Wednesday, November 7 2018 12:27

ArmInfo.In developing the draft state budget of Armenia for 2019, some fiscal rules were taken into account, including anti-cyclical regulation and stabilization of  public debt. Acting Minister of Finance Atom Janjughazyan stated  about this on November 7 at the parliamentary hearings on the draft  state budget.

According to him, there are severe restrictions on credit resources,  which will be attracted only for the implementation of infrastructure  projects that create additional value. The minister also stressed the  government's intention to impose restrictions on extra-budgetary  funds. Despite the fact that in 2019 the amount of extrabudgetary  funds will be increased by 20 billion drams, however, the presence of  such an item in the state budget carries with it certain risks. In  this regard, the executive body discusses the possibilities of  reducing extrabudgetary funds. In order to use budget funds more  efficiently, it is planned to optimize the state administration  system. Some satellite structures, including non-state commercial  organizations, as well as scientific institutions, will be optimized.  As noted by the Acting Minister, it is envisaged to involve qualified  personnel in the state structure, it is planned to increase their  wages, including by reducing the income tax. "Salary should not be a  means, but a goal. The work of each employee will be assessed by the  results of his/her work, not by his presence or absence from the  workplace," Atom Janjughazyan said.

He also said that the gambling business from the current fixed  payments will be transferred to the usual system of taxation. The  acting minister recalled that from 2019 the republic switches to  program budgeting.  Pointing to some of the shortcomings of the new  system at the same time, Atom Janjughazyan stressed that the issue is  not static, it will undergo changes and improve. In order to improve  the effectiveness of monetary and tax policies, it is envisaged to  increase the rates of indirect taxes, and, on the opposite, reduce  direct taxes.

To recall, on September 27 the government of Armenia approved the   draft budget for 2019. According to Atom Janjughazyan, Minister of   Finance, the project was developed taking into account several new   circumstances. According to him, the first is the fiscal rules,   according to which the fiscal policy should be implemented, which, in   particular, should have a tendency to stabilize debt.  "The logic is   as follows: we will borrow, as a rule, for capital expenditures, we  will not borrow to finance current expenditures," the minister said.   Thus, the consolidated budget for the next year in terms of revenues   is estimated at 1,533.7 billion drams (without revenues from   inter-budgetary transfers), expenses - 1,685.3 billion drams (without   receipts from inter-budgetary transfers), the deficit - 151.6 billion   drams or 2.2% of GDP. Sources of financing the budget deficit will be   53 billion drams - domestic sources, and 98.6 -foreign sources.   Budgets of communities for 2019 are estimated to be 138.9 billion   drams (including official grants from the state budget) of income,   and 138.9 billion drams of expenses. The draft law envisages that in   2019 when making decisions regarding monetary policy, within the   powers granted to it by law, the Central Bank will be guided by a   target of 12-month inflation at 4% with a tolerable limit of   fluctuations of + 1.5%. In 2019, capital expenditure from the current  2.3% of GDP will grow to 3%. State treasury revenues will amount to 1   trillion 462 billion drams, of which tax revenues will be 1 trillion   396 billion drams, expenses - 1 trillion 614 billion drams. Most of   the state budget funds will be directed to the implementation of   programs in the social and cultural fields - 44%. 24% of the total   state budget funds will be spent on solving problems related to   maintaining public order, security and defense, 12.3% are planned to  be invested in the real sector of the economy. In the form of   subsidies to the budgets of local governments, 3.2% of all   expenditures will be sent, and 5.8% - to government agencies. At the   end of 2019, the Armenian government expects GDP growth at 4.9%.    According to the minister, the calculations were made on the basis of   the program of medium-term expenditures for 2019-2021. with some   correction due to internal and external developments.  As the head of  the Ministry of Finance noted, initially, according to  the medium-  term expenditure program, GDP growth in Armenia for the  next year  was forecasted at the level of 5.3%, however, as a result  of the  growth adjustments for the current year - from 4.5% to 6.5%,  the  forecast for the next year was also revised. Nevertheless, as  Atom  Janjughazyan assured, this does not mean that the nominal value  of  GDP will decrease, which will grow by 130 billion drams. In 2019,   the government will send 10% of all budget funds to service the   public debt. As the minister pointed out, in 2018, as a result of a   restrained fiscal policy, the ratio of public debt to GDP will be   50.4%. A similar figure is expected by the end of 2019.  To note,   according to the state budget for the 2018, the revenues will be   1.308.2 billion drams, against the approved for 2017 1,210.0 billion   drams and 1,135.9 billion drams registered in 2016. At the same time,   the growth of tax revenues is expected - up to 1, 248. 5 billion   drams.  Capital expenditures will amount to 158.7 billion drams,   instead of the previously forecasted 172.4 billion drams (160 billion   in 2016), operating expenses from 1.391.8 billion drams will increase   to 1.306.5 billion drams.  Economic growth in 2018 is planned at the   level of 4.5% or $ 11,948.9 million.  The deficit is planned in the   amount of 156.9 billion drams. Economic growth for 2018 is planned at   4.5%, and inflation at 4% (+ 1.5%). ($ 1 - 480.37 drams).  By the end   of 2018, the national debt will grow to $ 7.2 billion and amount to  60% of GDP.