Armenia's 2024 budget characterized by "unprecedented reserve fund"
Armenian budget for 2024
“Despite the most difficult challenges, Armenia’s economy continues to demonstrate high sustainability,” Finance Minister Vahe Hovhannisyan said while discussing the 2024 budget in Parliament.
According to him, high rates of economic growth and activity have been maintained for a long time, and the government forecasts 7% growth for the next year as well. The Minister believes that in order to maintain the economic growth it is necessary to continue stimulating exports and attracting investments.
In 2024, the Armenian government plans to spend $7.1 bln, of which $1.7 bln will be spent on capital expenditures. Hovhannisyan assures that possible risks have been taken into account when developing the budget, and “an unprecedented reserve fund of 94 billion drams [$235 million]” is envisioned to overcome them.
Risk management will help avoid “major shocks”
The Finance Minister believes that the reserve fund will help not only to manage risks, but also continue planned programs even during serious shocks, and says that in the current environment it is impossible to manage risks without new approaches and without additional safety cushions:
“Regional conflicts can lead to global changes and carry the risk of escalating into a major catastrophe, which could result in a crisis with devastating economic consequences.”
He believes that despite all the challenges, Armenia will be able to rise to a new level of development thanks to “conscious and consistent steps”.
Aid to the Armenians of NK will continue to be provided in 2024
More than 100,000 Karabakh Armenians resettled in Armenia after Azerbaijan’s September military operation will continue to receive government assistance next year. According to Hovhannisyan, they will continue to receive 50,000 drams ($120) in January, February and March 2024 as compensation for rent and utilities.
About 30 billion drams ($75 million) will be needed to pay pensions and allowances to Karabakhis.
The budget also includes additional expenditures on education and health care for Armenians who moved from Nagorno-Karabakh. Housing and employment programs are not planned yet; their development and approval is scheduled for the end of December.
According to preliminary calculations of the Ministry of Finance, these projects will increase the expenditure part of the 2024 budget by 144 billion drams ($285 million), which will lead to a deficit of 4.6%.
“There are enough funds to implement the Crossroads of Peace project”
The deputies were interested in what programs the government is planning within the framework of the “Crossroads of Peace” project. Hovhannisyan answered that the budget reflects the projects that have already been approved. He said that the realization of the “Crossroads of Peace” project is possible with the participation of the countries of the region, not only Armenia. He assured that the government has “enough funds” for the development of infrastructures:
“When an agreement [on the realization of this project] is reached, when the idea will move forward, we have a reserve fund for its realization. And it still has unallocated funds for capital expenditure. We will have enough funds to provide the infrastructure for this project.”
More money for defense
In 2024, the Defense Ministry will be allocated 555 billion drams ($1.4 billion). This is 7.3% more than in 2023.
The budget envisages AMD 345 bln ($862 mln) for education, AMD 745 bln ($1.8 bln) for social sphere, and AMD 168 bln ($420 mln) for healthcare.
Economic growth of 7% is on the horizon
As in 2023, the government aims to achieve economic growth of 7%.
The Finance Minister said that double-digit economic growth was maintained in the first half of 2023. And according to the results of January-September, a 9.7% growth in the index of economic activity was recorded. A significant part of the growth was provided by the service sector; high performance was also observed in construction.
The Minister assumes that if current trends are maintained, economic growth for next year may even exceed 7%.
“Positive trends will continue”
Hovhannisyan characterized the economic successes as “inclusive”.
“High indicators of economic growth were accompanied, on the one hand, by an increase in employment, on the other hand, by an increase in average wages, significantly exceeding the rate of inflation.”
According to the minister, between January and September 2023, the number of employees increased by 5.7% and wages increased by 13.4% in the face of inflation of 2.8%. It is hoped that these trends will continue next year, which “will contribute to the well-being of society.”
Armenian budget for 2024