Sandoyan Discusses Budget Gap

YEREVAN (Noyan Tapan)–The budget deficit is the result of the previous government’s failure to fulfill its commitmen’s–former minister of finance and economy Edward Sandoyan said in an interview with Noyan Tapan.

Sandoyan described the absence of contacts and mutual confidence with the public as the most serious problem of the government. This is what impeded the collection of revenues and caused a considerable budget deficit.

Sandoyan said that Armenia’s energy system fails to reach the level of profitability as such large consumers as the systems of drinking water-supply and irrigation–central heating and some other enterprises (the Nairit chemical plant–Armenian Airlines Co.) have debts to it. When the 1999 state budget was approved the government planed to raise the level of revenues of paymen’s for electricity by some of these debtors (for example–to bring the interest for payment for drinking water from 15 up to 50). However–in the first half of the year this declared goal was not realized–which–according to the former minister–is explained both by the low discipline of the executive and the fact that the government had no political backing. Sandoyan hopes for the current government to be able to create an atmosphere of mutual confidence in the country.

This year the government has to repay debts amounting to some $40 million. An additional 9 billion drams of deficit formed as a result the lower-than-expected level of tax revenues. The revenue pattern of the budget is projected at 191 billion drams–the expenditure pattern at 248 billion drams.

In the given situation–according to Sandoyan–the International Monetary Fund had set a natural condition: to budget expenses to cover the debts of the mentioned services in energy. As a result–the energy sector gradually got rid of the debts and neared the level of profitability. Only further increase in electricity tariffs might be an alternative to this step.


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