ArmInfo. The underperformance of budget programs is alarming, as signaled by experts of the Luys Foundation, who have analyzed the report on the execution of the state budget of the Republic of Armenia for the first half of 2025. Specifically, the execution of such a key program as the , which is implemented under the auspices of the Ministry of High-Tech Industry, is less than 5%.
Close, but no cigar
The Foundation 's experts note that after a significant slowdown at the beginning of the year, the economic activity in the Republic of Armenia began to accelerate again in March, which can be attributed to the softening of the rate of decline in the industry due to the base effect, as well as to the growth of such industries as services and construction. The industrial sector's contribution to the growth of economic activity is negative - -2.1 percentage points. Compared to the previous year, the industrial sector saw a significant decrease in production volumes - 12.1%. The decline in industry, according to economists, is mainly due to the decrease in the manufacturing industry, which, in turn, is mainly due to the neutralization of the re-export factor of precious metals. , - the document says. The neutralization of the gold re-export factor is not the only reason for the decline in the manufacturing industry, the Luys Foundation notes. A significant decline was also recorded in such important sub-sectors as , and . In the first half of 2025, export and import indicators are in a deep decline. Thus, exports decreased year-on-year (Q2 2025 to Q2 2024) by 32.3%, and imports - by 25.9%, while a year ago there was a high growth of both exports and imports by 2.3-2.4 times.
State Treasury Revenues
In the first half of 2025, Armenia's state budget's actual revenues amounted to 1433.1 billion drams. At the same time, official grants recorded a 29.4% decrease in the revised plan. According to experts, the reason for the underperformance is again the low efficiency of targeted grant programs. In the first half of 2025, other budget revenues significantly exceeded the planned indicators for the first half of the year and the indicators from the same period of the previous year, which is due to a significant increase in revenues from several types of revenues, which has raised some concerns. Specifically, the growth in interest payments from the placement of temporarily free budget funds and deposits in banks and other financial and credit institutions was mainly due to the fact that additional free funds were accumulated instead of being spent on expenses. As for revenues from fines for offenses, they are constantly growing, although the current authorities have repeatedly stated that . As a result, the fiscal policy actually held back economic development. Meanwhile, according to the state budget's message for 2025, the fiscal policy will have a neutral impact on the economy in 2025-2026.
State budget expenditures are not fully met
In the first half of 2025, the actual volume of total expenditures in the state budget of the Republic of Armenia amounted to 1,472.3 billion drams, which is 14.8% (255 billion drams) less than the revised plan. Both current and capital expenditures were not fully met. The underfulfillment of programs under the jurisdiction of some responsible bodies is quite significant. For example, in the case of the Ministry of High-Tech Industry, the underfulfillment of expenditures is 72.8%. The Urban Development Committee is at - 58.7%, the Ministry of Environmental Protection - 34.3%, the Foreign Intelligence Service - 32.4%, the Ministry of Territorial Administration and Infrastructure - 22.8%, the Ministry of Economy - 22.3%, the Ministry of Education, Science and Technology - 20.9%. The overall picture of program execution is alarming, with a number of key programs failing to reach even half of their planned targets. Moreover, many of them have demonstrated extremely low efficiency over several reporting periods. For example, the implementation of such a key program as the , implemented under the auspices of the Ministry of High- Tech Industry, is only 4.7%. The program from the same ministry also stands out with extremely low indicators - 7.4%. The implementation of the implemented by the Ministry of Economy is also alarming: 12.6%. These facts indicate an insufficient level of management by the current government.
Deficit lower than planned
In the first half of 2025, the state budget of the Republic of Armenia had a deficit of 39.2 billion drams, which is approximately 8.3 times less than the deficit planned in the revised plan. This means that the budget execution deviated significantly (by approximately 286.1 billion drams) from the initial plan. The deficit being lower than planned is mainly due to the higher than expected revenues and lower than expected expenditures, resulting in an increase in available budget funds in internal funding sources. Economists also point out that the approved budget deficit indicator was revised from 315.9 billion drams to 325.3 billion drams, while the actual deficit turned out to be significantly lower than the approved indicator. This underscores ongoing concerns about the government's challenges in budget planning.
