The state budget programme indicators of the RA 2023 first quarter were executed on incomes by 105.1%, making 1160.7 billion AMD, on expenditures by 83.4%, making 1.026.4 billion AMD. During the financial period, the complete and timely execution of the obligations assumed in the order established by the state bodies within the framework of the state budget expenditure programmes was ensured.
The RA Minister of Finance Vahe Hovhannisyan said this, submitting for debate the certificate on the procedure of the first half of the RA state budget for 2023 to the NA Standing Committee on Financial-Credit and Budgetary Affairs at September 25 sitting.
The Minister touched upon the situation in the world economy and the economy of our country, presented the achievements of the first half of 2023 and indicated the emerged problems.
According to him, in the first half of 2023, as a result of gradual restoration of the world supply chains, the restoration of the economy of China, the restrictive monetary policy being applied by the central banks of the partner countries, low economic increases were registered from the potential increases, and in the RF the economic increase entered into positive domain in recent years. The inflationary pressures weakened conditioned by the restoration of the world supply chains, as well as the tightening monetary policy, and slowing down of the inflation rates is noticed in its conditions.
It was noted that, the high rates of the economic activeness formed as a result of the influx of people to Armenia, considerable increase of tourism, the move of the information technologies (IT) sector companies to the RA, as well as the increase of the export demand to Russia from the RA continued in the first half of 2023. After all this, in January-June 11.4% economic activeness growth was registered conditioned mainly by the increase of services. In other branches of economy increase of production volumes was registered.
In the first half of 2023, in the inner high demand and external some markets in the conditions of the demand increase towards the RA goods, the foreign trade registered significant growth in the conditions of the increase of the demand towards the RA goods: the goods export increased by 72.8%, and the import - by 73%.
According to the Minister of Finance, in the first half of 2023, 12-month inflation abruptly slowed down and entered into negative domain, in June making 0.5%, but in the economy the high demand, the high rates of the salary increase and the inflation expectations are maintained. Taking as a basis the latter, the Central Bank (CB) decreased the interest rate of the policy at least by 0.25%. To his conviction, the volumes of the bank system loans and deposits. The growth of mortgage loans continued promoting the growth of loans, receiving assistance from the state programme of the income tax return.
It was also noted that compared with the same period of the previous year in the first half of 2023, as a result of overperformance and expenditure underperformance of the state budget incomes, the state budget has been extra. The influence of the tax-budgetary policy is assessed restricting in the conditions of the economic growth.
Presenting the brief indicators of the state budget execution, the Minister of Finance documented that compared with the first half of the previous year the incomes of the state budget increased by 18.1% or 177.9 billion AMS, mainly conditioned by the growth of the tax incomes.
It was noted that compared with the first half of the previous year, the expenditures increased by 12.7% or 116.0 billion AMD, by the way, the current expenditures increased by 12.1%, 98.6 billion AMD the operations with non-financial actives by 18%, 17.4 billion AMD.
According to him, during the first half of 2023, 1.103.5 billion AMD of tax revenues and state duties was transferred to the RA state budget, which exceeded the programme index by 4%. Compared to the same period of 2022, the tax revenues and state duties increased by 18.9% or 175.6 billion AMD, which is mainly conditioned by the increase in revenues from profit tax, value added tax and income tax.
About 4.1 billion AMD of official grants was received from external sources, making up 48% of the planned receipts for the first half of the year and 6.6% or 291.1 million AMD lower than the figure of the same period last year.
During the financial period, the other revenues of the RA state budget amounted to 53.1 billion AMD, exceeding the planned indicator by 53.7% and exceeding the indicator of the first half of 2022 by 5.2%.
According to the Minister, the capital expenditures in the financial period amounted to 116.9 billion AMD, or 52.6% of the specified plan, and by 16.2% or 16.3 billion AMD exceeded the indicator of the same period of the previous year.
It was also mentioned that in the first half of 2023, the RA state budget was completed with a surplus of 134.3 billion AMD, compared to the planned deficit of 125.5 billion AMD and the surplus of 72.4 billion AMD in the same period last year. The budget surplus is mainly due to the overachievement of revenues and the relatively low performance of expenditures, as a result of which the free funds of the budget planned for internal sources of financing increased by 168.4 billion AMD.
Vahe Hovhannisyan also stated that as of 30 June 2023, the RA state debt amounted to 4.289.7 billion AMD (11.103.9 million USD). In the RA state debt, 2.487.2 billion AMD (6.438.1 million USD) was the external debt, 1.802.5 billion AMD (4.665.9 million USD) was the internal debt.
As of 30 June 2023, the debt of the RA Government increased by 109.5 billion AMD (472.7 million USD) compared to the end of the previous year, in particular, the external debt decreased by 43.1 billion AMD (0.9 million USD).
It was noted that in the conditions of high economic activity, the number of hired workers and salaries increased in January-June. Accordingly, the average monthly number of officially registered unemployed people decreased by 16.3% compared to the same period last year, making 46.764 people. At the same time, the number of hired workers increased by 5.7%, making 710.345 people.
According to the rapporteur, in the first quarter of 2023, the unemployment rate decreased by 1.1 percentage compared to the same quarter last year, making 13.7%, the number of unemployed decreased by 3.6%, and the number of employed increased by 5.5%. At the same time, labor supply increased by 4.2%.
Vahe Hovhannisyan also stated that in the first half of 2023, the average monthly nominal salary increased by 19.5% compared to the same period last year, making 261.376 AMD. The average monthly nominal salary in the state sector increased by 9.2%, making 192,109 AMD, and in the non-state sector, by 22.1% and made 290.141 AMD. Real salaries increased by 14.7% compared to the same period in 2022 by 4.2% inflation.
The Governor of the Central Bank Martin Galstyan noted that during the first half of 2023, the 12-month inflation rate has slowed down sharply, reaching -0.5% in June, but high demand in the economy, high rates of salary increase and inflation expectations are maintained, based on which the Central Bank considered the change in the direction of monetary policy, reducing the policy interest rate by only 0.25 percentage.
The Chairman of the State Revenue Committee (SRC) Rustam Badasyan stated that in the first half of this year, compared to the same period of 2022, the revenues of the state budget are 178 billion AMD higher, and the revenues planned for the first half of this year are 56.5 billion AMD higher.
During January-July 2023, about 210.2 billion AMD was returned to the taxpayers and physical entities, which is 81.2 billion AMD or 63% more than the indicator of the same period last year.
The RA Deputy Minister of Territorial Administration and Infrastructure Kristine Ghalechyan referred to the problems of the sector, presented the completed work and sectorial indicators, which exceed the achievements of the previous year.
The member of the RA Audit Chamber Yeghishe Soghomonyan informed that the Chamber will present the report on the implementation of the first half of the RA 2023 state budget a little later.
The rapporteurs also answered the Committee members’ questions.
The question of the Chair of the NA Standing Committee on Financial-Credit and Budgetary Affairs Gevorg Papoyan was related to the over-execution of the volumes of issuing state bonds. “To what extent is it justified?” the deputy asked.
The Minister of Finance mentioned that the problem is that in addition to the purpose of financing our deficit, the purpose of issuing bonds is to provide investors with sufficient investment toolkits. “It is important for us to preserve and deepen our investor base,” Vahe Hovhannisyan said.
Gevorg Papoyan also inquired about the low performances recorded in some budget programmes. “What is the reason that there are budget lines that have been underperforming for years? Are appropriate conclusions being made?” the Committee Chair asked.
“We regularly discuss the shortcomings and their reasons in the Government with our colleagues, and naturally they are taken into consideration in the budget planning phase, but our problem is not that we do not plan these directions because of the shortcomings, because these directions are directly related to the Government’s plan and its implementation and the promises we made. Therefore, we have to think about the mechanisms that will allow us to record the problems and find their appropriate solutions,” Vahe Hovhannisyan stated.
Gevorg Papoyan was also inquired about the problems of a number of other spheres, which were clarified by the representatives of the fields.
As a result of the debate, the issue was taken as a note.