ArmInfo.In 2019, in conditions of economic growth at the level of 4.9% and growth of gross fixed capital formation of 6.1%, the forecasted growth in exports of goods and services in GDP will be 41% instead of the 38.7% expected by the end of this year. This was stated by Acting Minister of Economic Development and Investments of Armenia Tigran Khachatryan during the discussions of the draft budget for 2019 in the standing commissions of the parliament.
According to Khachatryan, the growth rate of gross fixed capital formation (GFCF) of the country demonstrates the current potential of the economy in terms of its ability to serve further growth. But it is directly related to the volume of investment in the country.
As the Acting Minister recalled, gross fixed capital formation statistically measures the cost of acquiring new or existing fixed assets by the business sector, the government and ''net'' households minus the disposal of fixed assets. Gross fixed capital formation is an integral part of the gross domestic product (GDP), and thus shows investments in the economy. In this context, the projected figure of 6.1% is insufficient to be among the countries with sustainable economic growth, which can boast of a growth of GFCF by 23-24% of GDP. Thus, as Khachatryan pointed out, Armenia should actively stimulate the flow of investments into the republic with various tools.
As the Acting Minister noted, it is a well-known fact that the main obstacle for attracting investments into the country is the limited market. If there are no liberalized relations with neighboring countries, according to Khachatryan, the scale of the domestic market is in any case insufficient to increase the investment attractiveness. In this perspective, the increase in exports of goods and services and ensuring the competitiveness of their own products is essensial. In this sense, Armenia should actively stimulate the growth of light industry, pharmaceuticals, winemaking and jewelry.
According to Khachatryan, the tax policy plays an important role in the matter of attracting investments. High income tax rates, for example, make Armenian goods and services non-competitive in the foreign market.
Tigran Khachatryan agrees with the statement of the Acting Prime Minister, that potential investors took a wait and will take action after the early parliamentary elections in Armenia.
To recall, on November 1, discussions on the draft budget for 2019 started in the standing committees of the parliament. As expected, the document will be discussed by the legislator on November 13. The project was approved by the Cabinet on September 27 and became the first major financial and economic document prepared in the form of program budgeting.
Thus, the nominal GDP of Armenia in 2019, according to the draft budget for the next year, will grow by about 560 billion - from the expected by the end of 2018 6.193.0 billion AMD($ 12,752.6 million) to 6,756.2 billion AMD ($ 13,717.5 million) pledged in the project. GDP growth, according to the document, will be 4.9%, instead of 4.5% laid down in the approved state budget for the 2018. The following year's consolidated budget in terms of revenues is estimated at 1.533.6 billion AMD (without revenues from inter- budget transfers) instead of 1.333.5 billion AMD in 2018, and in expenses - 1.685.2 billion AMD (without receipts from inter-budget transfers), against 1.500.5 billion AMD this year, the deficit is about 151.6 billion drams or 2.2% of GDP, against 156.9 billion AMD envisaged in 2018 or 2.7% of GDP, but revised to 103.5 billion AMD (1 7% / GDP). Sources of financing the budget deficit will be 54.2 billion AMD- domestic sources, and 97.4 billion AMD- external. Community budgets for 2019 are estimated to be 138.9 billion AMD (including official grants from the state budget) in the line of income, and 138.9 billion AMD of expenses. This year, a figure of 130.1 billion AMD was set. 12-month inflation is expected at 4% with an acceptable limit of fluctuations of +/- 1.5%. In 2019, capital spending from the current 2.4% of GDP will grow to 3.2% of GDP. State treasury revenues will make 1,490.6 billion AMD (1.354.8 billion AMD this year) or 22.1% of GDP, of which tax revenues and state fees will be 1, 399.2 billion AMD or 20.7% of GDP, instead of 1.255.8 billion AMD or 20.3% of GDP in 2018, expenses were 1 trillion 642.2 billion AMD against the current 1,458.3 billion AMD. Current expenditures will amount to 1,422.7 billion AMD (21.1% / GDP), instead of current 1, 312.3 billion AMD (21.2% / GDP). The deflator index will be 104%, against 104.4% predicted by the end of this year. In 2019, official grants amounting to 39 billion drams are expected from international structures and foreign states, instead of 35.8 billion drams in 2018. Other budget revenues will be 52.4 billion drams next year, instead of 23.9 billion drams for the current year, official grants - 39 billion. The ratio of investments to GDP in 2018 is projected at 23.3% instead of 23.6% in 2019, exports in 2019 are expected to reach 41%, against the projected 38,7% in 2018.