Atom Margaryan: the indicators set in the draft budget-2018 are economically justified and realistic

ArmInfo. Atom Margaryan, head of the Center for Innovative and Institutional Research at the YSU, believes that the indicators laid down in the draft of the main financial document for the next year are realistic. "The budget for 2018 is based on the realities of the current year and is justified from the point of view of the overall macroeconomic situation," the economist said in an interview with ArmInfo on October 12.

Despite last year's recession in the economy, due to which in 2016 Armenia closed with an economic growth of only 0.2%, according to the expert, in the spring of this year, due to internal and external conditions, by the end of 2017, he forecasted GDP growth at the level of 4-4.5%, against the budgeted 3.2%.

Atom Margaryan notes the validity of his optimistic forecasts. In 9 months, growth was registered in almost all spheres of the economy. The indicators of economic activity in Armenia rose in the first eight months to 5.5%. The general picture is spoiled only by the spheres of agriculture and construction. According to Margaryan, the negative trend is likely to continue, and the year 2017 Armenia will close in this part with a recession.

The government's anti-crisis measures, reflected in the draft budget, if implemented, will provide economic growth of 4.5%, the expert said. In this context, he considers the conservative approach of the government in the line of current spending within the range of 2-2.5% to be justified. Despite the apparent unpopularity of this policy, raising pensions and benefits could be too risky, and the economic effect, for example, on increasing the purchasing power of the population, would be scanty.

Meanwhile, raising capital expenditures, namely, in the line of expenditures, it is expected to reach AMD 1 464.2 trillion, of which capital expenditures will make 175 billion drams instead of last year's 98.6 billion drams, the government will provide the economy with an investment-multiplier effect. The expert is also not afraid of an increase in the deficit from last year's 150.1 billion drams to the expected 156.9 billion (deficit / GDP is 2.7%), and that of which about 80 billion drams will be financed from external sources, the rest from internal resources , which in turn will increase the country's debt burden. "By directing budget funds to capital expenditures - agriculture, development of the irrigation system, energy, road construction, namely, the government plans to invest in these areas, the state encourages private investments that will result in job creation, expansion of business and, ultimately, lead to economic growth, "Atom Margaryan said.

The authors of the draft budget for the next year, according to the economist, also took care of the eradication of the "shadow" in the country's economy. According to Margaryan, the forecasted increase in the total budget revenues by AMD 1.307 trillion (without receiving interbudgetary transfers) by 100 billion drams due to the increase in tax revenues will be realized due to economic growth and reduction of the shadow economy. The expert reinforces his optimism with the data of the State Revenue Committee, which has repeatedly stated about the reduction of the "shadow" and the growth of revenues due to the increased efficiency of tax administration.  Positive expectations, he said, in addition to domestic developments, are also due to external developments.  Forecasts on the growth rate of the Russian economy, the expected signing of an agreement with the EU on a comprehensive and expanded partnership that will strengthen the European vector of Armenia's foreign economic policy, and deepen economic cooperation with Iran can be a fertile ground for maintaining positive trends and further development.

It should be noted that Armenia's consolidated budget for the year 2018 in terms of revenues will make 1.307 trillion drams (excluding intergovernmental transfers), of which taxes are 1.247.9 trillion drams. In the line of expenditures, it is expected to be AMD 1 464.2 trillion, of which capital expenditures will make 175 billion drams instead of last year's 98.6 billion drams. The deficit / GDP will be 2.7%, the GDP- deflator is planned at 3.5%. By the end of 2018, the national debt, compared with the current year, will grow another $ 300 million - to over $ 7 billion and will account for 60% of GDP.