His concerns, however, are not shared by the Defense Ministry’s chief financier, who says that the 30 percent reduction in spending estimated in U.S. dollars reflects the corresponding depreciation of the national currency that has taken place on the foreign exchange market since the approval of the current year’s budget in late 2008.
The actual reduction, meanwhile, follows the general pattern of the government’s request for the 2010 budgetary expenditures that it plans to slash by nine percent citing the ongoing economic recession and the resulting serious shortfall in tax revenues.
In an interview with RFE/RL on Tuesday, Vahan Shirkhanian, who served as Armenia’s deputy prime minister and deputy defense minister in the late 1990s, said this development is certain to have an impact on the overall fighting capacity of the Armenian army which he described as a complex and dynamic structure that has enjoyed a sufficient level of funding in recent years.
“The [military] budget would grow by $100-120 million every year and that could not but have its [positive] effect in the matter of ensuring [the country’s] military security,” he said. “But today we witness a sharp increase of Azerbaijan’s military budget and it is reflected not only in the increase in funding, but also in its purchasing modern high-precision weapons… I consider it unacceptable that Armenia cut its military spending.”
Speaking to RFE/RL on the phone, the Defense Ministry chief financier Colonel Vagharshak Avetisian said that the Ministry had submitted a request for about 130 billion drams in next year’s budget, which is nearly the same amount as the 2008 request for the current year. However, he explained, considering the devaluation of the national currency by nearly 30 percent, it turns out that the defense budget in 2010 will be nearly 30 percent less.
At the end of 2008, when this year’s military budget was approved, it was equivalent to $426 million. At the current dollar-dram exchange rate, the same amount in drams will be equivalent to $335 million.
But according to Avetisian, in any case the depreciation of the national currency will not affect the Defense Ministry expenditure in the main directions.
“Even if some changes are made in terms of reduction, then our main spending spheres and directions will never be affected by that. And, naturally, if there is a need for reduction, we can make cuts in capital construction, while the other expenditure items will not be affected,” said Avetisian.
Avetisian also downplayed the impact of the exchange rate on military purchases abroad that are transacted in hard currency.
“Our surveys show that the current level of prices [for weaponry] abroad is lower than it was during the past years,” he said.
Avetisian also brushed aside the argument made by the former defense ministry official that certain budget reductions might cause some discontent mainly among senior command staff who will have to complete harder tasks with less funding.
“We have made a budget request based on this year’s volumes. No changes will be made in any spending direction. Moreover, there will be some increase in money allowances,” said Avetisian. “I can say that our armed forces will be provided with everything that is necessary to achieve our objectives at a given period of time.”