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At the joint sitting of the RA NA Standing Committees on Economic Affairs and Financial-Credit and Budgetary Affairs chaired by Babken Tunyan and Gevorg Papoyan, the debates on the execution of the state budget 2022 continued.

Presenting the information of the Ministry of Economy regarding the implementation of the budget, the RA Minister of Finance Vahe Hovhannisyan noted that the Ministry has 13 programmes and 58 measures approved by the law, but 12 programmes and 63 measures were actually implemented. The annual budget of the Ministry was set at 42.2 billion drams, but actually 53 billion drams were spent. During the year, the specified plan was 55.7 billion drams. Performance against the revised plan was 95%. “If we compare with 2020, the budget of the Ministry of Economy has increased by 22.5%,” the Minister noted.

During the Q&A session, the Chair of the NA Standing Committee on Financial-Credit and Budgetary Affairs Gevorg Papoyan tried to understand the reason for correcting the budget of the Ministry of Economy and allocating additional money.

According to the Minister, there are two main reasons: often the subsidy programmes implemented by the Ministry have a greater demand than planned, and at the end of the year there is a demand for additional money. Next, issues of supporting this or that branch of the economy arise during the year, and part of these increases is conditioned by this.

“If we collect more money from the economy and on the other hand we don’t spend that money, do you think it is appropriate and right to collect more taxes in this context, and does it help or harm the economy?” the Deputy Chair of the Standing Committee on Economic Affairs Babken Tunyan asked.

Emphasizing the question, the Minister noted that the answer in this matter is equivocal. “Last year, our policy had a restraining impact on the economy, that is, the budget impulse was 2.1, and we had a restraining impact on that point. One may ask, is this good or bad? I think if we look at it in the context of last year, it’s good, because if we didn’t have that restraining impact, we would have had higher inflation. Other questions arise here: are we taxing the right sectors that are overheated? Here the answer is unequivocal,” the Minister of Finance said. In this context, Vahe Hovhannisyan highlighted making the tax system more flexible.

Touching upon the performance of the first three months of this year, the Minister underlined that there is a performance problem, which, however, is not only a performance problem, but is partly caused by quarterly planning problems. The Minister also spoke about the steps taken in terms of capital investments and the steps planned in the near future regarding the development of human potential and abilities.

The deputy Artur Khachatryan opined that a fundamental question is being debated: if taxes are collected, why are they not spent? The deputy underscored that there is a significant liquidity problem.

“Last year, the real growth of Armenia’s GDP was 12.6%, which according to the International Monetary Fund is the fourth highest index in the world. In the first quarter of this year, the rate of growth is maintained, amounting to 12.2%,” the RA Minister of Economy Vahan Kerobyan said during the joint sitting of the NA Standing Committees on Economic Affairs and Financial-Credit and Budgetary Affairs on May 30, presenting the performance of the sector last year.

Regarding investments, the Minister said that last year, according to interim data, we had a total accumulation of 1 trillion 845 billion drams, and the volume of foreign direct investments for the first time in the history of Armenia amounted to about 1 billion dollars, which is 5/13% of the GDP.

According to the Minister, instead of the previously planned 42 billion drams, the performance in the sector amounted to 53 billion 116 million drams.

In the financial year, the Ministry did not implement 2 projects, for which the funds were redistributed.

Vahan Kerobyan informed that about 1 million 660 thousand tourists arrived in Armenia last year, considerable investments were made in infrastructures.

The Deputy Chair of the NA Standing Committee on Economic Affairs Babken Tunyan inquired from the Minister if there is such a case when the realistic and prospective plan is not implemented due to lack of finances. The deputy noted that sometimes such complaints are made by the departments during budget debates.

The Minister added that the Ministry prepares the projects, substantiates them, and when the Government approves it, they find out the possible sources of financing with their partners. According to the Minister, it could be in the current or the next budget year.