MP Expects Major Cut In 2009 Government Spending

The Armenian state budget for 2009, drawn up before the onset of the crisis, calls for 945 billion drams ($2.45 billion) in expenditures. The government has struggled to meet this target, raising the possibility of a first budget sequestration since 1999. It has used a large part of more than $1.1 billion in anti-crisis loans obtained from foreign sources this year to finance the widening budget deficit.

“I think we will end the year with a nearly 15 percent [budget] underperformance,” Gagik Minasian, chairman of the parliament committee on finance and budgetary affairs, told RFE/RL. “We already have a underperformance exceeding 15 percent.”

The Armenian Ministry of Finance did not confirm Minasian’s forecast, promising to comment later this week. Deputy Finance Minister Vartan Aramian told RFE/RL in July that the government will have to cut spending by only 4 percent.

The International Monetary Fund likewise said in June that the external loans should help the government maintain its expenditures “at a level close to the original 2009 budget.”

In its draft budget for next year approved last month, the government projects 859.6 billion drams in expenditures, the first year-on-year drop in the country’s spending targets in over a decade. The budget’s successful execution is contingent on a 1.3 percent economic growth which the government has forecast for 2010. The Armenian economy contracted by 18.3 percent in January-September 2009.