"Fact" daily writes:
The draft is one thing, the fact is one thing. You have to approach the budget draft from two perspectives: what is planned and what will be the fact, which is a matter of time, but today we have a certain precedent that allows us to make certain assumptions, if not 100 with percent accuracy, then at least overall characteristic.
Lilia Amirkhanyan, an expert of the "Hayatsk" analytical center, expressed a similar opinion when we asked a question about the draft state budget for 2025. "The budget is problematic both in terms of what is planned and what is expected from the precedent. Our budget is projected to be based on fairly adjusted, modest economic growth.
Moreover, not modest in terms of the potential of Armenia's economy, long-term and stable economic growth, in that case, the potential of our economy implies a growth of 4.5-5 percent, but modest, taking into account the fact of the economic growth of the last years, up to 2025 ., we have a fairly modest planned economic growth, along with it, an increase in tax revenues, expenses, and, moreover, the increase in expenses is faster than the increase in budget revenues, and this implies that it is also planned increase in deficit. Tax revenues are mainly calculated on the basis of possible tax revenues from economic activity, the real sector of the economy, i.e. what activity, what kind of collection is assumed, thereby projecting tax revenues for the next year, etc.
The problem in our case is that the planned increase in tax revenues seems to be due not to the tax revenues coming from the real sector of the economy, but to the tightening of the tax administration and to a large extent. We have increased tax rates is a separate issue. At the basis of economic growth is the creation of added value implies more tax collection.
Of course, there can be objectively the withdrawal from the shadow, the policy against the shadow, etc. But we have the precedent of tax collection in 2024, which is insufficient, according to the data of the first half of the year problem, or the problem of creating added value in the real sector of the economy. Both seem to be with us.
In this case, it is not so important which is more important. From a macroeconomic point of view, both are quite problematic," says Amirkhanyan. "The deficit implies an increase in public debt taking into account the debt interest and principal sums on the budget starting from 2024, that is, rather large sums provided for servicing the state debt Its subsequent increase (about 15 billion in 2025) further increases the budget's debt service costs, huge sums that should be allocated to healthcare, social and other expenses. Debt servicing. Coming to the debt-to-GDP ratio.
There are two important factors that have had a positive effect on this indicator. First, the growth of the gross domestic product, this is good, but the problem is that the growth of this GDP was ensured by the effects of external factors, not the increase in economic capacity factors are weakening, GDP issues will be problematic going forward, reflected in a lower economic growth figure of 5.6 percent in 2025. Second the factor that brought the debt-GDP ratio to a manageable range and a fairly good indicator was the devaluation of the dram against the foreign currency. there is also some instability here," our interlocutor notes.
The largest share in the 2025 budget is social spending. "During the presentation of the budget, the increase in social spending is mainly due to the base effect. Let's try to present a simple example of pensions, benefits, wages, that is, the basic income of the population will not increase. What happens in parallel?
The population's expenses are increasing. From 2025, we have shock price increases in several directions: an increase in the price of transport, various tax restrictions, administration, which may seem at first glance to be related to business, but with the cost of goods and inflationary manifestations, it will affect the general layers of society, incomes. Continuity of universal declaration, which from 2025 to salaried workers, i.e. to the wider public Inclusion: It is stated that this is not intended to be taxed, but it is understood that there will also be taxable amounts under it.
The fact is that the tax expenses of the population are increasing. In the case of these expenses, we have a zero increase in the basic income. Although the social expenses are in the first place, I find it difficult to call the 2025 budget much more serious in the case of low-income groups will be the problem related to poverty.
It is necessary to separate not statistical but actual poverty, including the somewhat newly formed category of the working poor, which we have had in recent years," adds the expert. He emphasizes that all this is planned for the 2025 budget in the draft, the precedent of the 2024 budget allows to create certain predispositions of what will happen economic growth was 7 percent. This economic growth was revised to 5.8 percent during the last 2-3 months of the year. both in terms of capital payments, at least during the first nine months. In other words, one thing is planned, another is its implementation. At least the recurring problems of recent years give us the right to assume that we are dealing with inefficient management".
According to the experts, in 2025, the state will carry out "tax terror" regarding the proposed changes in the Tax Code. "In my opinion, we are dealing with panic actions in recent years we were dealing with positive shocks that since the launch of our colleagues in the expert field, we were all saying, this is very good, but it has to be capitalized, otherwise there will be very bad. There are worrying developments in the real sector of our economy, although we also had a double-digit economic growth, agriculture is in decline, for at least two years we have annual summary indicators of food and export production.
We have an increase in exports, 70 percent or more of which are accounted for by the re-export factor, we have a situation where the finance minister says that if the re-export factor is removed, the export of goods of domestic origin is negative. If the export is negative, we have a direct problem with production. When the economy is small and the depth is not great, it is possible to increase the scale of production only at the expense of the scale effect through
We are a small country, our consumers are small, so we need to have export markets like air and water to produce more are also profound, they come after the processes and developments of at least 2-3 years ago, let's remember the price increases of public services. When we have such developments in the real sector of the economy, and external factors are also canceled, a situation is created when the budget panic actions in the form of tax administration, and unpopular actions at that, are being carried out for organization.
This government is known for making such statements and actions that even if they are harmful, but at that moment they are popular and pleasing to the public, they implement them Lilia Amirkhanyan concludes.
Lusine Arakelyan
