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.
