Deputy Minister: 2019 will be the last year of attracting credit  funds for budget assistance

ArmInfo. 2019 will be the last year to attract credit under budget assistance. On December 12, Deputy Minister of Finance of Armenia Armen Hayrapetyan stated this  from the rostrum of the National Assembly of the Republic of Armenia.

According to him, since 2020, credit resources will be attracted  exclusively for targeted programs in order to achieve a specific  result. The Deputy Minister stressed that the four loan agreements  submitted for ratification with the World Bank, Asian Development  Bank and German KFW bank are intended to fill the deficit of the  state budget of 2019. In September of this year, the government  discussed the feasibility of attracting these funds, as a result of  which it was decided to anyway attract these loans. This is due to  the fact that out of the collected additional budgetary revenues of  62 billion drams, 56 billion drams are used to pay off previous  debts, in particular, through VAT refunds. Meanwhile, the deficit of  the state budget of the country of the current year of 180 billion  drams remained unchanged. The delay in ratification of these  agreements was due to the long period of negotiations between the  parties. It is planned to cover the deficit of the state budget of  the current year in the amount of 74 billion drams on attracted  resources. At the same time, the Deputy Minister noted that the ratio  of "public debt to GDP" is declining more rapidly than planned. In  general, as Armen Hayrapetyan noted, the presence of public debt is  not bad if it is managed correctly.

Meanwhile, the NA lawmaker from the Prosperous Armenia faction was  surprised at the fact that the government placed 300 billion drams at  5.5% per annum in the Central Bank of Armenia. "What is the reason to  attract funds if there is money in the Central Bank?", the MP said.  In response, Armen Hayrapetyan pointed out the importance of having a  "safety cushion". He also pointed out that a refusal to raise these  funds is possible, but in this case new financial risks may arise,  including, inter alia, the VAT refund process, which were not planned  for the current financial year. The availability of funds in the  Central Bank allows, especially in the first 10 days of the new year,  to provide 9 billion drams with the required 45 billion drams. In  this regard, the presence of an "airbag" through ratification of  agreements will solve this problem by ensuring the consistency of the  process.

Earlier, First Deputy Minister of Finance Karen Brutyan said that the  Asian Development Bank (ADB) will provide Armenia with a loan of  131.4 million euros for the implementation of the "Second Program of  Public Efficiency and Financial Markets". According to the deputy  minister, ADB has already agreed to provide 36.5 million euros from  the indicated amount, the German bank KfW will allocate another 40  million euros and the World Bank 9.7 million euros. The World Bank,  represented by the International Bank for Reconstruction and  Development, will also allocate 40.8 million euros for the  implementation of the same program. All funds will be used to finance  the 2019 state budget deficit. The deputy minister noted that as of  September 30, the country's national debt was equal to $ 6.539  billion against $ 6.940 in 2018. He emphasized that the current state  debt of Armenia is equal to 50.3% of GDP compared to 51.3% a year  earlier, and there is every opportunity to bring this indicator to  50% by the end of this year. Next year, this figure will be reduced  to 48%.  To recall, the 2020 draft state budget of the Republic of  Armenia stipulates that in 2020 the nominal GDP of Armenia will grow  by approximately 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. At the same time, the real GDP index will reach 104.9%,  against the forecasted by the end of the current year of 106.3% and  the actual for 2018 of 105.2%.  The GDP deflator will be 103%,  against 102.9% for 2019 and the actual 102.5% for 2018. According to  the project, the state budget revenue item will be 1,697,618,538.8  thousand drams (1.69 trillion drams or $ 3,566 billion), the  expenditure one - 1,880,186,389.8 thousand drams (1,88 trillion drams  or about $ 3.95 billion), the state budget deficit will be about 153  billion drams.