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Government Approves Draft Budget For 2009

The government approved on Thursday Armenia’s draft state budget for next year that projects further sizable increases in its expenditures and tax revenues.

The bill, which could undergo minor changes before being sent to parliament next week, calls for 945.4 billion drams ($3.13 billion) in expenditures and 905.4 billion drams in revenues.

The spending target represents a 13.3 percent increase from this year’s level. By comparison, the volume of the 2008 budget is more than 40 percent higher than in 2007. The sharp rise was partly due to the fact that the government for the first time included social security taxes and subsidies to the state pension fund in the budget.

“The [2009] state budge is a combination of our desires and means,” Finance Minister Tigran Davtian said, unveiling its details after a weekly cabinet meeting. “The budget for next year envisages unprecedented spending on education, healthcare and social security.”

In order to meet the spending targets, the government needs to ensure a 20 percent rise in its tax revenues that are projected to total 725 billion drams in 2009. The cabinet of Prime Minister Tigran Sarkisian launched recently a wide-ranging plan of reforms which it says will improve tax administration and reduce the huge informal sector of the Armenian economy.

Davtian said that as part of the reforms, the government will raise the salaries of tax and customs officials by more than 40 percent. It also envisages pay rises for law-enforcement officials, schoolteachers, medics and other public sector employees, he said.

The Armenian military will apparently remain the single largest recipient of public funds in 2009, with defense spending projected to grow by almost 20 percent to 149.6 billion drams ($495 million).

Davtian added that the government expects an economic growth of at least 9.2 percent in 2009. The Armenian economy is on course to expand at a double-digit rate for the seventh consecutive year in 2008.