Armenian government does not intend to tighten its belts: programs  will be implemented by increasing public debt

ArmInfo. The Armenian government will not cut spending even in the face of turbulent global economics. Armenian Finance Minister Tigran Khachatryan stated this on March 21 at a meeting of the NA Standing Committee on Financial-Credit and  Budgetary Affairs.

"What should the state do in the tax and monetary sector in  connection with inflation? There are two choices: either we control  the environment, including economic growth factors, or we fulfill all  the expenses planned by the government program,  and the Central  Bank, as part of its quarterly policy, influences inflationary  factors through the interest rate. We made a decision: in 2022, as in  2021, the implementation of the government's spending programs will  continue in the envisaged volumes," he said.

According to him, in such a case, prices will not be restrained. "We  believe that we should not introduce additional factors that could  harm economic growth," the Minister said.

The head of the Ministry of Finance admits that the Ukrainian crisis  and the Western sanctions policy against Russia will have a negative  impact on the Armenian economy. As a result, as the minister pointed  out, it will be necessary to adjust forecasts for GDP growth and  revise expectations for tax revenues of the state treasury in the  direction of reduction. Nevertheless, the financial authorities of  the country are not going to revise the expenditure items of the  state budget. The position of the authorities is to take the path of  attracting new loans, but to implement the planned programs in full,  Khachatryan explained.

It should be noted that according to the RA law "On the State Budget  for 2020", Armenia's GDP by the end of the year will be 7% (recently,  the Central Bank and the IMF adjusted their forecast to 1.6%, Fitch  Ratings - to 1.3%, ed. note). Budget revenues in 2022 will amount to  1 trillion 947.8 billion drams (24.7% of GDP) or 17.5% (289 billion  drams) more than in 2021, expenditures - 2 trillion 184 billion drams  or 27.7% GDP (184 billion drams more than the figure adjusted for the  current year and 334 billion drams more than the approved figure for  2021), while the state budget deficit decreased by 6 billion 736.3  million drams - up to 236.2 billion drams. The lion's share of the  revenue item of the state budget - about 95% - will be provided by  tax collections (tax revenues and state duty). As a result, tax  revenues will amount to 1 trillion 844 billion, against the actual 1  trillion 586.9 billion drams or 22.7% of GDP in 2021.

According to the document, net borrowed funds will amount to 356  billion drams, of which 250 billion will be attracted through  treasury bonds, and 106 billion drams - budget assistance loans. When  approving the state budget, the financial authorities once again  assured that in 2022 there will be a return to the logic of the  "golden rule" of public finances, established by fiscal rules, which  will create a solid foundation for long-term high economic growth,  ensure a stable reduction in the debt-to-GDP ratio and improve the  spending structure. "Thanks to an increase in tax revenues, a return  to spending management rules and a safe deficit level, which should  not exceed 3.1% of GDP, significant fiscal consolidation will be  carried out in 2022 and public debt management issues will be  significantly improved," Tigran Khachatryan said. It was noted that  by December 31, 2022, the government debt will decrease by 0.6  percentage points and amount to 4 trillion 741 billion drams and  60.2% of GDP from up to $8 billion 767.9 million (4 trillion 209.8  billion drams or 60. 3% of GDP) for 2021.