Low Tax Collection Rates Recorded, Says Central Bank President

In 2024, the budget deficit, although exceeding last year's figures, was lower than the indicators planned in the 2024 budget. This was noted today, June 4, by the President of the Central Bank of Armenia, Martin Galstyan, during the discussions on the implementation of the 2024 budget in the parliamentary committees.

“Thus, in 2024, the state budget deficit in relation to GDP amounted to 3.7%, compared to the planned 4.6% and 2% in 2023. Meanwhile, the budget execution was accompanied by compliance with tax-budgetary rules, and throughout the year, the state budget deficit of the Republic of Armenia remained consistently low relative to capital expenditures. In 2024, as in the previous year, the majority of the deficit, 95.5%, was financed from domestic sources, while also recording a level of divergence from external funding that was lower than planned. It is notable that in 2024, certain expenditures for financing the budget deficit decreased, due to a gradual easing of monetary policy and a decrease in the interest rates on government bonds. As a result, the tax-budgetary policy in 2024 primarily took on a neutral character.

In this regard, it is important to note that the tax-budgetary issues arising from the structural features of economic growth, as well as the ongoing deficiencies in the implementation of capital expenditure programs, contained certain uncertainties and risks regarding the necessary positioning of the economic tax-budgetary policy. The government debt burden in 2024 remained below the targeted 50% level according to the RA tax-budgetary rules, amounting to 48.3%. It is also noteworthy that the government debt burden was lower than the indicators planned in the debt reduction program for 2022-2026. Consequently, it can be recorded that alongside the implementation of public investment programs aimed at increasing economic potential in 2024, ensuring the stability of public debt, as well as the application of an adequate and effective strategy for managing debt in the context of financing the budget deficit are crucial prerequisites for the flexibility of tax-budgetary policy, the continuity of programs aimed at medium-term economic growth, and the formation of necessary guarantees for improving debt servicing prospects,” he said.