Monday, December 4 2017 12:48
Naira Badalian

Draft Budget 2018: Who will increase financing in Armenia

Draft Budget 2018: Who will increase financing in Armenia

ArmInfo.The Armenian  government, following the results of parliamentary discussions,  revised its forecasts both for the revenues of the state budget of  the republic for 2018 and for expenditures. As a result, the  healthcare budget, the government's reserve fund will be increased,  and the costs of servicing the country's public debt will increase.  The siloviki will also not offend - their funding will be increased  by 1.123 billion drams.

After the first reading of the draft law "On the State Budget of the  Republic of Armenia for 2018", expenditures were increased by 15  billion drams. The budget of Armenia for 2018 in terms of  expenditures from the previously projected 1, 464.2 billion drams  (1.360.1 billion in 2017 and 1.420.6 billion in 2016) will grow to 1,  465.2 billion drams.  In particular, the changes in the exchange rate  led to an increase in expenditure items. According to the Law on the  Budget System, the RA Law on the Budget is submitted to the National  Assembly in accordance with the calculations as of September 1, after  which, in the second reading, as a result of the exchange rate  changes, some adjustments are made. In this case, changes in the  exchange rate by almost 5 drams led to an increase in revenues by 1.5  billion drams. Pursuant to the requirements of the new Constitution,  the expenditures of the Government Office will be allocated 1.7  billion drams more than the previous version of the draft budget. At  the same time, the expenditures of the government's reserve fund will  be increased by 3.9 billion drams from 21.1 billion drams earlier  laid down to 25 billion drams, which is due to planned activities  and, possibly, unplanned expenses for them. In addition, the  expenditure part of the draft budget grew by 4 billion drams, which  was due to the increase in financing of Armenia's healthcare sector -  from 72.6 billion drams, planned by the previous text of the  document, to 76.6 billion drams. The State Committee of Water  Resources will receive more than it was planned for the previous text  - from 9.3 billion drams to 10.6 billion, as financing in the amount  of 1 billion 289 million drams will be spent to cover the costs  associated with a rise in price for water tariff of 11.4 dram per  cubic meter (including VAT). It is also planned to increase the  financing of the "Armenia" military detachment in the amount of 1  billion drams, which is a derivative of the issue of border security,  and of Armenia's obligations under international treaties.

The expenditures on social and cultural activities will be increased  by 2 962 569.7 thousand drams - from 614 059 666.8 thousand drams to  618 335 153.2 thousand drams. 116 billion drams will be allocated for  science, 12.5 billion drams for culture, 1.03 billion drams for youth  programs, 1.9 billion drams for sports, 8.08 billion drams for  communication.

Next year, the siloviki will not be offended either - their funding  will be increased by 1.123 billion drams to 307,034,388.0 thousand  drams. In particular, the current draft state budget plans to  allocate 228 533 097.7 thousand drams to the Defense Ministry instead  of the early 228 503 492.9 thousand drams. The expenses of the RA  Police will increase by AMD 94 275,300 to AMD 40 186 810.0 thousand.  Meanwhile, the expenditures of the National Security Service of  Armenia will remain unchanged with respect to the previous draft  budget - 20 372 956,3 thousand drams, the State Security Service - 2  765 776,6 thousand drams. The State Revenue Committee will receive  exactly as much as it was planned to allocate to the tax and customs  authority.  According to the new version of the document, expenses  for maintaining the state apparatus will be increased by 1 123 880.1  thousand drams more, up to 95 227 495.7 thousand drams. The cost of  servicing the state debt of the country will increase by 754,681.1  thousand drams to 141,234,569.9 thousand drams.  Changes in financing  in the form of reduction are expected by the Yerevan City  Administration - the city administration will receive AMD 11,934,600  less from 8,840,434.1 thousand drams to 8,828,499.5 thousand drams  pledged in the adjusted version. The amount will be "saved" at the  expense of Yerevan metro expenses, which was supposed to be allocated  2 724 280.6 thousand drams by the previous text, and the current  version offers 2 712 346.0 thousand drams. The expenses of the  National Statistical Service of the Republic of Armenia will be  reduced by 9,716.4 thousand drams, up to - 698,775.7 thousand drams,  while the State Committee of Real Estate Cadastre for 250,000.0  thousand drams more - up to 3 955 720.8 thousand drams.  It should be noted  that on November 30, RA Minister of Finance Vardan Aramyan submitted  to the Government for approval the adjusted version of the draft  budget for 2018. Earlier, on November 16, a break was declared in the  National Assembly of the Republic of Armenia on the draft law "On the  State Budget of Armenia of 2018". The NA deputies were given the  opportunity to present their proposals on the draft of the main  financial document.

According to the adjusted draft of the state budget, the revenue part  will be 1.308.2 billion drams, instead of the previously projected  1.307.3 billion drams (against 1.210.0 billion drams approved in 2017  and 1.135.9 billion drams actual for the year 2016). At the same  time, tax revenue is expected to grow. In particular, the Ministry of  Finance expects the growth of tax revenues to 1, 248. 5 billion drams  against previously predicted 1.247.9 billion drams or 95.5% of the  expected revenues of the state treasury. Meanwhile, according to the  results of the current year, tax revenues are expected at the level  of 1135.0 billion drams (93.8% of all revenues to the state  treasury), against the actual 1076.9 billion drams (94.8%) in 2016.  In 2018, it is expected to attract official grants of 35.8 billion  drams from international structures and foreign countries, instead of  the previously predicted 35.6 billion drams (2.7% of state treasury  revenues). In 2017, the expected figure was 30.9 billion drams  (2.6%), and in 2016 their actual volume was 28.4 billion drams  (2.5%). Expectations for targeted grants have also increased -  instead of 29 billion drams to 29.3 billion drams. But the projected  level of grants within the framework of the European Neighborhood  Policy has decreased from 6.5 billion drams to 6.4 billion drams.  Other budget revenues will make 23.9 billion drams next year, instead  of the early expected 23.8 billion drams (1.8% of the revenue part).  In 2017, the figure is expected at 44.1 billion drams (3.6%), and in  2016 made 30.6 billion drams (2.7%) The forecasted level of the  deficit / GDP indicator will make 156.9bln AMD, against the previous  156.8bln AMD. Of these, AMD 76.9 billion is planned to be financed  from internal resources (instead of previously forecasted AMD 77.1  billion) and 79.9 billion from external sources compared to early  79.7 billion drams. 

Note that the nominal GDP of Armenia in 2018, according to the draft  budget for the next year, will grow by 441 billion - from 5,409.1  billion expected by the end of 2017 to 5,850.7 billion drams pledged  in the project. The economic growth in 2018 is planned at 4.5% or $  11.948.9 million. The forecasts of economic growth for the next year  are largely due to the outlined positive dynamics this year, as a  result of which the Ministry of Finance raised the forecasts for  economic growth in 2017 from the planned 3, 2% to 4.3%.

In the matter of ensuring economic growth, one of the locomotives is  promised by industry and the services sector. So, 4.5% of GDP will be  provided at the expense of industry 1.1%, agriculture - 0.6%,  services - 2.2%, net indirect taxes - 0.4%. 12-month inflation by the  end of 2018 will be 4%, instead of expected in 2017, 2.4% and actual  -1.1% at the end of 2016. Exports will reach 37.4% of GDP, against  the projected in 2017 37% and 33.1% in 2016. By the end of 2018, the  national debt, with $ 6.8bln of AMD expected by the end of this year,  will grow to $ 7.2 billion and amount to 60% of GDP. The forecasted  level of the deficit / GDP indicator will make 156.9bln AMD, against  the previous 156.8bln AMD. Capital expenditures will make 158.7bln  AMD, instead of 172.4bln AMD (160bn in 2016), the current expenses  from 1.391.8bln AMD will grow to 1.306.5bln AMD.

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