In Armenia, capital expenditures underfulfilled by 70% in first  quarter of 2025

ArmInfo. In the first quarter of 2025, the underfulfillment of capital expenditures in Armenia amounted to almost 70%. This is stated by the experts of the Luys Foundation, analyzing the report on the execution of the state budget of the Republic of Armenia for January-March of this year.

The experts of the Foundation draw attention to the fact that  Armenia's economic activity has sharply decreased by about 3.5 times compared to the first quarter of last year, amounting to 4.1%. The main reason for the slowdown is a significant weakening of exogenous favorable factors (complete neutralization of some exogenous positive factors) as a result of the Russian-Ukrainian armed conflict, they believe. This negative impact is most pronounced in the industrial  sector, which in the first quarter of this year sharply decreased by 18.5% compared to the same period last year. The growth rate of trade turnover has dropped sharply, reaching 6%, while in the first quarter of last year it was 26.5%.

Exports and imports have dropped sharply - by 61.8% and 47.9%, respectively. Such a sharp decline is mainly due to a significant reduction in re-export volumes.

The total revenues of the RA state budget in the first quarter of  2025 amounted to 597.4 billion drams, which is 102.1% more than the revised plan. The excess of the planned volume of revenues in the total budget revenues was achieved mainly due to other revenues. Their implementation is 149.6%. Meanwhile, a 22.9% lag was recorded for official grants. Moreover, in terms of underfulfillment of official grants, the first quarter of 2025 was no exception: they have been underfulfilled throughout the entire term of office of the current government, since the relevant bodies have consistently failed to fulfill the preconditions previously agreed upon with donors.

In the first quarter of 2025, the actual expenditures of the RA state budget amounted to 576.2 billion drams, which is 29.6% or 242.1 billion drams less than the revised plan. At the same time, 37.6% of the total amount of underfulfillment falls on current expenditures, and 62.4% on transactions with non-financial assets.

Current and capital expenditures were underfulfilled by 15.4 and 67.1 percent, respectively. This year (as in the previous year), all components of current expenditures were underfulfilled in the first quarter.

The low implementation of the planned total capital expenditures in the amount of 228.9 billion drams is largely due to the expenses carried out within the framework of the RA Defense Ensuring Program, which constitutes the bulk of capital expenditures and amounted to only 29.9% of the planned figure of 170.2 billion drams, or 50.9 billion drams.

reminds that in 2025, when presenting the budget, the  government emphasized that the allocation of large amounts of money for capital expenditures in the defense sector is its top priority. 

In the first quarter of 2025, the state budget of Armenia was  executed with a surplus of 21.2 billion drams against a planned  deficit of 233.3 billion drams and an actual deficit of 0.9 billion  drams for the same period of the previous year. The main reason for the surplus, economists note, is the low efficiency of expenditures.

"The deterioration of the macroeconomic situation in the first  quarter of this year is a consequence of shortcomings in public  administration and a decrease in the sustainability of the economy, and there is every reason to fear that the negative trends that have already emerged will worsen in the near future, jeopardizing the execution of the state budget," the Luys Foundation summarizes.