The Government of the Republic of Armenia

Dear colleagues, in accordance with the requirements of the Article 90 of the RA Constitution, we present the 2012 state budget project to the National Assembly. I want to thank you for the exciting discussions, which took place during the Cabinet sittings. The many suggestions and recommendations presented by you have become the subject of discussion of the Government, because they were very useful for us to understand what the issues of concern of the MPs are.
We have presented a detailed review on the main macroeconomic indicators of the state budget and our expectations to the National Assembly and the public. We have tried to present the risks that could be revealed next year and the measures that would be implemented to make those risks manageable.
Today I would like to draw your attention to three major issues, which will be aimed to be solved by the state budget project. In this regard, I would like you to draw your attention to the RA president’s speech, which he raised during the sitting of the Union of Industrialists and Entrepreneurs of Armenia. The speech was aimed at the main targets, by which the government should be guided. First of all I would like to cite the following statement: “Today the sustainable economic growth and development is a primary problem of the agenda in almost all the countries. We are part of this world and we bear the consequences of global developments, therefore they should be responded adequately. The guarantee of our long-term economic growth and development is the transformation. It is known, that we have a problem with economic growth and development, in particular, the problem is more than just the growth of industry and employment. Today the economic development has a significance of a national security.” This is the first and main problem for 2012. For the first time in our history, the Government developed such a program with the private sector.
Secondly, the business environment should be improved; more favorable business conditions should be created. The tax package that was presented to you also pursues this goal.
The third problem is the creation of free economic zones, which will stimulate the private investments in Armenia. I want you to pay attention to the fact that the legislative changes, allowing the Government to determine benefits for large investors, have already given positive results. We have large investments; thousands of jobs have been created in Armenia. This program will give more results in 2012.
Next are the joint projects with the EU, within the framework of which reforms have been implementing in Armenia, which will open the European markets for us. The free trade agreement signed in St. Petersburg will also create more trading opportunities for the CIS countries, including Armenia. This will considerably facilitate the export of goods.
The second major issue the Presidents invites our attention to: “Of course, business needs a stable economic environment and a political stability. We are going to provide both. We will go further in terms of economic stability, providing not only stability of the level of inflation and financial system, but every year we are planning to cut the budget deficit-GDP ratio. The latter will increase our strength reserves and that is what the 2012 draft budget speaks about.”
Dear colleagues, you have noticed that 2012 has peculiarity for our sustainability. In particular, we will significantly reduce the state budget deficit, which means that we keep the focus on external and domestic debt burden, so that it would be manageable and would not endanger our sustainable development. At the same time, in 2012 we will significantly improve the tax-GDP ratio, increasing the tax revenues with around 101 billion AMD, compared to the previous year. This factor is of essential importance in terms of developing our capabilities and strengthening our reserves, to be able to confront the serious challenges that exist today in 2012.
Of course, in 2012 the priority for us will be to manage the risks, which can be manifested. I would like to remind you that we were able to provide 120-130 billion AMD more tax revenues in 2007-2008 than in the previous years. This means that in 2012 the nominal GDP ratio will be much higher than in 2007-2008.
The third major issue that was brought up by the RA president is as follows: “Our goal is the enactment of an organized and self-confident society. We must become a society that creates the best conditions for discovering each individual’s creative abilities.”
This is the third most important goal to reach in 2012. To reach it, we will have to solve the following problems: first of all, people with high income should pay more taxes than people with lower incomes. So is the logic of budget and tax packages. The investment of the progressive scale in terms of income tax pursues that goal. The privileges that the package provides small and medium businesses with pursue the same goal.
We have thoroughly presented the logic of the tax package during the National Assembly committee’s joint sitting. The next target on our way to our goal is the budgetary expenditures. In order to redistribute the state incomes from the wealthy to the poor in 2012, we will increase the social allowances of 100 thousand families with 10 percent. This applies to one-seventh of our families. Pension of more than 500 thousand pensioners will be increased with 10 percent. More than 120 thousand state employees will use the social package that we presented to you. This will increase their incomes with 10 percent. First of all, employees with lower incomes are targeted, which means that we are creating more favorable social environment for them, too. At the same time, this social package will stimulate economic growth within the Republic of Armenia.
With the state budget expenditure we are mainly targeting the social risks that exist nowadays. We will give the opportunity to finance the citizens’ education, health care, as well as aim to promote domestic economic growth and one of our main priorities, the development of tourism. This package makes it possible for 120 thousand state employees to organize their holiday in RA or Nagorno Karabagh.
Dear colleagues,
We have presented the detailed budget indicators to you. My colleagues will present them more carefully, according to directions, the kind of projects we are going to implement and results we expect, in their speeches.
I want to once again express my gratitude for cooperation and joint work.
Thank you.