In particular, the government believes the budget provides for ‘manageable’ risks, ensures stability and seeks to stimulate export.
Speaking in parliament, Prime Minister Tigran Sargsian described the budget as having “a clear social orientation”, since it “increases social spending to unprecedented amounts” for social welfare, health and education.
The budget unveiled by the government late last month calls for a nearly seven percent increase in its expenditures.
The draft commits the government to spending a total of 998.4 billion drams ($2.8 billion drams), up from 935.5 billion drams projected for this year.
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 seven percent in the first eight months of this year amid renewed economic growth.
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 (GDP).
The budgetary targets are based on the assumption that the Armenian economy will grow by 4.6 percent in 2011 – a growth also forecast for Armenia by the International Monetary Fund.
“We are reaching a one-trillion-[dram] level and in this sense the budget constitutes an essential grow from what it is this year by a total of about 63 billion drams (about $175 million) in the spending pattern,” said Finance Minister Tigran Davtian.
Premier Sargsian, meanwhile, said the measures the government plans to implement in 2011 will result in the stimulation of exports.
“For the first time we will present our logic of an industrial policy that will be aimed at stimulating export and will target specific projects in this sphere that contain export encouragement mechanisms,” said Sargsian.
But opposition Armenian Revolutionary Federation (Dashnaktsutyun) faction member Artsvik Minasian said he remained unimpressed by the government plans.
He said the government lacks a “serious program” to ensure Armenia is able to meet its economic challenges.
“The current policies that the government has announced and is trying to realize in connection with softening tax administration and its risk-based tax collection policy not only have failed to be implemented, but also have resulted in a stricter tax administration not based on law but rather on the engagement of the clan-based system,” said Minasian. “As a result, now we have a large number of closed small and medium-sized enterprises, a considerable loss of employment and emigration is looming large.”