ArmInfo. According to the updated forecast of the Central Bank of Armenia, the deficit of the state budget in 2017 will reach 120.6 billion AMD or 2.2% of GDP, against the previously projected 2.8%. This is noted in the updated monetary and credit program of the Central Bank of Armenia.
The ratio of taxes to GDP, according to the forecasts of the Central Bank, will be 22.2% in 2017, which is almost the same as the previous forecast, but 0.9 percentage points higher than the previous year. The ratio of state budget expenditures to GDP in 2017, the Central Bank expects at the level of 25.8%, which is 0.7% percentage points lower than the previous forecast and 2.2 percentage points lower than last year. During 2017, it is planned to save government spending mainly on capital expenditures through external financing.
Against the backdrop of revised GDP forecasts to accelerate growth, the impact of fiscal policy on gross demand in 2017 is estimated to be 4 percentage points below the previous forecast, which is 1 percentage point higher than the previous forecast. In the medium term, fiscal stabilization will be aimed at the gradual reduction of the deficit to stabilize the debt. Nevertheless, in 2018-2020 the deficit-to-GDP ratio is expected to average 2.4% (against the average 2.2% in 2017-2019). And despite this growth in the average indicator due to the interest payments on the debt provided in the medium-term perspective, the impact of fiscal policy on gross demand will be restraining.
From the third quarter of 2017 to the 1st quarter of 2018, the change in gross demand and the situation in the labor market will have a weak deflationary pressure on the consumer market-an average of 0.6-0.8%. Moreover, the impact of the fiscal policy, private demand and the labor market on the price level will be deflationary by an average of 1.1-1.3%, and the impact from external demand will be inflationary by an average of 0.4-0.6%.
According to the National Statistical Service of Armenia, in 2016 the deficit of the state budget was 272.5 billion drams with growth of 11.2%. Incomes of the state budget grew by 0.7% in 2016 to 1.2 trillion drams, while expenditures grew by 2.6% to 1.4 trillion drams. The GDP of Armenia increased by 0.2% in 2016 to 5.068 trillion drams ($ 10.5 billion), against the growth of 3.2% in 2015. The GDP deflator index in 2016 was 100.5%, against 101.2% in 2015.