Thursday, September 26 2019 13:18

ArmInfo.The Central Bank of Armenia updated the forecast on the ratio of the budget deficit to GDP for 2019 at the level of the expected 1.5% (and without taking  into account the amounts for VAT refunds, 0.6% is forecasted),  instead of the previous forecast of 1.8%, and against those already  budgeted 2.2%

As noted in the Central Bank's Monetary Policy Program  (MCP) published at the end of September for the III quarter of 2019,  this level is expected in the context of an improved forecast for GDP  growth for 2019 in the range of 6.7-7.2% (an average of 6.9 %).  In  terms of the tax / GDP ratio, the Central Bank, taking into account  the expected overfulfillment of tax revenues of 62 billion drams,  predicts for 2019 the level of 22.2% (against the previously  forecasted 22.1%), exceeding the indicator of the previous year by  1.3 percentage points. But taking into account the return of 56  billion drams (i.e., the debit balance formed before July 1, 2017),  the tax / GDP ratio is projected at 21.4%, which is exceeded by only  0 5 percentage points.

According to the forecasts of the Central Bank, in 2019, government  spending is expected to be saved by almost 5.1% or about 84 billion  drams. The ratio <budget expenditures to GDP> according to the  forecasts of the Central Bank is expected in 2019 at the level of  23.7% (against the previously forecasted 24.8%), exceeding the  indicator of the previous year by 0.2 percentage points. The Central  Bank, taking into account these estimates, predicts that in 2019 the  impact of fiscal and budgetary policies on gross demand will be  slightly restraining (0.5%). And excluding the expected return of VAT  amounts, the restraining effect of fiscal policy on gross demand will  exceed 1%. As for the medium term, according to the spending program  for 2020-2022, the impact of fiscal policy will be neutral. The  Central Bank for 2020 estimates that the impact will be neutral, but  does not exclude the possibility of an expanded impact to some  extent.  According to the updated WB forecast, the ratio <budget  deficit to GDP> in 2019 will be 2.2%, with a decrease in 2020 to 2%.  The WB predicts in Armenia the ratio of budget revenues to GDP at  24.3% in 2019, with an increase in 2020 to 25.2%. And in terms of  budget spending / GDP ratio, the World Bank expects an increase in  the level in 2019-2020 from 26.5% to 27.2%. Actual data for the year  2018 recorded:  the ratio <budget deficit / GDP> at 1.8%, <budget  revenues / GDP - 22.3%>, <budget expenditures / GDP> - 24.1%, against  the projected WB, respectively 1 , 9%, 23.8% and 25.4%.

According to the Statistical Committee of the Republic of Armenia, in  January-December 2018, the budget deficit of Armenia amounted to  105.4 billion drams ($ 218.2 million), declining by 60.5% year on  year, against a meager 4% decline in 2017. The budget revenues of  Armenia accelerated the annual growth rate from 5.6% to 8.4%, while  expenditures unfolded from the growth by 3.8% decline, making  respectively 1340.9 billion and 1446.3 billion drams ($ 2.8 billion  and $ 2.99 billion, respectively). Armenia's GDP slowed annual growth  in 2018 to 5.2% from 7.5% in 2017, amounting to 6.005 trillion drams.