The most important, outstanding economic issue in this period in Armenia is the state budget. The government has presented its draft budget for 2007 to the parliament within the terms provided by the law. As for the parliament, it has taken it under consideration and is going to approve. Before, the government used to make copies of the budget document and provide the deputies with copies so that they could get introduced to them. This time the government wants to save resources and has only published a short description of the budget consisting of 44 pages only. Due to some reasons the most important economic document of the year does not interest the parliament much. Nevertheless, the mentioned document is really interesting. The income part of the budget has been significantly changed compared to the sample of the previous year. In 2006, the government planned a 436 billion dram income, notwithstanding, this year it is planning to get 489.5 billion dram for next year. The growth mark that our state registers officially (12%) actually is more than they announce. The reason is the fact that the previous budget was built on a different exchange rate mark (420 dram for 1 USD) than we have now (357 dram). It is expected that 94% of the budget income will be provided by tax collection. The government hopes to collect more money as indirect tax. For instance, the government expects to collect 30 million dram more as indirect tax in 2007 than in 2005. How is it possible? Definitely the government has the answer to this question since it has collected as much as planned during the previous years. Experts say that this is an administrative application method than a tool for cutting down shady economy and improving the economic performance. Our legislation has grounds for providing more inflow in the budget without any adequate economic grounds. This means that businesses may have losses, but the government will collect its taxes anyway. This fact does not concern on the fact whether those businesses have enough income or not. This fact have served a reason for the government to anticipate 72,6 million dram. It is more by 26 million dram than in 2005. In this framework as well as they expect more income tax by 16 billion. In this framework the government papers write that they expect to receive more than 15 billion dram from international financial institutions and other countries (aid contributions). This doesn’t fit with the image of the Caucasian tiger. However, we are going to receive about one million dollar from the Great Britain to reduce poverty in Armenia. In addition, it is expected that Armenia will be given 4,5 billion dram by the “Millennium Challenges” corporation. The other side of the budget that is difficult to compare with the double-digit growth in our economy is the section for deficit. Of course, we can say like the national TV company that many countries of the world have deficit in the budget. Even more, the U.S. has deficit in its budget too in spite of the fact that they haven’t registered double-digit growth during the previous four-five years. It is worth mentioning that the government anticipates reimbursing the deficit of 27 billion dram from internal sources. This provision contains risks. Please note that the CB is registering growth of the national currency, however, the internal debt is in the national currency as well. This means that the mentioned debt will grow as much as the national currency. It is expected that Armenia will borrow 41.356 million dram from foreign sources in 2007. In other words, we will continue with the tradition of borrowing money from foreign sources, which is definitely the most difficult-explainable paradox in our economy. The foreign debt of Armenia before registering double-digit economic growth was 1 billion. It seemed that the economic growth would give us an opportunity to cover the foreign debts slowly, however, what is happening is the vice versa. At the end of 2006 the foreign debt will be 1.560 million dollar. Next year we are going to pay 17,5 million dollar to cover a part of the foreign debt taken during the past years. Nevertheless, such tendency of debt coverage cannot resist the growth of foreign debt. The only positive development is the fact that the debt percentage compared to the GDP growth continues decreasing. If you think this is enough, you can feel safe.
