Sep 29, 2011

YEREVAN, September 29. / ARKA /. Speaking at a Cabinet session today
Armenian prime minister Tigran Sarkisian said the government expects
its revenues to increase next year by about 100 billion drams from
this year. The 2011 budget calls for 850 billion drams in revenues,
of which 650 billion drams are to be collected as taxes.

"The changes we are planning to make to the tax law will be
implemented in two ways ~V increasing the tax base and improving
tax administration. We assess our opportunities to improve tax
administration at 10-15 billion drams, while taxes are likely to grow
by around 100 billion drams," he said.

According to Sarkisian, all the ministers were instructed to learn
how much GDP is produced in their respective sectors, what is the
value of new products and how much money goes to the budget.

He, however, said that even if the changes are not implemented, the
size of the country's budget will increase by 40-50 billion drams on
the wave of economic growth, forecast at 4.2%.

The prime minister said the draft budget for 2012 was discussed with
Armenia~Rs main donors - the IMF and the WB, which along with the EU
are expected to provide extra financial support in 2012.

He said every year the IMF board of directors tells Armenia if it
does not increase the rate of redistribution of financial resources
through the budget, donors will give up additional financing, because
Armenia has undiscovered resources.

~QTo put it simply , why should they have to finance the deficit of
our budget, if Armenia has the resources that the authorities are
obliged to use," Sarkisian said.

He added that the increase in the ratio of tax to GDP by 0.6% per
year is a serious challenge for Armenia, since the government did
not assume previously such a burden.

"That is why we have developed jointly with the IMF a tax package,
which seeks to identify those areas that had not been previously
taxed, so that we can reallocate more funds through the state budget",
he said.

The premier added that the tax package was also discussed with the
president of Armenia, because the document has also a political

Armenian ministry of finance sent yesterday a draft budget for 2012
to the Cabinet~Rs consideration. It calls for 910 billion drams in
revenues and 1.042.5 trillion drams in spending. The projected deficit
is 132.5 billion drams, the finance ministry said in a statement
sent to ARKA. According to the statement, the amount of revenue is
projected to increase by 6.8% from this year~Rs budget (852.4 billion
drams). The spending is expected to grow by 41.5 billion drams. Some
86.1% of the spending (897.8 billion drams) is projected as current
expenditure. ($1 - 370.38 AMD).