Gagik Minasyan: The draft budget for 2018 is fundamentally different from the document of previous years

ArmInfo. At present, the level of the state debt of Armenia is adequate to the level of the economic growth of the republic, "Gagik Minasyan, chairman of the NA Standing Committee on Financial-Credit and Budgetary Affairs, told  on November 20 when speaking about the draft budget for 2018.

According to him, the draft budget for the next year is fundamentally different from the documents of previous years. The main priorities laid down in the current main financial document should lead to the provision of stable economic growth in the medium term. In addition, according to Minasyan, the budget pursues the goal of settling the issue of stabilizing the public debt, since Armenia is already close to that rubicon in 60% of GDP, after which it is legally forbidden to increase public debt. Despite the fact that next year the government debt will continue to increase, the authors of the bill expect that the ratio of public debt to GDP in 2018 will be reduced by one percentage point. "According to the results of the year, the current government debt will reach 55.1% of GDP from last year's 51.8%." By the end of the year 2018, the ratio of public debt to GDP in 2018 will be reduced by one percentage point - to 54.1% of GDP in the conditions of the planned 4.5% GDP growth, "- said the head of the Commission. According to the deputy, today Armenia, according to international standards, is considered a country with an average debt burden.

The main financial document for 2018 is also for the first time focused on the cardinal increase in capital expenditures. Thus, Armenia, as noted by the expert, will also provide a return to preserving the "golden rule" in the budget system next year, which means that the volume of capital investments should exceed the planned deficit index, while current expenditures are less than the expected level of tax revenues.

The budget 2018, provides for a nominal GDP of 5 850 billion AMD. The general budget revenues, as the expert recalled, will grow by 100 billion AMD due to the increase in tax revenues. The consolidated budget of Armenia for the year 2018 in terms of revenues will make 1.307 trillion AMD (without the receipt of intergovernmental transfers), of which taxes - 1.247.9 trillion AMD. In the line of expenditures, it is expected to be AMD 1.444 trillion, of which capital expenditures will make 175 billion AMD instead of last year's 98.6 billion AMD. The deficit / GDP will make up 2.7% -156.9 billion drams, of which about 80 billion drams will be financed from external sources, the rest due to domestic resources, the GDP-deflator is planned at 3.5%. Capital expenditures of 100 billion drams will be spent on defense - an increase in defense spending is expected to be 17% or 27 billion AMD to about 246.8 billion AMD ($ 518 million), compared with 209.8 billion AMD in 2017. Thus, the funds allocated for the defense of the country will increase by 37 billion drams or 17.6%. Priority in terms of capex will also come from new infrastructures (roads, irrigation systems, electricity transmission).

"Weak links" of the system turned out to be social spheres. The social security budget will hardly grow (408 billion AMD), the minimum wage will remain at the same level (net volume - 55 thousand AMD), as well as the average pension (41 thousand AMD). Nevertheless, according to Minasyan, the services provided in the sphere will not be reduced. The tasks will be optimized only, he said, noting that in addition to purely financial indicators, there are quantitative, qualitative and temporary, to which one can come and with less expenses and more rational allocation of funds.

At the same time, budget allocations for education in 2018, compared with the current year, are planned to reduce by 0.6% or 71.4 million AMD. In 2018, the education sector will receive 126,714.1 million AMD (excluding science expenditures), which is equal to 2.17% of GDP or 8.65% of the state budget expenditures. The economy will be 3,275.3 mln AMD only through the reduction of non-staff.  Nevertheless, Minasyan believes that the reduction of expenses will not affect the magnitude of the performance indicators towards their reduction. The bulk of the cuts, he said would affect people who are not related to the education system. "More than 1/3 of the system's employees are not related to the sphere, so these cuts will not lead to a decline in the quality of education," he said, adding that the issue should be considered only in terms of the expected efficiency.