Armenian Government Works on Two year Budget

YEREVAN (Armenpress-RFE/RL)–In formulating its 2004-2006 budget–the Armenian government adopted a series of programs–including a drastic poverty reduction plan that includes socio-economic reforms. In the proposed budget–teachers’ salaries–for example–will increase to 30,000 dram (approx. US$51) in 2004–and to 60,000 by 2006. To make healthcare more readily accessible to Armenia’s citizens–reforms were made to the February 2003 decision on government-sponsored health care assistance.

The government also announced changes in its plans to introduce mandatory social security accounts for Armenia’s citizens. The scheme–approved by parliament last year–would give each Armenian national a lifetime "individual code" to contain information about their incomes and social security contributions. Government officials say the program is essential for combating tax evasion and also serves as the first step of a much-needed overhaul of the pension system.

According to Social Security Minister Aghvan Vartanian–the changes amount to switching from "individual codes" to "social security cards."The numbers will be given to the cards–not the individuals," he explained. "The number of a card will be unique and unchangeable." The change was made to appease church officials who denounced assigning numbers to human beings–claiming it runs counter to Christian beliefs. Vartanian further explained that the government has rejected critics’ deman’s to make the social security program optional–and not mandatory–as will be the case next year. "All questions that worried our society and church have been resolved–and the system will be put in place," he said. "This is a state program–which will be mandatory starting from July 1–2004."

The government says that the new employment and income records will mark the first step in Armenia’s transition to a new pension system based on the "pay-as-you-can" principle–whereby the amount of retirement benefits depends on life-long social security contributions of employees. The existing Soviet-era pension system does not differentiate between the sizes of the contributions and is based on the so-called "solidarity of generations." With the number of pensioners approaching the number of citizens employed in non-agricultural sectors of the economy–it is increasingly difficult to sustain.

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