Government Proposes State Budget for 2004

(–The draft budget for 2004 shows that Armenia’s government expects to spend 15 per cent more than it earns in tax revenues next year.

The National Assembly began consideration of the budget proposals this week–which Minister of Finances and Economy Vardan Khachatryan–said would place less reliance on external financing than in previous years as a result of domestic economic growth.

Khachatryan said the draft budget would not include gran’s provided by the World Bank for structural improvemen’s–nor funding provided by American-Armenian philanthropist Kirk Kerkorian’s Lincy Foundation–as well as donations from the Dutch government.

"Compared to 2003–external transfers will reduce by 53 billion drams (about $94 million). But economic growth compared with last year has increased by 13 per cent," the minister said. He added that tax collection had improved greatly.

State income next year is forecast to be 269.1 billion drams (about $476 million)–with expenditure estimated at 311.5 billion drams (about $551 million). The deficit of 42 billion drams is expected to be covered by special purpose external gran’s.

In particular–a $14 million loan will be given to Armenia by the International Monetary Fund (IMF)–which was confirmed this week by the executive council of the fund.

More than 95 per cent of income is achieved through taxes–and the budget plans include an expectation that an extra 8 billion drams (about $14 million) will be collected from the shadow economy next year. Failure to achieve this target will add to the deficit.

Khachatryan outlined wide-ranging plans to increase spending on public services–saying there would be "progress in all fields." The education sphere is expected to be allotted 39,282,000 drams (about $69,525,000)–which is 23 percent more than in 2003. Salaries for teachers will double from 15,000 drams (about $26) to 30,500 drams (about $53).

Medical workers will get a pay raise of 3,500 drams (about $6)–making the average about 33,000 drams. The legal minimum wage will increase by 160 per cent–from 5,000 to 13,000 drams (about $23).

Spending on defense is set to increase by 12 per cent to 49.5 billion drams ($84 million)–and allocations for the police will increase by about 600 million drams.

Spending on areas of culture–information–and sports is planned to rise by about 9 per cent to 7.479 billion drams (about $13.2 million). There will be 1.186 billion drams (about $2 million) to support cultural activities–including theater and concert performances.


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