Armenia's Finance Minister Vahe Hovhannisyan has announced that despite strong economic growth, the country faces the risk of falling short on tax revenues in 2024. He predicts a shortfall of over 100 billion drams (more than $250 million).
Hovhannisyan explained that tax collections are not meeting the targets set in the third quarter of 2023 because the budget was based on those figures. The 2024 budget plan will need to be adjusted based on the current year's results, reports CivilNet.
The minister pointed out that one reason for the shortfall is the growth of tax-exempt sectors such as jewelry and construction. He emphasized that economic growth and tax collection should go hand in hand, but in this case, there is a time lag.
In particular, the construction sector is booming but does not pay taxes immediately, as tax liabilities arise only after the completion of construction. As a result, there is a time lag between the development of the sector and the payment of taxes.
The jewelry sector has also shown sharp growth due to the re-export of Russian gold. According to the minister, statistical discrepancies in this area explain the significant differences between GDP figures and economic activity.
"Currently, we are witnessing a boom in the construction sector and active re-export of gold, leading to temporary gaps in tax revenues and statistical discrepancies," concluded Vahé Hovhannisyan.
BMG reminds that Armenia's state budget revenues for 2024 are planned at 2.7 trillion drams (over $6.9 billion), which will account for 24.9% of GDP. Meanwhile, expenditures will amount to 3.2 trillion drams (over $8.2 billion). The budget deficit will increase by approximately 142 billion drams (over $364 million) compared to the initial draft and will total around 483 billion drams (over $1.2 billion), or 4.6% of GDP.
