S&P expects Armenia's budget deficit to be 2.8% of GDP in 2023

YEREVAN, August 28. /ARKA/. S&P Global Ratings expects Armenia's budget deficit to be 2.8% of GDP, significantly smaller that projected given strong growth this year.

It recalls that the government targets a budget deficit of 3.1% of GDP in 2023, widening from an estimated 2.4% in 2022. The 2023 budget target encompasses an economic growth forecast of 7% in real terms.

‘Beyond 2023, we expect gradual consolidation on the back of the government's efforts to improve revenue collection and increase compliance with fiscal rules, resulting in average annual general government deficits of 2%-3% of GDP through 2026. We expect the three-year stand-by arrangement (SBA) program with the IMF will underpin the fiscal path,’ the rating agency said.

In December 2022, the Executive Board of the International Monetary Fund (IMF) approved a 36-month Stand-By Arrangement (SBA) for Armenia amounting to SDR 128.80 million (about US$171.1 million or about 100 percent of Armenia’s quota in the IMF).

The Armenian authorities indicated that they will treat the arrangement as precautionary. The SBA will serve as insurance in case shocks generate balance of payments needs and will support the authorities’ reform efforts. -0-