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Armenian Finance Minister Advocates Spending Cuts

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  • Armenian Finance Minister Advocates Spending Cuts

    World Markets Research Centre
    March 13 2009


    Armenian Finance Minister Advocates Spending Cuts

    Natalia Leshchenko



    Armenia's Finance Minister Tigran Davtian has argued at the Cabinet
    meeting that the spending of 131 billion drams ($354US million) should
    be delayed until the fourth quarter of 2009, armenialiberty.org
    reports. The minister says that the spending was planned on the basis
    of projections for 21% rise in tax and other revenues for the budget,
    but the January statistics has shown a 11% drop in revenues as well as
    the shrinking of GDP. Davtian said that the fall in tax revenues could
    reach 93 billion drams or over 10 % of the yearly target. Davtian was
    supported by Prime Minister Tigran Sarkisian who said that the
    government should effectively switch to quarterly planning, and asking
    ministers for austerity.

    Significance:A transfer to effective quarterly planning might have
    good rationale but will require careful organising due to the
    existence of early payments. Austerity is also challenged by the
    rising utility tariffs, but the Armenian government hopes to fall back
    on Russia's $500US million loan to cover most essential budgetary
    needs. Overall, the governing team has proven reasonable and capable
    so far, and the minister's recent speech suggests that they are able
    to react to the changing circumstances.
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