Expected Economic Decline of Approximately 7.9 Percent for 2020 - Atom Janjughazyan

During the meeting of the Standing Committee on Financial-Credit and Budgetary Affairs of the National Assembly of the Republic of Armenia, Minister of Finance Atom Janjughazyan discussed the changes to the 2021 state budget project following the initiation of military operations in the country.

The minister stated that the initial forecast for economic growth for 2020 was at 6 percent, which has been adjusted downward by 0.8 percentage points immediately after the military operations began, resulting in an expected economic decline of approximately 7.9 percent for 2020.

Janjughazyan noted that tax revenue was initially projected at 1 trillion 320 billion drams, but after September, this figure is estimated to be between 1 trillion 350 to 356 billion drams. He explained, “Considering the uncertainties, we have tried to adopt a realistic lower threshold of about 1 trillion 350 billion drams for this year’s tax revenues. We will have a shortfall for 2020 that differs from the initial budget projections by about 30 billion drams lower than what was presented in the budget amendments. The absolute figure was 459 billion, but now it will be about 430 billion drams according to forecasts.”

According to Janjughazyan, a 4.8 percent economic growth was anticipated for 2021, but taking into account the negative impact of the second wave of the pandemic and changes in external demand, they assess that a scenario of 3.2 percent economic growth is realistic for the next year.

The minister also mentioned that due to the increased deficit, additional debt must be attracted, which means that our interest expenditures may rise. “Under the revised scenario, the expenditure level will be 1 trillion 850 billion drams, and for 2021, we will not have a 4.1 percent GDP deficit, but rather 5.4 percent. Instead of an absolute figure of 274 billion drams, we will have 342 billion drams,” he concluded.