Monday, October 14 2019 11:51
Naira Badalian

Economist: Underfulfillment of capital expenditures by the state  threatens economic recovery as early as in 2020-2021

Economist: Underfulfillment of capital expenditures by the state  threatens economic recovery as early as in 2020-2021

ArmInfo.The underfulfillment of capital expenditures of the state budget is a serious problem for the future development of the Armenian economy. The head of the  department and entrepreneurship of YSU Karlen Khachatryan stated this  in an interview with ArmInfo correspondent.

Earlier, ArmInfo reported that according to the data for the first  half of 2019, the state budget expenditures were not met by 17.3% -  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 drams capital investments  planned for the current year, by the end of July this year only 39  billion drams were spent. By the end of 2019, Armenia will also not  "ensure" the deficit indicator set in the Law "On the State Budget of  the Republic of Armenia for 2019".  The Ministry of Finance is  inclined to the fact that according to the situation as of December  31 this year the indicator will be much lower than the fixed figure  of 151.6 billion drams and will be about 42.5 billion drams (1.6% /  GDP).

According to the economist, it is capital investments in the form of  funds allocated for infrastructure development that can become an  additional impetus, a resource for stimulating the economy. "This  includes the construction of roads and water supply systems, which  may become a prerequisite for the progressive development of the  relevant sectors of the economy. It turns out, he believes, that the  state, refraining from this expense item, which, all other things  being equal, could provide certain reserves for economic recovery on  the contrary, slows down growth in the future, "he said.

Clarification of deficit expectations, the expert believes, will also  be a "disservice" for the Armenian economy. According to Khachatryan,  at this economic stage, the state should have implemented a more  aggressive policy towards increasing state treasury expenses.  "According to my observations, the economy needs additional  incentives. After all, we are increasingly talking about low levels  of both foreign and domestic investments. It would be possible to  somehow fill the gap by increasing government spending, which is not  done and is completely unjustified," it.

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