ArmInfo. If the trends of the first half of the year regarding the non- fulfillment of budget expenditure and revenue items continue, the execution of the 2024 state budget will be at risk, and it is possible that this will lead to budget sequestration.
This is the opinion of the experts of the Luys Foundation, who analyzed the trends of the Armenian economy for this year. In particular, as noted in the Fund's message, in 2024, due to the natural favorable factors that appeared in the RA economy as a result of the Russian-Ukrainian conflict, the economic activity indicator was recorded at 10.4%.
, - the experts of the Fund noted.
In particular, statistical data indicate that the influence of the above-mentioned favorable factors is gradually weakening. It is no coincidence that since April there has been a sharp slowdown in the growth of the manufacturing industry (the of high economic activity in the first half of the year in the jewelry industry), as a result of which in the second quarter of 2024, cumulative growth in the manufacturing industry was recorded monthly, which is significantly lower than the previous month.
Moreover, along with this growth, a number of key sub-sectors for the RA economy (for example, the production of food, clothing, chemicals and chemical products, etc.) have been recording a decline for several months. In other words, the growth of jewelry production (although significantly slowed down compared to the previous month, but still relatively high) was able to the impact of this decline, the trends of deterioration in the structure of the industry.
In general, the of the RA economy, which began at the beginning of the Russian-Ukrainian conflict, under the influence of exogenous factors, has received a new impetus in recent months due to the developments in the jewelry sub-sector. However, it is already clear that if the neutralization of the aforementioned exogenous factors continues, the economy will face serious problems. The experts of the Foundation also touched upon the problems with the collection of tax revenues of the state treasury.
Thus, in the first half of 2024, the growth rate of budget revenues is more than three times less than the same period of the previous year, which is due to a more than fourfold slowdown in the growth of taxes and state duties. The total revenues of the RA state budget for the first half of 2024 amounted to 1 billion 243.7 billion drams and fell short of the revised estimate by 8%. Tax revenues of the state budget and state duties for the reporting period amounted to 1 billion 187.6 billion drams (117.4 billion drams less than planned - ed.), and compared to the revised plan were underfulfilled by 9%.
The total expenditure of the RA state budget in the first half of 2024 amounted to 1,232.7 billion drams, or 12.5% less than the revised plan. Both current and capital expenditures were lower than expected.
Underfulfillment was recorded in the framework of the programs implemented by all responsible bodies mentioned in the report. In percentage terms, the most significant underfulfillment is in the programs under the jurisdiction of the Ministry of High-Tech Industry, the Statistical Committee, the Foreign Intelligence Service and the Ministry of Economy. As a result, in the first half of the year, the RA state budget was executed with a surplus of 11 billion drams, while it was planned to have a deficit of 56.4 billion drams. In other words, the budget execution deviated from the plan by about 67.4 billion drams.
from reality. And this proves that the government has still not managed to solve the problem of insufficient budget planning skills. Instead, the report provides various excuses for all the shortcomings in program implementation: lack of personnel, bad weather conditions, problems related to the procurement process, procedural problems with donors, etc. From studying the expenditures according to the program classification of the budget, it becomes clear that the current government has either not implemented a number of programs that are vital for the Republic of Armenia, or their effectiveness is very low. Such programs include, for example, , which was not implemented at all, and , which was implemented at only 0.6%>, the authors of the study noted.
The Fund believes that if the trends of the first half of the year on non-fulfillment of budget expenditure and revenue items continue, the execution of the 2024 state budget will be under threat, and it is possible that this will lead to budget sequestration. Moreover, the growth rate of tax revenues, which is two times lower than the aggregate indicator of economic activity, perhaps indicate the most serious problems in the RA economy. Meanwhile, experts are sure that in addition to the fact that tax administration is "limping", the problem of ensuring the possibility of effective implementation of key economic programs remains unresolved in the public administration system in the relevant bodies.
