ArmInfo. The Central Bank of Armenia, in its updated forecast for 2021, predicts a state budget deficit at 4.4% of GDP, with a y-o-y decline of 1 percentage point. According to the Central Bank, despite the high level of the state budget deficit in 2021, compared to 2020 (when the fiscal policy was significantly expansive), the impact from income will be expansive by 1 percentage point, and from spending - by 2.3 percentage points.
This is set out in the Central Bank's Monetary Policy Program (MPP) for the II quarter of this year, published at the end of June, where an improved forecast for GDP for 2021 is noted in the direction of greater growth by 4.6% from the previously forecasted 1.4% (versus the actual 7.4% decline in 2020).
In terms of the tax / GDP ratio, the Central Bank forecasts a level of 22.1% for 2021, with a y-o-y decline of 0.3 percentage points. In terms of the cost / GDP ratio, the Central Bank forecasts a level of 27.5% for 2021, with a y-o-y decline of 3.1 percentage points.
According to the Central Bank, in the medium term, based on the scenario of the expenditure program for 2022-2024, in parallel with the economic recovery, the government will conduct fiscal consolidation, which, within the framework of fiscal norms, will ensure a gradual decrease in the deficit and debt burden (from the projected government debt by 2021 above 60% of GDP) due to increased tax revenues and improved spending structure. As a result, the impact of fiscal policy will be suppressive in 2022 and neutral in 2023.
To note, according to the Statistical Committee of the Republic of Armenia, the budget deficit of Armenia in 2020 amounted to $ 639 million, increased 5.2-fold on a y-o-y terms (against a 39.3% decline in 2019 and a 60.5% decline in 2018). Budget revenues slowed down y-o-y growth from 16.3% to stagnant 0.1%, while expenses, on the contrary, accelerated growth from 12.2% to 16.7%, amounting to $ 2.99 billion and $ 3.6 billion, respectively
