The Government of Armenia has approved the bill on amending the law on the country’s budget system and the law on state debt.
During today’s Cabinet meeting, finance minister Vardan Aramyan said the bill has been discussed for a long time and the amendments concern the new fiscal rules.
The minister said the IMF has provided technical assistance, and the main issue is that the current regulations on fiscal rules are pretty harsh.
“Today we have the following norms: the state debt law says If you surpass the state debt by 50%, then the following year you must plan a deficit not greater than 3% of the average GDP of the previous three years and in case of 60% exceeding the debt is null, this is a very harsh approach. Today, countries change these norms one after another and put the main rules in the spending policy, which Armenia is also trying to do”, he said.
“We mentioned three thresholds – 40, 50 and 60 percents, if the debt is greater than 40%, then the norm whereby capital spending should be greater than the deficit must be engaged, if it is greater than 50, then we heighten the rules, we set a rule on the growth of current spending, and if it exceeds 60%, we heighten it even more, in order to tie the current spending with average revenues also”, he said.
The PM asked whether there are any questions for ministers of the economic sector, whether the degree of freedom isn’t being limited.
In response, the finance minister said the most important is that regardless who it is, they must be engaged in fiscal policy by the rules.