Armenian Government Releases 2011 Budget; to Boost Spending 7%

YEREVAN (RFE/RL)–Armenia’s government unveiled on Thursday the state budget for next year which calls for a nearly 7 percent increase in its expenditures.

The draft, which will be sent to parliament on Friday, commits it to spending a total of 998.4 billion drams ($2.8 billion), up from 935.5 billion drams projected for this year.

“We are going to have to work hard in 2011,” Prime Minister Tigran Sargsyan said at a cabinet meeting held in the northern Armenian town of Ijevan. “A lot will depend on how we will end 2010.”

Armenian public spending had steadily and rapidly grown until last year’s global recession that hit the country’s economy hard. A resulting fall in tax revenues forced the government to cut it in 2009. Government expenditures rose by roughly 7 percent in the first eight months of this year amid renewed economic growth.

The recovery also led to a 21 percent year-on-year surge in tax revenues. Much of the gain resulted from an event sharper rise in proceeds from value-added tax.

The government plans to boost its overall budgetary revenues by 14.6 percent, to 850 billion drams, in 2011. That would translate into a budget deficit equivalent to almost 4 percent of Gross Domestic Product. Finance Minister Tigran Davtian told journalists in Ijevan that the 2010 deficit-to-GDP ratio will stand at 4.8 percent.

The budgetary targets are based on the assumption that the Armenian economy will grow by 4.6 percent in 2011. The International Monetary Fund forecast the same growth rate on Wednesday.

In a statement issued following a two-week visit to Yerevan by a high-level IMF mission, the fund also reiterated its largely positive assessment of the Armenian authorities’ economic policies. Still, it said the authorities should do more to tackle tax evasion and improve tax administration.


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