Armenia`s authorities incapable of solving budget planning problems -  Luys Foundation

ArmInfo.  The 2024 budget of Armenia was underfulfilled. This is stated in a study conducted by the Luys Foundation.

In particular, as noted in the study, the actual revenues of the city  budget amounted to 116.7 billion drams, which is only 1.6% more than  the previous year, but still 6.4% less than the approved budget  figure. And this is despite a number of legislative acts aimed at  increasing tax deductions, which received a sharply negative reaction  from the public. In particular, compared to previous years, the rates  of local fees (for example, fees for various permits) and local  payments (for example, fees for parking cars) have increased sharply.  Nevertheless, the budget of the capital of Armenia was  underfulfilled.

Moreover, as the fund's experts note, the growth of budget revenues  compared to the previous year occurred only due to an increase in  "taxes and fees", while the other two components of total revenues -  "official grants" and "other revenues" - significantly decreased,  which offset the growth of total budget revenues.

The largest share is occupied by local taxes and fees, which  increased by 4.1 times compared to the previous year. The second  largest share is occupied by property taxes, which significantly  increased by 39.3% in the reporting year. The increase is due to an  increase in the property tax base by 42.9% compared to 2023 as part  of the transition to a new tax system from 2024. The growth of local  fees by 79.1% was due to a significant increase in parking fees.

It is noteworthy that the revenues from these three types of income  for the above reasons increased by 19.7 billion drams compared to the  previous year, while the total volume of own revenues increased by  only 8.3 billion drams.

Moreover, the fund's experts state that budget expenditures were also  underfulfilled. Thus, Yerevan budget expenditures were to amount to  113.7 billion drams, which is 2.3% more than the previous year's  figure, but 5.5% less than the revised plan and 9.0% less than the  approved budget figure. Both current and capital expenditures were  underfunded.

At the same time, expenditures on remuneration, cash incentives and  special payments are more than twice as high as in 2023.

According to the implemented programs, the analysis of expenditure  performance shows that some vital programs have not been completed  even half of what was planned. Such programs include expenditures  under the programs "Implementation of design work", "Reconstruction  and maintenance of bridge structures", "Maintenance and operation of  streets", "Improvement of streets, squares and parks", "City lighting  of Yerevan", "Construction of the Yerevan metro infrastructure",  "Construction and major repairs of preschool educational  institutions". Moreover, the last two of the listed have a great  public resonance. 

However, despite the fact that the current authorities of the capital  constantly declare their intention to put into operation the Ajapnyak  metro station as soon as possible as one of their main goals, the  program "Construction of the Yerevan Metro Infrastructure" does not  provide for the completion of the station by 2024. No expenses have  been made in this direction at all.

The implementation of the program "Construction and reconstruction of  preschool educational institutions" carried out with state support is  only 35.0%, although the construction and reconstruction of schools  and kindergartens is one of the priority areas defined by the current  program of activities of the RA government.

The city budget surplus amounted to 3.0 billion drams against a  deficit of 7.1 billion drams planned in the revised plan. In the  reporting year, as in 2023, the budget deficit according to the  revised plan increased sharply (more than 25 times), but in fact a  significant budget surplus was recorded. This fact, perhaps, confirms  that the city authorities are still unable to solve serious problems  of budget planning.