Sargsyan Details Plans Ahead of Budget Session

YEREVAN (RFE/RL)–The Armenian parliament’s economic committee began discussions on austerity measures proposed by the government on Wednesday–with Prime Minister Vazgen Sargsyan urging lawmakers to endorse major changes in this year’s budget to restore fiscal discipline demanded by Western lending institutions.

Sargsyan said a shortfall in budget revenues totaling 31 billion drams ($58 million) and extra government spending–needed to save the energy sector–requires tax hikes and a re-distribution of 1999 expenditures approved by the previous parliament late last year.

"We have tried to opt for the most painless solution. But obviously–it can’t be considered absolutely painless," Sargsyan said. The government says it will this year collect 13 billion drams less than was projected–which mainly results from an overestimation by the previous cabinet of money gran’s from foreign governmen’s and import duties.

Yerevan has also come under pressure from the International Monetary and Fund and World Bank to take action over growing consumer debt to the energy sector–which is in a difficult financial situation.

Sargsyan said the government will pay 17 billion drams to power stations and distributing companies to urgently compensate part of the huge debt.

Last month–the government raised excise duties on gasoline and cigarettes in a move it hopes will bring an additional 12 billion drams to the state treasury. The government also proposes other measures – including improved tax administration and cuts of "non-urgent expenditures" in the social–education and health sectors – to close the 30-billion-dram gap.

The budget crisis has caused a delay in the release of fresh loans by the IMF and World Bank.


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