With the participation of the RA Minister of Finance Vardan Aramyan, a two-day seminar for economic journalists launched in Hankavan. In the course of the seminar on “The RA State Budget for 2018”, it was touched upon the review and modernization of fiscal rules, the macroeconomic framework for the next year’s budget, as well as the developments in the outside world, the RA macroeconomic developments and forecasts, the revenue and expenditure frameworks.
According to the RA Minister of Finance Vardan Aramyan, the public debt / GDP ratio will be reduced by one percentage point in 2018. “The growth of public debt in GDP will reduce by about one percentage point. Since 2014, public debt grew in GDP by about 13 percentage points, i.e. by 5-7 percentage points each year. And this year, efforts were made to slow down growth rates, to provide growth of 3-4 percentage points instead of 7, and in 2018, according to the assessments based also on a stable exchange rate scenario, debt / GDP indicator will drop by one percentage point”, - clarified the Minister.
The economies worldwide reacted to the crisis with a promoting fiscal policy. As a result, the indicators of Government debt/GDP increased after the crisis. The RA Deputy Minister of Finance Armen Hayrapetyan noted that during the recent years, the fiscal policy has been countercyclical while before the crisis in 2009, it had been neutral or expansionary. Meanwhile, after the crisis the fiscal policy deviated from the golden rule in terms of public current expenditures and capital expenditures. According to Hayrapetyan, the golden rule defines that the capital expenditures of the state budget should exceed the state budget deficit.
State investments of Armenia are in a relatively low level. As a result, in 2016 the public debt exceeded 50 percent of the GDP. In Armenia, the current rule for debt stabilization is as follows: the Government debt should not exceed 60 percent of the GDP of the previous year. In case of exceeding its 50 percent, the deficit of the next year’s state budget should not exceed 3 percent of the average indicator of the GDP volume of the recent three years. The transaction, which does not meet the requirements of these rules and generates Government debt, is considered as invalid. According to the RA First Deputy Minister of Finance, Chief Treasurer Atom Janjughazyan, these rules are rigid and do not give enough flexibility and bigger role to the fiscal policy in terms of economy stabilization. Besides, they do not envisage exceptions such as crisis, disaster, war. In this regard, it was mentioned that in case of shocks it is not excluded that the Republic of Armenia would undertake legislative amendments.
