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ARMENIAN H1 BUDGET DEFICIT REMAINS BELOW TARGET
Venla Sipila
Global Insight
July 27, 2011
According to the newest fiscal data from the Armenian Ministry of
Finance, the budget deficit in the first half (H1) of 2011 came
in at 6.6 billion dram (USD20 million), ARKA News reports. This
result leaves the budget gap considerably below the projected AMD56.3
billion. In particular, budget revenues increased by 9% year-on-year
(y/y), reaching AMD399.3 billion. Of this total, AMD314.8 billion
consisted of taxes and state duties, this revenue category coming in
nearly exactly on target and growing by 10% in annual comparison.
Collection rates of value-added tax (VAT), income and profit taxes
improved, accounting for this success. Meanwhile, spending increased
by 5.9% y/y, totalling AMD405.8 billion, reaching just 88.5% of the
first-half target. Specifically, current expenditures accounted for
AMD371.2 billion of the total. According to the Finance Ministry, the
budget gap remained below projections because only AMD18 billion was
spent of grants, compared with the targeted total of AMD56.9 billion.
In addition, the government only spent AMD9 billion of foreign loans,
instead of the projected AMD22.9 billion.
Significance:The first-half fiscal results imply stable, strong
budget performance in the second quarter of the year (seeArmenia:
2 May 2011:). The encouraging strength of revenues reflects partly
the overall recovery of the economy from a very deep recession, but
the increase in tax collection is particularly welcome. Indeed, this
reflects important progress in one of the key ingredients in Armenia's
IMF-supported development programme (seeArmenia: 1 July 2011:).
Improved fiscal administration is instrumental in strengthening fiscal
sustainability and reliance on external financing, as well as in
reducing the role of the shadow economy and containing dollarisation.
Venla Sipila
Global Insight
July 27, 2011
According to the newest fiscal data from the Armenian Ministry of
Finance, the budget deficit in the first half (H1) of 2011 came
in at 6.6 billion dram (USD20 million), ARKA News reports. This
result leaves the budget gap considerably below the projected AMD56.3
billion. In particular, budget revenues increased by 9% year-on-year
(y/y), reaching AMD399.3 billion. Of this total, AMD314.8 billion
consisted of taxes and state duties, this revenue category coming in
nearly exactly on target and growing by 10% in annual comparison.
Collection rates of value-added tax (VAT), income and profit taxes
improved, accounting for this success. Meanwhile, spending increased
by 5.9% y/y, totalling AMD405.8 billion, reaching just 88.5% of the
first-half target. Specifically, current expenditures accounted for
AMD371.2 billion of the total. According to the Finance Ministry, the
budget gap remained below projections because only AMD18 billion was
spent of grants, compared with the targeted total of AMD56.9 billion.
In addition, the government only spent AMD9 billion of foreign loans,
instead of the projected AMD22.9 billion.
Significance:The first-half fiscal results imply stable, strong
budget performance in the second quarter of the year (seeArmenia:
2 May 2011:). The encouraging strength of revenues reflects partly
the overall recovery of the economy from a very deep recession, but
the increase in tax collection is particularly welcome. Indeed, this
reflects important progress in one of the key ingredients in Armenia's
IMF-supported development programme (seeArmenia: 1 July 2011:).
Improved fiscal administration is instrumental in strengthening fiscal
sustainability and reliance on external financing, as well as in
reducing the role of the shadow economy and containing dollarisation.