Fluctuations do not cause changes in 2025 draft budget of Armenia 

ArmInfo. On December 3, the  plenary session of the National Assembly of Armenia resumed hearings on the draft final version of the country's 2025 state budget.

According to RA Finance Minister Vahe Hovhannisyan, as a result of  active discussions, a total of 19 proposals and requests were  received from deputies, 5 of which were accepted in full or in part,  4 were given corresponding explanations, and 10 proposals were not  accepted.

Hovhannisyan noted that, taking into account the exchange rate fixed  by the regulation as of November 1 of this year, changes were made to  the revenue and expenditure parts of the country's main economic law,  as well as to the provisions on the deficit of the draft state  budget. In particular, as a result of the revised project, the  country's GDP in 2025 will amount to 10 trillion 891 billion drams,  and the economic growth rate is envisaged within 5.1%, which is lower  than the previously presented indicators by 158 billion drams and  0.5%, respectively. The Minister noted that the country's economic  growth potential next year is 5.5% and the Ministry of Finance  expects to achieve this figure.

The state treasury revenues in the next financial year will amount to  2 trillion 837 billion drams, which is 35.5 billion drams less than  the previously planned figure. The decrease is largely due to a  decrease in the projected volume of tax revenues. At the same time,  the share of taxes in the country's GDP will remain at the same level  - 25%. It is planned that tax revenues will be reduced by 39.6  billion drams.

The Minister also said that an increase in revenues by 1.6 billion  drams is expected through official grants, which is due to both an  increase in targeted grants and changes in exchange rates. In  particular, it is planned to receive an additional 1.1 billion drams  in grants, 1 billion of which will be provided to the Ministry of  Environment and 100 million drams to the Ministry of Health. It is  also envisaged to increase revenues from other sources by 2.6 billion  drams, which is associated with the revaluation of budget revenues  from certain types of taxes and changes in exchange rates.

Hovhannisyan stressed that the 2025 state budget expenditures will  amount to 3 trillion 441 billion drams, which is 40.8 billion drams  less than the preliminary version. At the same time, allocations for  current expenditures will be reduced by 42.4 billion drams, and  capital expenditures will be increased by 1.7 billion drams. The  reduction in expenditures is mainly due to the reduction in the  volume of macro reserves by 48.3 billion drams, which is necessary to  manage the risks of a possible decline in GDP. 

The Minister also noted that the Reserve Fund of the RA Government  will be increased by 3.3 billion drams. The state budget deficit in  the country's GDP will remain at the same level - 5.6%, amounting to  604 billion drams, which is 5.4 billion drams less than the  preliminary version of the draft state budget. This will lead to the  country's public debt to GDP ratio reaching 54.3% by the end of 2025,  but will remain at a manageable level and will not lead to fiscal  policy risks.

According to the preliminary version of the 2025 state budget draft,  under the conditions of ensuring GDP growth of 5.6%, 3.5% GDP  deflator and average inflation of 3.6%, the state budget revenues of  Armenia in 2025 were planned to increase by 279.5 billion drams - to  2 trillion 873.1 billion drams (about $ 7.4 billion), which is 11%  higher than the expected figure for the current year. State treasury  expenditures were planned at the level of 3 trillion 482.4 billion ($  7.8 billion) or 31.5% of GDP. The figure is 13% higher than  expectations for 2024 (30.4%), and 37% higher than actual  expenditures for 2023 (27.5%). Of the planned expenditures for next  year, 2 trillion 749.2 billion drams were planned to be allocated for  current expenditures (24.9% of GDP), 733.2 billion drams ($1.88  billion) or 6.6% of GDP - for expenses on non- financial operations  (capital investments), which is higher than the planned figure for  2024 of 695 billion drams ($1.79 billion), and expected by this  project - 639.3 billion ($1.65 billion) - 6.3% of GDP.