan.    

He thinks that the reduction of financing of the budget deficit at the expense of internal sources in 2016 is an inadequate response to the current economic challenges, because it deprives the population of options to inverts in government bonds as an alternative to the bank deposits. "The banking system has reduced the profitability due to the growth in deposits and decline in lending. This means that the population has money but there is no alternative to deposits," he said.     

"I think under such circumstances the increase in the budget deficit at the expense of internal debt would be much more effective than due to the foreign debt," he said.

To note, the Standing Parliamentary Commissions have already discussed the draft state budget 2016. It will also be discussed at the plenary session of the Armenian National Assembly in late November. According to the draft state budget, the real GDP for 2016 is estimated at 2.2%, GDP deflator index - 4%, 12-month inflation - 4% (+1.5%), budget deficit - 3.5% of GDP. 

According to the National Statistical Service of Armenia, in Jan-Sept 2015 versus Jan-Sept 2014, Armenia's budget revenues rose by 1.9% to 842.5 bln AMD, and expenditures rose by 14.8% to 958 bln AMD. The budget deficit grew 16-fold to 115.5 bln AMD.