Government ‘Still Hopes’ to Avoid Spending Cuts

YEREVAN (RFE/RL)–The Armenian government still hopes to avoid cutting its planned record-high expenditures this year despite the worsening economic situation, Prime Minister Tigran Sargsyan said on Wednesday.

Armenia’s 2009 state budget envisages a 15 percent rise in government expenditures projected to total 945.5 billion drams ($2.6 billion). The budget was drawn up last fall on the assumption that the Armenian economy will grow by 9 percent.

The economy is now widely expected to contract in 2009. The country’s Gross Domestic Product already fell by 0.7 percent in January. The government also reported a nearly 13 percent drop in its budgetary revenues, raising more questions about its ability to meet its budgetary targets.

Sargsyan said that it is still “premature” to speak of their downward revision as a forgone conclusion. He said the government plans no cuts in its current expenditures and has so far only delayed planned first-quarter spending on capital projects.

“The government has stated that legislation gives the government certain flexibility,” he told reporters. “We are now making use of that right. We are carrying out a re-distribution of quarterly expenditures.”

Still, Sargsyan did not rule out the possibility of a budget sequestration later this year. “Depending on how events will unfold, what economic indicators we will have, we will make decisions later on,” he said.

The prime minister spoke after holding separate meetings with the parliamentary factions of three parties represented in his coalition government. “Today’s meetings were devoted to the current socioeconomic situation, the resulting problems and how we are going to overcome negative effects of the global financial-economic crisis,” he said.

Ara Nranian, a parliament deputy from the Armenian Revolutionary Federation, said he and his colleagues were “shocked” by what they heard from Sargsyan. Nranian declined to elaborate.

According to the premier, the ARF lawmakers disagreed with his views on Turkish investmen’s in the Armenian economy. “There are different approaches to how the state should deal with this delicate issue. Our views do not coincide there in the sense that I believe we must remain loyal to liberal principles and create favorable conditions for all kinds of investmen’s without restrictions,” he said without going into details.

At issue was apparently Sargsyan’s recent public offer to Turkey to participate in the planned construction of a new nuclear plant in Armenia that would replace the aging Soviet-era facility at Metsamor. The ARF is strongly opposed to any Turkish involvement in the ambitious project.

“We are surprised, and we don’t understand the reasons for taking up this initiative. It is also unclear how the Prime Minister sees the implementation of this project. It corresponds neither to our economic benefits, nor to our political interests, to say nothing of the fact that it can harm our deman’s on the issue of the Armenian Genocide recognition,” Nranian said at a press conference on March 3.

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