The RA State Budget 2012 in the center of attention of those citizens of Armenia, who are interested in the economic processes in the country. The budget was days ago approved by the RA government.
It still doesn’t have a name. The previous ones had names (social budget, anti-crisis budget, etc) because in the Armenian practice the budgets are always tagged before sent to the National Assembly for a vote. However, the budget of the previous year was already able to draw the attention of the society, which mainly occurred due to the contradiction between the Prime Minister and the State Revenue Committee. So the budget of this year may be named “intriguing” or “scandalous.” As our statesmen like to say the budget is the economic program of the year. It means the budget should reflect the economic priorities, the changes anticipated in the economic policy and the expected results. However, when reviewing the budgets of different years we come to the conclusion that despite the names they are all the same. Those are all survival budgets, where the state can hardly make it to pay the pensions and subsidies. Perhaps the numbers change but the proportion doesn’t change too much. For example, the government led by the Prime Minister, often speaks about the modernization of the economy, increase of competition and many other positive things. Does the state budget reflect all that? Indeed, it still needs to be adopted by the NA and it may be altered as well. However, judging from its current content nothing special (in a good meaning) can be expected to be changed.
As we see, the expenditures of the budget have increased in a full number in almost all directions besides nature protection, housing and communal services. By the way, reduction is mostly seen in this last sector because in 2012 instead of 26,9 billion 200 million AMD was allotted to this sector.
Most of the others the social protection sector has grown (from 271.9 million to 307.3 million). The authorities are mainly focused on this as the pensions that have been reduced by 10% are included in this sector. The finance capacity provided to the defense and other sectors have been increased too. It is also important to pay attention to the capacity of separate sectors. The first one from this point of view is the sector of education. The sector of education, which has a small financial support, will not receive much in 2012. In 2011 the sector of education was provided with 108.4 billion drams, and for 2012 this sum has been increased by 200 million drams and this sector will receive 108.6 billion drams. But the capacity of expenses on education in the budget has been reduced from 10.8% to 10.4%. Maybe this is not so important but for a country like Armenia, which attaches importance on IT and wants to have educated society and developed economy, it is very important to spend money on education.
Or, many people speak about corruption and the importance of fair justice system, but the salaries of judges are not increased (the salary of judges is 440,000 drams, and the salary of the chief prosecutor is 392,000 drams). We don’t mean that the main obstacle for fair justice system is the low salary or tuition, but officials need wealthy conditions too. Even more, during the visit of the author of the Singaporean miracle to Armenia they were listening to him speaking of cutting corruption through increasing the salaries of state officials.
People may say there is no money for that. We agree with the opinion that the resources of the budget are limited, but still there I money to spend on less important things. For example, in 2011 the government has spent 16,5 billion drams for procurement and maintenance of vehicles and technical facilities, and this year the budget will provide 18,9 billion for that purpose. Instead of this the capacity of salaries and budget payments were reduced for this year from 70,6 billion to 67,1 billion, which is less by 3,5 billion drams. This also includes the salaries and honoraries for teachers, healthcare employees and servants of other state institutions. As for the expenses to be provided on the state administration system (including salaries for judicial and executive institutions employees), they were reduced from 14,1 billion to 13,2 billion drams. By the way, the expenses for state administration system are included in the general public services expenses section in the first chart. As it is shown here the money to be provided for this purpose has been increased by approximately 10 billion drams. This section includes the coverage of state borrowings as well. In 2012 the budget will provide 47,3 billion drams for covering state expenses, which is more by 4,7 billion than this year. It is worth mentioning that despite the difficulties with attracting foreign borrowings and lack of budget resources the government does not save on grants. In 2012 the government will provide 98,5 billion drams for grants (instead of 89,5 billion provided last year). What is more interesting, the government has increased the section for “other current grants” section by 5,2 billion drams. We can write more about the budget but we will stop here in consideration of the fact that the draft budget has not been approved yet and is subject to changes. We will discuss any interesting changes that may happen to the budget in the future again.