Author: Susanna Petrosian, Yerevan, exclusive to VK
Standing Committee on Fiscal Affairs of the Armenian parliament is discussing the report on the state budget for 2011. The Government proposes to approve the revenues of the Annual Report to Parliament on the implementation of the state budget - about 880.9 billion drams, the expenses - 986.5 billion drams, and the deficit - 105.7 billion drams. ($ 1 = 405.4 AMD). In this case, according to the law "On the State Budget of Armenia for 2011", the revenues of the state budget approved in the amount of 852 billion drams, the expenses - of $ 1.001 billion drams, and the deficit is more than 148.6 billion drams.
Prime Minister Tigran Sargsyan noted during the presentation of the report that 2011 was a turning point for the Armenian economy: inflation fell from an average of 9.4% to 4.7%, economic growth accelerated and amounted to 4.6%, exceeding the 2010 growth more than twice. In his view, fiscal policy can be considered as balanced because the reduction in the budget deficit which reached 2.8% of GDP against the planned 3.9% continued. The industry grew by 13.5%, and agriculture grew by 13.7%. In addition, according to the prime minister, the government has managed to improve the collection of taxes and the ratio of taxes to GDP, creating the conditions for increasing that figure in 2012 by 0.6%.
This report did not inspire confidence in MPs, especially those of the opposition union "Armenian National Congress' (ANC). Thus, according to deputy from the ANC, the former Prime Minister Hrant Bagratyan, the real figure of the budget is less than the declared government figures: "In 2011, the implementation of the budget of Armenia was 848 billion drams instead of the planned 852 billion drams. It turns out that the budget is not fulfilled by only 4 AMD, which is not true. Actually, the amount of 27 billion drams is lacking for the implementation of last year's budget with regard to real inflation, which reached 7.7% instead of valid 5.5%".
Bagratyan accused the government of manipulating the figures and said that according to official statistics the inflation rate in 2011 was not 4.7% as stated in the report of the government but 7.7%. "High inflation is good for the implementation of the budget. Does the government know that in 2011 AMD depreciated? Does the government have calculations relating to budget overrun by increasing depreciation of AMD, that is, how much extra money did it bring in the budget?" – MP asked. But government officials did not respond to these questions.
The former Prime Minister also pointed to the extremely low level of tax revenues in Armenia compared with the budgets of neighboring countries. According to him, if the budget of Azerbaijan in 1996 was $700 million, today it is $18 billion. "Low levels of tax revenues and GDP growth are not acceptable for us; Armenia needs to dramatically improve tax collection and provide economic growth of 7.4%," – Bagratyan said. However, the Deputy Minister of Finance, the Treasurer of Armenia Atom Janjughazyan assured that last year, tax collection amounted to 100.3%, and the "shadow" declined.
Leaving aside the frustration of former Prime Minister Bagratyan and trying to track down the situation in the economy, we can really come to a strange conclusion. Thus, according to the Government, in the field of tax collection there is noticeable positive trend; moreover, the plan of tax collection is exceeded. But how, in a country where there is a constant emigration of population, even according to official statistics, may increase the collection rate? According to the columnist of "Fourth despotism" Mark Nshanyan, the largest taxpayer in the country is the company "ArmRosgazprom", and the smaller population of a country is, the more gas consumption reduces and therefore reduced, as well as the amount of taxes paid by the company. "If against the background of the population decline the amount of taxes is increasing, this means that the tax burden on everyone is increasing ", Nshanyan says.
In addition, even according to official data, inflation in 2011 outpaced the growth rate of household income which in 2011 reached 5.9%, that is, the population in 2011 were worse off than in 2010. According to expert on economic issues Vahagn Khachatryan, the figures presented by the Government are not true. But the problem is not that the Armenian economy makes no progress, but the fact that the Armenian economy is still linked to the Russian one and depends on the world price of oil and transfers coming from Russia. "We have no economy developing on its own logic. Our economy remains dominated by monopolies, oligarchs, and therefore its development depends on the willingness of those in power: they decide how much product to import, how much money the company must pay to the budget and to the "black box office." This is not my assessment, it is made by businessmen, including businessmen living in the diaspora"- Khachatryan says.
Apparently, today during the session of Parliament the Government has yet to respond to a series of not very pleasant questions. On October 1st Parliament Speaker Hovik Abrahamyan will propose to introduce the project of the annual report on the implementation of the state budget for 2011 to the agenda to continue the discussions. According to the law "On the Regulation of the National Assembly", half an hour after the debate in Parliament, the keynote speaker proposes to approve the report. With enough votes (in the case of matters relating to the budget, this is half of the total number of MPs (of 131 members in Parliament)), the proposal passes and the National Assembly approves the report. Given that the ruling Republican Party of Armenia, together with its partner in the coalition, "Rule of Law", has 75 votes out of 131, the possibility that the report will not be approved is virtually eliminated. With the current balance of power in the parliament another option is impossible. Thus, according to the law on the regulation, if the parliament does not approve the report on implementation of the budget, the question of confidence in the government will arise. But here, as in the first case, half of the votes is needed again. Otherwise (i. e. if there is not a sufficient number of votes to express confidence in the government), the report will automatically be approved.
That is, in fact the whole process of discussion and vote on the report in no way threatens the change of government. But the sharp criticism sounded still under discussion in the relevant committee promises to be even more persistent at the expanded session of the National Assembly, which is unlikely to have a positive impact on the presentation and discussion of the draft budget for 2013, which will take place in the near future.
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