Why is money being withdrawn from the economy? Where are these arbitrary decisions leading? Hrant Bagratyan

The budget expenditures for the first half of 2019 are lower than those in 2017. This was noted by former Minister Hrant Bagratyan in a post on his Facebook page.

“Let’s continue analyzing the state budget for the first half of 2019. Today, let’s talk about expenditures. As we observed, there is an increase in revenues; however, not to the extent that government officials are claiming. It is a nominal increase, which has occurred multiple times in the budgetary practices of the last 25 years. The tax-to-GDP ratio has remained stable. The bulk of these increases comes from toxic sectors, such as car sales. They are toxic because they are not sustainable and will not be around tomorrow. Yes, there is a slight increase based on tax administration; however, it is not impossible that this growth may disappear by the end of the year or at the beginning of next year. For example, in 2018, when the current government was in power for 8 months, there were also constant claims of increases in budget revenues, but by the end of the year, it deflated: the total revenues of the state budget amounted to 1,340.9 billion dram, instead of the planned 1,343.5 billion. And this, excuse me, was planned by the previous 'criminal' regime.

Now, let’s turn our attention to expenditures. The society interacts with the budget precisely through expenditures. This is where we see who received what. In 2018, state budget expenditures amounted to 1,446.3 billion dram as opposed to 1,503.8 billion in 2017. Did you know about this? Now, in the first half of 2019, expenditures amounted to 636.6 billion dram compared to 610.3 billion in 2018. This means they increased by only 4.3%. If we deduct the 2% inflation for 2019 and the 2.4% inflation for the first half of 2018, we arrive at 608.6 billion dram. Thus, the budget expenditures in the first half of 2019 are only 2.3% or 14.6 billion dram higher than in the corresponding period of 2018, and compared to the first half of 2017, you might want to sit down for this... they are lower by 12 billion dram (the expenditures in the first half of 2017 amounted to 620 billion dram). And without feeling awkward, the Prime Minister and the government talk about an economic revolution and budget growth.

This raises the question: where is the money? After all, there is a small, modest (not to the extent that is being claimed) increase in revenues. This is already a riddle. The media has already mentioned that the government has deposited this money in the Central Bank or in commercial banks. No explanation has been provided by the government. Why is that? Why is money being withdrawn from the economy? If money is being saved for a 'rainy day', there are Central Bank reserves for that. If the Ministry of Finance is sterilizing toxic revenues, then we must note that such expenditures are not foreseen in the 2019 budget law. This amounts to illegal economic activity. I am struggling to understand where these arbitrary decisions are leading,” he mentioned.