Minister of Finance Vahe Hovhannisyan presented that according to the draft of the 2025 state budget, the government is allowed to finance the contractual arrangements undertaken in 2024, but not implemented as of December 31, at the expense of the free balance of the 2025 state budget at the beginning of the year.
In the project on the 2025 budget, the measures included in the 2025 state budget, which have a clearly defined completion date, will be presented in a separate annex.
In the 2025 state budget law, the macroeconomic and fiscal frameworks defined by the 2025-2027 medium-term expenditure plan were reviewed in the government message.
According to the minister, according to the 2025 draft of the RA state budget, the GDP is predicted to be 11 trillion 50 billion drams, the economic growth is 5.6 percent, the GDP deflator is 3.5 percent, and the average inflation is 3.5 percent.
“State budget revenues are planned to be 2 trillion 873 billion drams, of which tax revenues are 2 trillion 760 billion drams. It is expected to improve the tax-GDP ratio by 0.1 percentage point compared to the approved budget of 2024, and by 0.7 percentage points compared to the expected one for 2024,” he said. he
State budget expenditures are planned to be 3 trillion 482 billion drams, of which 2 trillion 749 billion drams are for current expenditures, and 733 billion drams are for capital expenditures.
The spending policy will also be aimed at strengthening the RA defense system, increasing the country’s resistance to possible risks.
The deficit of the state budget is planned to be 609 billion drams.
The government’s debt-to-GDP ratio will be 53.5 percent at the end of 2025.
The legislative initiative of the Government of the Republic of Armenia will be presented to the National Assembly in the prescribed manner.
What are the key components of the 2025 state budget proposed by Finance Minister Vahe Hovhannisyan?
Interview between Time.news Editor and Finance Expert
Time.news Editor: Good morning, and thank you for joining us today. We’re discussing the recently announced draft of the 2025 state budget by Finance Minister Vahe Hovhannisyan. This seems to be a significant moment for the government. Can you start by summarizing what the minister has proposed?
Finance Expert: Good morning! Absolutely, it’s great to be here. Minister Hovhannisyan outlined an important aspect of the 2025 state budget proposal—specifically, that the government plans to use any unspent contractual commitments from 2024, which remain unfulfilled by the end of the year, to be financed through the 2025 state budget’s free balance at the start of the year. This essentially allows for continuity of projects and commitments claimed in the previous fiscal year.
Time.news Editor: That sounds like a strategic move. How does this mechanism work? Why is it important for the government to carry over these commitments into the next budget year?
Finance Expert: Great question. This mechanism serves multiple purposes. Firstly, it ensures that projects won’t stall due to a lack of financing, especially if they were obligated but not completed within the fiscal year. Secondly, it helps maintain investor and public trust that government projects are reliable and funded. Lastly, it provides a clearer financial roadmap for projects, thereby helping with overall economic planning and stability as continuity is a marker of effective governance.
Time.news Editor: Interesting! So this allows for projects to be funded without starting from scratch in the new budget year. What are some potential challenges the government might face with this approach?
Finance Expert: There are a few challenges. One challenge is accurately estimating how much budget will actually be unspent by the end of the year. If projections are off, it could lead to a budget shortfall or misallocation in 2025. Additionally, carrying over obligations could unintentionally create a backlog of projects that might overwhelm the government’s capacity to deliver, potentially slowing down progress and affecting accountability.
Time.news Editor: That makes sense. On a broader scale, how should citizens and stakeholders interpret these decisions? What does this mean for the average citizen?
Finance Expert: For ordinary citizens, this decision can signal that their government is committed to completing projects that have been promised, whether in infrastructure, social programs, or other areas. It demonstrates a proactive approach to fiscal management, where the government prioritizes maintaining momentum on crucial services and developments. However, citizens should also be vigilant about how these funds are allocated and ensure that transparency is upheld.
Time.news Editor: Transparency is indeed key. As we look toward the implementation of this budget and its impact on the economy, how do you suggest the government measure its success with this carry-over approach?
Finance Expert: The government should set clear performance indicators tied to the projects being carried over, such as completion timelines and impact assessments. Regular progress reports to the public can help to foster transparency and trust. Additionally, conducting independent audits can provide objective insights into how these funds were used and whether the projects delivered as promised, helping to refine budgeting processes for the future.
Time.news Editor: That all sounds crucial to ensuring that the budget serves its intended purpose effectively. Thank you for your insights today. It looks like we’ll be keeping a close watch on how this proposal unfolds in 2025.
Finance Expert: Thank you for having me! It’s always important to engage in these discussions, and I look forward to seeing how the government navigates its commitments in the coming years.