Armenian parliament committee approves 40 billion dram rise in military spending
05.10.2020,
18:19
The Armenian parliament committee on financial and budgetary issues approved today a set of amendments to the state budget, prompted by the martial law declared late last month.
YEREVAN, October 5. /ARKA/. The Armenian parliament committee on financial and budgetary issues approved today a set of amendments to the state budget, prompted by the martial law declared late last month.
The government-designed bill says in connection with hostilities in the zone of the Karabakh conflict, current expenditures are expected to increase in the amount of about 40 billion drams (over $82.7 million). The 2020 defense budget of the country is 307 billion drams (about 627 million).
A draft government decision says the hostilities in the Karabakh conflict zone and the martial law, declared in Armenia along with full mobilization, will have a negative impact on the economic activity.
The government expects, in particular, a temporary decrease in employment, a drop in the private sector's demand, as well as an increase in uncertainty and risks. As a result, the economy is expected to decline by 6.8% instead of the 2% reduction, budgeted in April.
It is also expected that nominal GDP will fall to 6.170 trillion drams from t the previously projected 6.485 trillion drams. It is emphasized that in the context of an economic downturn, tax revenues will decline faster than GDP contraction, therefore, the tax-to-GDP ratio will decline by about 0.3%.
“In the context of decreasing nominal GDP, as well as the ratio of taxes to GDP, tax revenues are also expected to decrease by about 35 billion drams. In connection with the hostilities, current expenditures are expected to rise by about 40 billion drams,” according to the government draft decision.
The Central Bank of Armenia previously revised its GDP forecast for 2020 downward to 6.2%, instead of the previously predicted 4%.
On April 29, the National Assembly of Armenia approved a revision of 2020 budget indicators, prompted by the spread of COVID-19. The budget forecast for GDP was reduced to a decline of 2%, down from the originally projected growth of 4.9%. The budget deficit was increased to 340 billion drams, or 5% of GDP, up from previous projection of 2.3%. ($ 1 - 488.59 drams). --0--
The government-designed bill says in connection with hostilities in the zone of the Karabakh conflict, current expenditures are expected to increase in the amount of about 40 billion drams (over $82.7 million). The 2020 defense budget of the country is 307 billion drams (about 627 million).
A draft government decision says the hostilities in the Karabakh conflict zone and the martial law, declared in Armenia along with full mobilization, will have a negative impact on the economic activity.
The government expects, in particular, a temporary decrease in employment, a drop in the private sector's demand, as well as an increase in uncertainty and risks. As a result, the economy is expected to decline by 6.8% instead of the 2% reduction, budgeted in April.
It is also expected that nominal GDP will fall to 6.170 trillion drams from t the previously projected 6.485 trillion drams. It is emphasized that in the context of an economic downturn, tax revenues will decline faster than GDP contraction, therefore, the tax-to-GDP ratio will decline by about 0.3%.
“In the context of decreasing nominal GDP, as well as the ratio of taxes to GDP, tax revenues are also expected to decrease by about 35 billion drams. In connection with the hostilities, current expenditures are expected to rise by about 40 billion drams,” according to the government draft decision.
The Central Bank of Armenia previously revised its GDP forecast for 2020 downward to 6.2%, instead of the previously predicted 4%.
On April 29, the National Assembly of Armenia approved a revision of 2020 budget indicators, prompted by the spread of COVID-19. The budget forecast for GDP was reduced to a decline of 2%, down from the originally projected growth of 4.9%. The budget deficit was increased to 340 billion drams, or 5% of GDP, up from previous projection of 2.3%. ($ 1 - 488.59 drams). --0--
