Tuesday, September 8 2020 13:28

ArmInfo.The deficit of the state budget of Armenia in January- July 2020 amounted to 104.9 billion drams ($ 216.1 million), of which 53.4% or $ 115.3 million fell on July.

On an annual basis, the dynamics of this indicator  worsened to a 3-fold decline - from last year's surplus to the  current deficit, and on a monthly basis, the accelerated growth of  the deficit continued in July. As a comparison, we note that in  January-July 2019, the state budget was closed with a surplus, with  an annual growth of 7 times and a monthly decline of 2.3 times, and  in the first case, with an exit from a deficit to a surplus, and in  the second, with a subsidence from surplus to deficit.

According to the Statistical Committee of the Republic of Armenia,  the budget revenues of Armenia on an annualized basis decreased by  5.8% (against 23.8% growth in the previous year), amounting to 833.3  billion drams ($ 1.7 billion), while spending sharply accelerated  growth from 6.1% to 20.7%, amounting to 938.2 billion drams ($ 1.9  billion). On a monthly basis, a modest increase in income by 13.3% to  116.6 billion drams was accompanied by a significant increase in  spending by 37% to 172.6 billion drams, as a result of which the  deficit jumped 2.4 times to 56 billion drams.

The annual decline in the revenue side of the budget is due to a  decrease in fees for all taxes, except for social payments (an  increase of 15%). The most significant decrease was recorded in  income tax revenues - by 41%, customs duty - by 28.3%, VAT - by  16.5%, state duty - by 15.9%, and a slightly smaller decline was  recorded in turnover tax - by 14 , 9%, excise tax - by 14.2%, as well  as income tax - by 9% and environmental / environmental payments - by  6.9%. The dominant items in the structure of income are taxes from  VAT (253.9 billion drams), income tax (241.8 billion drams), income  tax (102.5 billion drams).  Against this background, in the  expenditure side of the budget, the decline was recorded only in  interest payments of external debt, while the rest of the items  showed growth. The highest annual growth was recorded in transfer /  grant spending - by 37.4% and social benefits and pensions - by 24%,  with a break from which subsidies follow in pace - by 11.7%, expenses  on the purchase of goods and services - by 5 , 5% and salaries - by  2%. Interest payments on public debt increased by 7.7%, amounting to  83.1 billion drams ($ 171.2 million), of which 41.9 billion - on the  external debt and 41.2 billion - on the domestic debt. Moreover,  budget expenditures on interest payments on external debt reversed  the annual dynamics from 12.9% growth to 2.1% decline, while the  growth in interest payments on domestic debt accelerated sharply from  1.8% to 19. nine%. Social benefits and pensions dominate in the  structure of state budget expenditures - 323.7 billion drams, with a  strong lead behind transfers / grants (96.5 billion), salaries (91.3  billion), purchases of goods and services (83.7 billion), interest  payments on the state debt (83.1 billion) and subsidies (71.8 billion  drams). (The estimated exchange rate of the dram against the US  dollar as of July 31, 2020 was 485.33 AMD / $ 1).

Note that according to the forecast of the Central Bank of Armenia  for 2020, updated in June, the ratio of the state budget deficit to  GDP will be 5% (against the actual 1% in 2019). This level is  expected by the Central Bank in the context of a deteriorated  forecast for GDP for 2020 to a 4% decline (against the actual 7.6%  growth in 2019). In terms of the tax / GDP ratio, the Central Bank  predicts a level of 22.4% almost equal to the actual indicator of  2019. In terms of tax revenues, the Central Bank forecasts a decline  of 169.1 billion drams for 2020. The Central Bank forecasts the  expenditure / GDP ratio at 29% for 2020 with an annual growth of 4.3  percentage points. (taking into account the 150 billion drams  included in the state expenditures of the package of assistance to  the economy). The conservative assessment of the Central Bank  regarding taxes takes into account the impact of the coronavirus  pandemic on the world economy and the domestic economy of Armenia,  the extremely high uncertainty in the timing of the duration of the  epidemic with an accompanying negative development of the situation.