Government expects around 6% economic growth in 2024

YEREVAN, AUGUST 27, ARMENPRESS. The Armenian government expects economic growth to be around 6% by yearend. Although tax revenues in the first half of 2024 were less than projected, the figure is still more compared to the previous year. In terms of expenditures, the government made 40 billion drams more capital expenditures in the first half of the year: over 20 billion drams in capital expenditures was made for the defense sector alone. Authorities expect the state debt to be around 50% of the GDP by yearend.

“The budget is executed pretty well in terms of expenditures,” finance minister Vahe Hovhannisyan told Armenpress. “The number of our redistributions is also an indicator of good performance. We are continuously improving the level of our planning.”

The developments projected last year for 2024 were incomplete because the ministry didn’t have the full picture about 2023 GDP and its structure.

The tax revenues collected in the first half of this year are 117 billion less than projected. However, tax revenues have grown compared to last year.

“The 2023 results and 2024 developments are such that we now predict that the tax revenue level we had projected in the budget can’t be ensured. However, when we predict the budget, we consider various scenarios, based on which we ensure certain fiscal buffers. That’s why we have a reserve fund. We envisage funds, which we don’t distribute, in the event of the risks materializing. That’s why this year we had an unprecedented big reserve fund because we knew that multiple risks existed. At this moment there is 55 billion drams in our reserve fund. This is sufficient to either mitigate or completely neutralize the problems which could occur in case of less tax collection,” the minister said.

The finance minister said the Armenian economy experienced a positive shock in the last 2-3 years.

“We had a big influx from Russia, an abrupt growth in exports, some part of it were re-exports. These factors have gradually gotten weaker. And, so to say, we are returning to the dimension of our potential growth, which has been around four percent in the past, but is now assessed around five percent as a result of our policies,” he said.

The Statistical Committee recently published an updated data on the 2024 Q1 GDP, as well as the 2023 annual GDP. The 2023 GDP’s updated assessment is over 50 billion drams less, and the 2024 Q1 GDP over 48 billion less.

Explaining the new data, the finance minister said, “Basically, the impact which was previously being exaggeratedly calculated because of gold re-exports has been cleared, because gold was not only being re-exported but also undergoing some processing in Armenia. And the added value of that reprocessing was overestimated.”

The government had projected 7% economic growth in the 2024 budget.

“We still have four months ahead, and there could be many developments, but our present-day projection tells us that economic growth will be around six percent,” he said.