2024-03-17 23:29:27
“LUYS” Foundation studied the 2022 the report on the performance of the RA state budget in the first semester.
So, in 2022 in the first half of the year, the implementation of the budget deviated from the plan by around 205 billion drams. The main reason for this is the under-spending of the budget.
The amount of underperformance has significantly increased compared to the first half of the previous year, one of the reasons for which is that unrealistic indicators were planned in advance. Thus, the amount provided by the revised plan for capital expenditures for 2022 is about 365.2 billion drams, which exceeds the actual figure of the previous year by about 148.9 billion drams or 68.8%. However, from the actual indicators of the first semester and the underperformance of 40.7%, it is obvious that it will not be possible to provide such high indicators. Moreover, let’s remember that in 2022 During the budget discussion and adoption phase, the government cited unprecedented capital expenditure planning as a key achievement. It turns out that the ability to implement expenses has remained at the same level, the government has not taken any steps in this direction, but, just for the sake of presentation, it has initially reflected unrealistic indicators in the budget.
2022 Fiscal policy has been highly accommodative in the first half of the year, largely due to underspending. Although the implementation of a restrained fiscal policy is justified in the current situation, it should not be implemented at the expense of capital expenditure, as the underperformance of the latter harms the potential of the economy. Currently, in the face of growing domestic demand, the government needs to take measures to stimulate the supply side of the economy, one of the best tools for doing so is capital spending.
No action is being taken regarding the aggravation of the Russian-Ukrainian conflict and the effects of the factors derived from it on the RA economy. The current external shock has an asymmetric impact on the economy, i.e. some sectors are experiencing strong positive developments (eg services and trade) and some are experiencing problems due to exchange rate appreciation (IT, construction, exporters to the EU). Under these conditions, the government should implement measures to more effectively tax the sectors with positive developments and provide targeted support to the affected sectors, which, however, does not.
Full analysis here.