Expert: The biggest omission of Armenian government is using economy for political purposes

ArmInfo. The biggest omission of the Armenian government is using economy for implementing political goals; economist Vahagn Khachatyan expressed this opinion at today's press conference referring to the negative trends of budget implementation.

"By the results of the last year the deficit of Armenia's budget totaled 3.5% from the GDP, while in countries, with similar models of economy the deficit should not exceed 3%", he noted adding that in the budget of 2016 this indicator is set at 3.8%. According to Khachatryan such tendency testifies to the government's inability to overcome the challenges, which, the Armenian economy faces today.

According to Khachatryan in 2014 when the Russian economy experienced downfall at the background of sanctions and fall of prices on metals this negative trend influenced Armenian economy as well and this was an alarm to revise the budget expenditures. "I quite well remember the conclusions voiced when 2014 budget was summed up: 'there is no necessity to revise it our forecasts will come true'. And according to the budgetary program the economic growth should have been 6%, the international organizations forecasted Armenian GDP growth by 1.9-2%, while the statistical service registered 3% growth", Khachatryan recalled stressing that this indicator of GDP growth in fact does not correspond to real situation.

The expert touched upon the statistics on the state debt published by the Ministry of Finance of Armenia.  Thus, according to him as of April 30 Armenia's debt totals 5.5 bln USD or 50% of the country's GDP (10.5 bln USD). "If we remember the World Bank's forecast such amount of state debt has been forecasted for 2018", he noted. In this context the expert noted that the state debt of Armenia demonstrates growing trend. "National Assembly of Armenia was discussing two days ago the agreements on 100 mln USD.  The World Bank's 35 mln USD loan aimed at assisting NPP and TPP will be added tot his sum. Not considering expenses on construction of North-South road corridor. And the last thing which is worth mentioning is 350-360 mln USD spent for servicing the state debt", he informed adding that Armenia's internal debt has already reached 793 mln USD. As a result Khachatryan thinks that because of faults in the past the Armenian government was not able to solve the tasks, the country's economy faces. "Inaction led to today's situation", the expert summarized.

According to the National Statistical Service of Armenia Armenian budget in 2015 had a deficit of 231.2 bln AMD with 2.5-fold y-o-y fall. Particularly budget incomes grew only by 0.9% while expenses grew by 12.2%. In 2014 the budget deficit was 91.7 bln AMD versus 10.2 bln AMD deficit in 2013. Particularly the incomes experienced 6.6% growth in 2014 and expenses grew by 14.1% . In Q1 2016 the budget deficit totaled 38 bln AMD (79 mln USD), increasing by 75% year-over year, versus sharp growth by 6-fold last year. Particularly, the dynamics of incomes demonstrated change from 3% growth to 1.2% decline in Q1 2016, at the background of which the upward trend of expenses slackened from 10.3% to 5%. 

According to the preliminary data of the Finance Ministry provided to ArmInfo by the National Statistical Service of Armenia, as of April 1 2016, the state debt of Armenia increased 13%, and in Q1 alone - 2.3% and $5.2billion drams.  The foreign debt accounted for 85% of the total state debt, with the remaining 15% being the internal debt.  Foreign debt increased 12.3% year-on-year, and 2.1% for Q1 2016 alone (versus 2.8% growth a years ago and 0.9% growth in the same period of 2014) to $4.4bln. The internal state debt totaled 380.4bln drams or $790.4mln with a 13.6% y-o-y growth and 3.8% growth for Q1 2016 alone. The government share accounts for $3.9bln or 89% of total foreign debt.  The Central Bank of Armenia (CBA) borrowed the remaining $487.9 mln.  The Government's foreign debt increased in Feb-Mar by 0.5%-1.4% and by 2% in Q1 2016 (versus 3.6% a year ago). A similar dynamics was observed at the CBA - by 0.5%-1.7% growth in Feb-Mar and 2.4% in Q1 (versus 3% decline a year ago). The Government's foreign debt increased 12.1% year-on-year with that of the CBA growing 13.3% y-o-y.  Government bonds accounted for most of the internal debt growing from 87% to 89% in Q1 2016 (18.1% y-o-y increase and 5.6% increase in Q1 in absolute terms).