According to the forecast by the Asian Development Bank, Armenia is expected to adopt a more expansionary fiscal policy in 2024, with a focus on increasing allocations for social transfers and capital expenditures.
The projected 2024 budget indicates a deficit amounting to 4.6% of the Gross Domestic Product (GDP), while revenue is forecasted to be at 24.9% of GDP. This aligns with the government’s goal of achieving a tax-to-GDP ratio of 25.0% by 2026, through improvements in tax administration and legislative reforms. The introduction of a universal income declaration system by 2024 is also anticipated to bolster government revenue.
Expenditure is predicted to rise to 30.5% of GDP, with plans to enhance funding for social assistance programs and capital outlays, which are expected to reach 6.6% of GDP in 2024. Unless there is a significant depreciation of the Armenian dram, the public debt is projected to increase slightly but remain below 55% of GDP by the end of 2024.
The current account deficit is foreseen to widen as trade and income deficits expand. It is estimated to be at 2.4% of GDP in 2024 and 2.7% in 2025. Growth in merchandise exports and imports is anticipated to slow down due to a decrease in aggregate demand and a further reduction in transit trade.
However, imports of construction materials, machinery, and equipment are expected to remain strong as investment in large infrastructure projects increases. The surplus in services is likely to expand with the continued growth of tourism and financial services. Smaller money transfers are expected to exacerbate the income deficit.
BMG reported that Armenia's economic growth in the state budget for 2024 is projected at 7%. Meanwhile, the Central Bank of Armenia expects the country's economic growth in 2024 to fall within the range of 5.3% to 6.4%.
