Monday, October 21 2019 15:11
Naira Badalian

The main challenge for Armenia is the restoration of the lost trust  of citizens, business and an external investor in power - Expert

The main challenge for Armenia is the restoration of the lost trust  of citizens, business and an external investor in power - Expert

ArmInfo."Last year, we wondered whether the budget for 2019 is revolutionary. It turned out that yes," economist Vahagn Khachatryan said, commenting to ArmInfo  how the draft budget for 2020 is "revolutionary", and whether the  document creates the prerequisites for the accomplishment of the  economic revolution.

According to his owls, it is clear that the  indicators laid down in the state budget are important, since they  are the ones that guide the government in the course of its  activities in the planned financial year. "At the same time, I  believe that the issue of changing our perceptions and ideas is  important in the fulfillment of the economic revolution, since the  main unresolved problem remains the task of fundamentally revising  the previous vicious system of governance," he said.  According to  the expert, the new government does not succeed in solving this  problem. "Structural changes were somewhat slowed down, procedures  and state institutions were reviewed, in particular, the Program  Implementation Bureau was closed, and the new structures created on  their basis are not working or working inefficiently. This led to  underfulfillment of capital expenditures, which is an omission on the  part of the government, because this limits the potential for  economic growth, "said the economist. At the same time, as  Khachatryan noted, there are quite objective reasons that impede the  process - the problem is multilayered, starting with the imperative  of cardinal structural changes, to changes in people's thinking.  In  general, as the economist pointed out, without delving into the  figures indicated in the draft budget for 2020, it can be stated that  the document is modest. "As the experience of fulfilling the budget  for the current year showed, having laid down expectations for GDP  growth of 4.9% in the document, today we are talking about the  adjusted forecast by the end of the year a few percentage points  higher. The next important challenge facing the RA government is to  restore the previously lost trust of citizens, business and an  external investor, "the expert said.

It should be noted that according to the state budget of Armenia,  according to the results of 2019, the GDP growth in the budget for  2020 was revised to 6.3%, and in the latest forecast of the Central  Bank of the Republic of Armenia this indicator was increased to 6.9%.  On October 13, Armenian Prime Minister Nikol Pashinyan and then  Economy Minister Tigran Khachatryan announced that the republic will  close the year 2019 with economic growth within 7%. Nevertheless, the  draft budget for 2020 predicts by the end of the year GDP growth at  the same level of 4.9%. According to Moody's agency, in Armenia, real  GDP growth in the medium term may reach approximately 5.5-6% over the  next few years, the Eurasian Development Bank (EDB) forecasts a 6%  GDP growth in 2019, and the World Bank - 5.5% with a slowdown in 2020  to 5.1%, and 5.2% in 2021.

According to the draft budget for 2020, the nominal GDP will grow by  about 529 billion drams - from 6.566.5 billion drams expected by the  end of 2019 to 7.095.1 billion drams included in the document. The  GDP deflator will be 103%, against 102.9% for 2019 and the actual  102.5% for 2018. The revenue side of the budget will be 1.698  trillion drams (1.496 trillion drams this year), the expenditure side  - 1.880 trillion drams (versus 1.648 trillion drams in 2019). The  deficit will reach 182.6 billion drams instead of 151.6 billion drams  in 2019.

The volume of capital investments in the state budget of Armenia for  2020 is planned in the amount of 357 billion drams, which is 137  billion drams more than the figure set for the current year. Thus,  the ratio of the budget capex to GDP is planned to be increased to  5%. Meanwhile, from the planned 220 billion capital investments for  the current year, by the end of July this year 39 billion drams sold  in total. 

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