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.