Armenia`s state budget deficit to be reduced to 1% by 2030, down  from current 5.5%: Vahe Hovhannisyan

ArmInfo. In the long term, Armenia intends to pursue a path of spending containment and reduce the budget deficit to 1%, as stated by Finance Minister Vahe Hovhannisyan  on September 24 during  a panel discussion  "Armenia's  New Reality as an Economic Shock."

According to Hovhannisyan, the  Medium-Term Expenditure Framework for 2026-2028 (MTEF) aims to ensure  fiscal sustainability by reducing the budget deficit, gradually  bringing it to 2.8% of GDP from 5.5% of GDP in 2025 (4.5% in 2026,  3.5% in 2027, 2.8% in 2028, 1.8% in 2029, and 1% in 2030).

"The goal is to create additional buffers to avoid debt pressure in  the event of shocks, as we live in a world with high interest rates  on debt," he said.

To ensure the long-term implementation of this policy, Armenia must  curb spending by increasing its efficiency. This will enable the  country  to maintain its debt at manageable levels and, if necessary,  withstand volatility without experiencing unnecessary shocks, the  Finance Minister emphasized. To achieve this, according to the MTEF,  it will be necessary to reduce the share of budget expenditures in  GDP by approximately 1 percentage point annually. Current  expenditures will decline in line with the fiscal consolidation  objective, while capital expenditures will be maintained at a level  significantly higher than historical norms, thereby contributing to  the strengthening of economic and infrastructure security. The share  of capital expenditures in GDP will stabilize at an average of 5.9%  of GDP until 2028, while current expenditures will gradually decline  from 24.3% in 2026 to 22.7% of GDP in 2028.