ArmInfo. At the meeting on December 5, the National Assembly of Armenia began discussions on the final version of the draft state budget for 2020.
As RA Minister of Finance Atom Janjughazyan noted in his speech, the draft state budget was drawn up on the basis of the tax reform policy, which was launched in the summer of this year with the adoption of relevant legislative initiatives, one of the most important components of which are actions to ensure sustainable economic growth. According to these initiatives, direct tax rates will decrease and indirect taxes will increase slightly. This, according to the minister, will lead to a reduction in the tax burden for business entities, and will increase the competitiveness of the state economy.
Another direction for ensuring sustainable economic growth will be to improve the performance of public investment, including in infrastructure projects. The growth of allocations for capital construction in 2020 will be substantially increased and will exceed by AMD 102 billion the volume of deductions for the current year. In general, capital construction expenditures will amount to 4.1% of the country's GDP, which will exceed by 1.3% points the similar indicators of the current year. It is also envisaged to increase the costs of solving problems with human capital. Thus, 11% more financial resources will be allocated to the field of education and science than in 2019, to the healthcare sector - by 22%, and on social projects - by 11%. Reducing government debt in the national debt is also one of the government's priorities. It is planned that by the end of 2020, government debt will be 10% points lower than 2 years ago and will amount to 48.2% of the country's GDP. It is also planned to refuse to attract credit resources to fill the budget deficit. The stage of raising funds to help cover the state budget deficit, as noted by Janjughazyan, has been completed. There will be no risks with servicing the first tranche of Eurobonds.
It should be noted that, as stated in the document's statement, during the hearings of the draft budget in the specialized committees of the parliament, 225 proposals were received from deputies. Predicted indicators were also influenced by factors such as changes in the exchange rate. So, according to the Law of the Republic of Armenia "On the Budget System", the Law of the Republic of Armenia "On the Budget" is submitted to the National Assembly in accordance with the calculations as of September 1, after which, in the second reading, by November 1, as a result of changes in the exchange rate, some adjustments are made. In general, the Ministry of Finance revised its forecasts both in terms of revenues of the state budget of the republic for 2020, and expenses. So, in conditions of 4.9% of GDP growth, 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 budget revenue item with 1.698 trillion drams fixed in the draft budget for the current year decreased to about 1.695 trillion drams or 23.9% of GDP (1.567 trillion or 23.9% of GDP this year and actual 1.341 trillion or 22.3% of GDP for 2018 year). Costs declined from the previously forecasted 1.880 trillion drams to 1.855 trillion drams.
As a result, the deficit indicator also decreased - to about 160 billion drams and will amount to 2.3% of GDP, against the previously forecasted 182.6 billion drams (2.6% of GDP). The deficit will be financed in the amount of 210.5 billion drams from domestic sources and another 50.5 billion drams are expected to be attracted from external sources. 12-month inflation is forecasted to be within 4% (+ / _ 1.5%). Tax revenues of the state budget (tax revenues and state duty) in 2020 are projected at 1 trillion 602 billion 252 million 712 thousand drams or 22.6% of GDP, compared to the early 1 trillion 602 billion 130 million) and adjusted for the current year 1 trillion 464 billion drams or 22.3% of GDP (and the actual 1 trillion 258 billion drams or 21% of GDP for 2018). In 2020, according to the adjusted draft budget, Armenia expects to receive from foreign states and international organizations official grants in the amount of 35 billion 024 million drams or 0.5% of GDP against 33.8 billion drams previously allocated, 39.5 billion drams and AMD 11.2 billion for 2019 and 2018, respectively.