Deficit of Armenian state budget for 2017 will be 150.1 bln AMD

ArmInfo. The draft budget of 2017 envisages the GDP nominal growth at 5% or 5405 bln AMD, Armenian Finance Minister Vardan Aramyan said in Parliament on October 31, when presenting the draft state budget of 2017.

According to the Finance Ministry, the progressive type of economic growth of Armenia in 2017 will be due to both foreign developments - particularly, recovery of the Russian economy, growth in the world copper process - and the fiscal and monetary policy of the Armenian Government in 2017. Aramyan said that the economic growth will make up 3.2%, deflator index - 1.7% (this year it will make up nearly 2.4%, according to the Finance Ministry), and the deficit will amount to 150.1 bln AMD. The minister noted that according to preliminary estimations, the state budget deficit at the yearend of 2016 will total nearly 300 bln AMD. In 2016, the share of taxes and duties in GDP made up 21.7%.

In 2017, this indicator will be increased by 0.4 pct points. The first 0.2 pct points will be the growth in excise and duties for casinos and betting terminals, while the second 0.2 pct points will be the strengthening of the tax and customs administration. In 2017, the financing of the deficit will be ensured due to internal revenues - 71.1 bln AMD (of which 45 bln AMD - by means of issue of government bonds and return if facilities), and 79 bln AMD will be raised from foreign sources. In 2017, the GDP deflator will make up 101.7%, 12-month inflation - 2.4%. Economic growth will be ensured due to a number of sectors - 5.5% growth in industry, 4% growth in agriculture, no growth in construction (versus 1.5% decline in 2016), 2.8% in services, 3% growth due to indirect taxes revenues.

Aramyan said that in 2017 the state budget revenues will be increased by 27 bln AMD to 1 210 bln AMD, expenditures will be reduced by about 13 bln AMD to 1 360 bln AMD ($2.87 bln at the current exchange rate), with the revenues-to-GDP ratio being 22.4%. In the budget of 2016, the indicator is 1 trillion 186.3 bln AMD, with the revenues-to-GDP ratio being 21.8%. In the structure of revenues, 1 135 bln AMD will be tax revenues and state duties (1 065 bln AMD in 2016), 31 bln AMD - official grants (31.5 bln AMD in 2016), 44 bln AMD - other revenues (25.8 bln AMD). The minister said that one more principle of the draft state budget is the fiscal policy stability and debt stability. He noted that in 2014-2015 Armenia fixed a high level of deficit - 4.8%. At the yearend of 2016, the deficit will make up 5.9 %, he said, adding that this is the main source of debt formation.

"As a result, in 2014-2015 the debt grew from 43.7% and will total 54.4% by the yearend of 2016", Aramyan said, stressing the need to be more conservative to prevent debt overgrowth in the future. "We were comparatively conservative in terms of expenditures. The state budget expenditures are planned to total 1trillion 360 bln AMD, with 1 264.6 bln AMD or 93% of this amount being the share of current expenditures, 95.9 bln AMD or 7% being expenditures of non-financial assets. Under such conditions, the budget deficit will be 2.8%, which is twice as low as the indicator of this year," he said.

The share of expenditures on social services (education, healthcare, social protection) will make up 45.8% of the budget, while expenses on defense, public order maintenance, penitentiaries and national security structures - 21.2%, economy sectors - 8.4%, state debt servicing - 8.8%, various subsidized programs - 3.6%, financing of the emergency fund - 0.6%. The expenses on the social sphere will be increased by 3.8 bln AMD due to the growth in the number of beneficiaries. In 2017, the subsidies for the communities will be increased by 940 mln AMD to 48 bln AMD. Expenses on education will drop by 23.5 mln AMD (0.02%) to 128,539.8 bln AMD. Science will receive 14,425.4 mln AMD (versus 160.3 mln AMD in 2016).  Expenses on healthcare will fall by 2,668.9 bln AMD (3%) to 85,772.9 bln AMD. Culture, recreation and religion will receive 26,199.9 bln AMD versus 26,900.8 bln AMD in 2016. The Finance Ministry also suggests raising budget expenses for social policy from 405 163.2 mln AMD in 2016 to 408 985.8 mln AMD per annum (up 3 822,6 mln AMD) in 2017-2019. 

According to the document, in 2017 expenses on agriculture will drop by 1,154.9 mln AMD (14.4%) to 6,882.9 mln, and water economy will receive 21,0632.7 mln AMD versus 40,151.5 mln in 2016. Energy and natural resources will receive 38514.8mln AMD versus 32398.0 mln in 2016. Transport and communications will get 49,806.9 mln AMD versus 57,780.6 mln in 2016. Nature protection will get 2,898.1 mln AMD versus 2,924.6 mln AMD in 2016; economic development -  2,649.0 mln AMD versus 2,991.0 mln AMD in 2016; urban development - 6,330.9 mln AMD (30% less), and cadaster - 3,898.5 mln AMD (9.4% less). Expenses on defense will total 209,313.3 mln AMD (4 bln AMD more), of which 197,642.3 mln will be spent on military needs. As much as 2.5 bln AMD will be allocated for current expenses and capital expenditures will increase by 1.5 bln AMD.

According to the draft budget of 2017, military expenses will total 209.755.268.400 AMD (about $439.7 mln), including 202.046.175.100 AMD ($423.5 mln), with the foreign military aid to total 164.647.800 AMD ($345 thsd). The military budget of Armenia for 2016 is 208.014.971.000 AMD ($436 mln), including 200.352.639.300 AMD ($420 mln) defense expenditure, with the foreign military aid being 169,024,600 AMD ($354.3 mln).