ArmInfo.The borrowed funds next year will be used exclusively to finance capital expenditures for development, Armenian Minister of Finance Tigran Khachatryan said on November 17 in parliament presenting the draft law "On the state budget of the RA for 2022"
According to the head of the Ministry of Finance, the Armenian government attaches particular importance to maintaining macroeconomic stability, in connection with which the draft state budget for the next fiscal year prioritizes programs aimed at ensuring this task. As the minister pointed out, these programs are based on the following main approaches: the creation of such macroeconomic conditions that will become "fertile ground" - will contribute to high economic activity of the private sector and create conditions for 7% economic growth by the end of the year. The financial authorities also plan to reach 7% GDP growth as a result of large financial investments in infrastructure projects. According to Khachatryan, capital expenditures of the state budget for 2022 will amount to about 357 billion drams, or 4.5% of GDP, which is 60% or more than 130 billion drams higher than the target for 2021.
At the same time, the RA government, represented by the Ministry of Finance, claims that "in 2021, the Armenian economy entered the recovery phase" and in 2021 the economy is expected to grow up to 6.5%, instead of 3.2% set in the state budget. Economic growth in 2021 will be mainly driven by the outstripping growth in the service sector (including trade) - 8.1%. Industry, agriculture and construction will also grow - 4.3%, 5.6% and 1.5%, respectively. In 2022, industry will grow by 8%, construction by 18%, and services and agriculture by 5.9% and 3.9%, respectively. In the context of a gradual weakening of the negative impact of the pandemic and the war in Artsakh in 2021, final consumption in real terms will grow by 7.7%, and investments - by 3.6%. In 2022, consumption will grow by 4.7% and investment by 22.5%. The growth in investment will be due to large government investments in infrastructure projects (an increase of 46.2%), as well as, as a result of government policy to stimulate private investment - by 15.6% (both domestic and foreign investment). This year, exports and imports will grow by 7.6% and 8.2%, respectively, and in 2022 by 14.3% and 15.3%, respectively.
The GDP deflator will grow by 4.6% (6.8% at the end of 2021), 12-month inflation - 5.2% (7.4% is expected by the end of this year), and in 2022, average inflation will reach 5.6% (7% expected in 2021). State revenues and official grants from the state treasury in 2022, from the 23.6% expected by the end of this year, will grow to 24.7% of GDP, tax revenues and duties will increase from 22.5% to 23.4% of GDP. State budget expenditures, instead of 28.2% expected at the end of this year, will decrease to 27.8% of GDP, and current expenditures will also decrease - from 25.1% to 23.45 GDP.
In particular, expenditures compared to the approved budget for the current year will grow by 18.2% or 337.5 billion drams - up to 2 trillion 188.4 billion drams, which is about 204 billion drams or 10.3% more than the adjusted expenditure budget for 2021 year, or about 340 billion drams more than the target for 2021.
Of these, 1 trillion 843 billion drams, or 81 billion drams (4.6%) more than the target for the current year, will be directed to cover current expenses. Thus, as the head of the Ministry of Finance pointed out, current expenses will not exceed tax revenues. At the same time, as Khachatryan assured, the borrowed funds will be used exclusively to finance capital expenditures for development, "he assured.
According to the draft budget for 2022, the revenues of the state treasury of Armenia, compared with the approved state budget for 2021, will increase by about 289 billion drams, or 17.5% - 1 trillion 946.2 billion drams. It is planned to significantly increase tax revenues. In 2022, they are projected at the level of 1 trillion 843.8 billion drams (up to 23.4% of GDP), which is 263 billion drams or 16.5% more than the indicator approved by the revised budget plan for 2021 (1 trillion 581.0 billion drams, 22.5% of GDP). The minister recalled that tax revenues (tax collections and state duties) in 2021 were fixed at 1 trillion 440 billion 136 million 839.5 thousand drams. Thus, tax revenues in 2022 are expected to be 0.9 percentage points higher than the 2021 level. Moreover, tax revenues in 2022 will exceed the level of the pre-crisis tax revenues in 2019 by 380 billion drams (about $ 770 million, the estimated exchange rate of the Armenian dram to the US dollar is 493.6 AMD /$ 1.). Thus, 94.7% of all state budget revenues will be provided by tax revenues, 1.8% by official grants and 3.2% by other revenues. Official grants, which Armenia is applying for next year, will amount to about 40.3 billion drams, or approximately 81.6 million US dollars, against 24.3 billion drams provided by the state budget for the current year and actual 12.4 billion drams last year. The size of the state budget deficit will be reduced to 243 billion drams or 3.1% of GDP from 4.7% of GDP expected by the end of 2021.
At the same time, the financial authorities assure that in 2022 there will be a return to the logic of the "golden rule" of public finance established by fiscal rules, which will create a solid foundation for long- term high economic growth, ensure a stable decrease in the debt-to-GDP ratio and improve the spending structure. "Due to an increase in tax revenues, a return to the rules for managing expenditures and a safe level of deficit, which should not exceed 3.1% of GDP, significant fiscal consolidation will be carried out in 2022 and the issues of government debt management will be significantly improved," said Tigran Khachatryan. In particular, according to the head of the Ministry of Finance, during 2022 the government debt in relation to GDP will decrease by 0.6 percentage points - from 60.8% at the end of 2021 (63.5% of GDP in 2020) to 60. 2% projected by December 31, 2022. The debt structure will be significantly improved, with an increase in the share of monetary indebtedness and reduced foreign exchange risks. In particular, in 2021- 2022, it is planned to increase the share of government treasury bonds in drams in the structure of government debt, which, according to forecasts, will be 2.9% and 2.6%, respectively. At the end of 2022, the share of domestic debt will increase by 2.4% to 30.7%. In parallel, as the head of the Ministry of Finance assured, work will continue to improve the efficiency of expenditures.
