Surprises of Armenian budget-2018
Armenia's parliament is discussing the draft state budget for 2018. The project contains both positive and negative moments for the country. Expenditures and revenues for 2018: 1 trillion 307 billion drams (1 dollar = 484 drams) in revenues, 1 trillion 464 billion drams in expenditures, the projected deficit is about 157 billion drams. The government promises to achieve a 4.5% GDP growth. International economic institutions forecast a similar target.
According to some experts, the optimistic forecasts are based on positive economic dynamics, which include export growth, production growth in a number of industries, as well as an improvement of tax collection. According to official data, a 6% economic growth was registered in the first 6 months of this year, that benefit from the industry and services sectors related to tourism. A 50% increase in world copper prices also had a positive impact on the Armenian economy - copper concentrate remains Armenia's main export product for Europe.
Another important factor was the improvement of the economic situation in Russia, to which Armenia's economy is closely linked. Almost 10% increase in private transfers compared to last year is one of its important indicators. "The proposed fiscal policy will create prerequisites for a 5% economic growth, which will allow us to solve our tasks both in terms of sustainable long-term development and in the social sphere more effectively," Prime Minister Karen Karapetyan said.
Meanwhile, the draft provides for a reduction in public sector financing by 5,600 staff positions. It is about the state medical and educational institutions. The budget does not provide for an increase in pensions, benefits and minimum wages. The total wage bill will be reduced by 3 billion drams. It was social issues in the draft budget that became the target of sharp criticism by the opposition.
According to Naira Zohrabyan, a deputy from the Tsarukyan alliance, the fact that the draft budget does not provide for raising pensions, benefits and minimum wages is absolutely unacceptable in the conditions of the current inflation.
Another opposition MP Manet Tandilyan from the Yelk bloc described the draft as anti-social, saying that the document will help increase the number of poor people. Today, the 29% of the country's population live below the national poverty line, while in 2007 this figure was 12%.
According to the Minister of Finance Vardan Aramyan, despite the criticism of the opposition, social problems remain relevant, but they require different approaches. The minister explained that, according to the government's approach, it is necessary to ensure economic growth, otherwise social problems will not be solved: "We cannot promise you to increase salaries and pensions, and then, in the absence of economic growth and tax revenues, say that we cannot pay you these salaries and pensions." The current government, unlike the previous ones, opposes an increase in current expenditures at the expense of debts, in particular, through the attraction of new foreign loans. Despite the difficult situation surrounding the draft budget, simple arithmetic indicates that the government will be able to enlist the support of deputies. The next year will tell how the government's approaches will affect the social situation.