ArmInfo.The Armenian government should be sure that there are no risks in making capital expenditures, Deputy Prime Minister Mher Grigoryan stated on October 9 on the sidelines of the conference titled "What to do-2 Economic Revolution: Perception and Launch"." commenting to ArmInfo on the reasons and possible threats of significant underfulfillment of capital expenditures in 2019.
Thus, according to him, at this stage, the country's authorities have thought about both simplifying the process of implementing programs and eliminating the risks associated with their productivity and possible corruption. "In this context, I believe that we should hurry, but hurry slowly and not at the expense of risks, aiming at the final result of the transparent implementation of effective programs," he explained.
Earlier, ArmInfo reported that according to the data for the first half of 2019, the state budget expenditures by 17.3% were not met - out of the planned 769.5 billion drams, 636.7 billion drams were spent. Of the capital expenditures provided for the indicated period in the amount of 89.4 billion drams, only 23.5 billion drams were spent. On the whole, of the 220 billion capital investments planned for the current year, by the end of July this year 39 billion drams were spent.
Meanwhile, as the former finance minister of Armenia Vardan Aramyan stated earlier, the strictly conservative approach of the government in the implementation of capital expenditures is probably a positive phenomenon at first glance, since it formally leads to the preservation or reduction of the physical size of the public debt, but in the long term it jeopardizes growth potential. In fact, it is capital investments that provide the maximum multiplier effect for sustainable economic growth, since these funds, budgetary and credit, are directed to infrastructure projects, such as road construction, irrigation and reservoir systems, and the energy sector. Thus, according to the calculations of the economic team of the Luys Foundation, of which Aramyan is a member of the coordinating council, non-fulfillment of capital investments in the amount of 1.1% ''fines'' the potential for GDP growth by 0.3 percentage points. That is, if in 2019 the non-fulfillment of capital investments reaches about 65 billion drams (or in the amount of 1.1% of GDP), then this year the economy will grow by 1.1 percentage points below the planned level. In subsequent years, regardless of the level of investments made, annual GDP growth rates will be lower by an average of 0.3 percentage points.