Prime Minister Karen Karapetyan made a statement during the presentation of the draft law “On the 2017 State Budget of Armenia” at the joint session of standing committees of the National Assembly of the Republic of Armenia.
The Prime Minister stated in part:
“Honorable Speaker of the National Assembly,
Dear Members of Parliament,
Dear Government Members and Guests,
Today, we are initiating the 2017 State budget bill debate. I think the discussion will result in a targeted and optimal use of budget resources for the coming year. The Finance Minister and the heads of government departments will outline the details of each component. However, I would like to mention several important facts.
Over the past two years, it has been characteristic for the Armenian economy to be affected by negative external shocks, conditioned both by the economic decline in Russia and the drastic fall in copper prices on the global markets.
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To ensure economic growth and sustainability in these circumstances, the tax and budget policy was anti-cyclic, which led to unavoidable increase of the public debt.
In 2017, the Government will implement all necessary measures to provide for macroeconomic sustainability as a precondition of growth, but whereas we are facing restrictions imposed by the RA law On State Debt, the 2017 budget will feature the approach of stabilizing the indebtedness through decreased deficit.
It is to be noted that the budget bill projections were meant to avoid suffocating the economy, but at the same time, to increase the taxes / GDP ratio.
The level of tax receipts was estimated based on approaches compliant with economic realities and restrained expenditure.
The Government has set the target of about 3.2% for GDP increase in 2017. Taking into account the current economic environment and the expected economic passivity in the election year, we will have to make significant efforts to reach the above indicator.
Nevertheless, we assure you that we will do everything possible to achieve the proposed target. The fiscal policy should be transparent and understandable to every taxpayer and society.
Our attitude is clear: the budget payments made by taxpayers must be applied as optimally and purposefully as possible, and the results must be visible for the public.”
The Head of Government gave a brief outline of how the 2017 budget was developed, noting that the 2017 budget bill was formulated based on the 2016 baseline indicators, including the level of deficit, the prescribed deficit ratio limitation for the following year, as well as the estimate of tax/GDP ratio and the eventual growth of income.
The Premier said there are some restrictions based on macroeconomic indicators. In view of the above, a possibly stricter policy has been adopted to prevent the rise in deficit more than dictated by the restrictions.
According to Karen Karapetyan, account was taken of the imperative that business should not be repressed and could reproduce. The goal is to build up a normal platform for achieving a more buoyant economic situation in 2017.