The World Bank Explained the Causes of Armenia’s Budget Deficit in 2024

According to the October report of the World Bank, Armenia Monthly Economic Update, Armenia’s budget shifted from a surplus to a deficit in the January-August 2024 period. While the same period in 2023 saw a surplus of approximately $184.5 million, the current deficit stands at $218 million.

Experts note that the deficit in August alone reached $68.3 million, which amounts to 0.8% of the projected annual GDP. At the same time, there was significant growth in specific tax categories: the environmental tax increased by 40%, the excise tax by 18%, and the turnover tax by 31%.

Overall tax revenues grew by 8.8%, but after deducting income tax returns from mortgage credits, the real growth was only 5.3%. Meanwhile, expenditures rose by 16%, excluding mortgage payments. The notable increase in August spending (by 10.5%) was primarily due to a 29% rise in social protection costs.

It is worth noting that according to the 2024 state budget, revenues are projected at $7.02 billion, while expenditures are set at $8.26 billion, including capital expenditures of $1.79 billion. The budget deficit is expected to be $1.24 billion, or 4.6% of GDP.

Earlier, BMG reported that, according to Armenia’s Ministry of Finance, the state treasury will fall short of around $408 million in tax revenues and duties compared to the planned target for this year. As a result, government spending will be reduced by approximately $336 million.

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