Armenian Central Bank head names measures to boost 5.6 per cent economic growth in 2025

p

YEREVAN, 12 November. /ARKA/. ‘Macroeconomic forecasts laid down in the 2025 budget reflect gradual neutralisation of high economic growth factors of the past years and shaping economic growth on the basis of long-term stable factors,; said today Martin Galstyan, the chairman of the Central Bank of Armenia, during a discussion on the budget in the parliament./pp

According to him, this implies targeting lower economic growth compared to the medium-term programme, as a result of which the fiscal policy for 2025 will be guided by the forecast of 5.6% growth with a focus on fiscal stability and debt sustainability, as well as safeguarding of the economic potential built in recent years./pp

Galstyan said it is expected that effective implementation of the necessary structural reforms will be required to achieve the target level of economic growth./pp ‘Ensuring economic growth will significantly depend on the opportunities and results of improving the investment climate, promoting exports, as well as the implementation of infrastructure investment programmes in a timely and full manner,’ he said./pp

In this context, the head of the Central Bank attached importance to the consistent increase in the role of capex, especially on infrastructure programmes./pp

Galstyan also noted that under the existing geopolitical and economic uncertainties, there are significant risks in terms of stability of factors for economic potential and possible scenarios of economic prospects./pp ‘From the point of view of effective risk management, we consider it important to have strict restrictions for the formation and use of the Reserve Fund's resources, aimed solely at covering possible additional financial needs of expenditures emanating from risks,’ he emphasised./pp

Noting that the draft budget for next year includes a tax-to-GDP ratio of 25%, the head of the regulator said that this implies a certain conservative approach. Nevertheless, he noted, state budget revenues are expected to have a predominantly restraining effect on gross demand in 2025./pp

He also noted that the ratio of total expenditure to GDP will rise to 31.5 per cent in 2025, as a result of which expenditure will have an expansive impact on government demand./pp ‘As a result, with the tax-to-GDP growth pledged and a significant increase in spending, the fiscal deficit-to-GDP ratio is planned to rise to 5.5 per cent, as a result of which fiscal policy will have a more expansive impact on overall demand,’ he said./pp

The draft state budget for 2025, approved by the Armenian government in late September 2024, calls for revenues of 2.87 trillion drams, expenditures of 3.48 trillion drams and a deficit of 609 billion drams. Economic growth is planned at 5.6 per cent, average inflation at 3.5 per cent, and the government debt-to-GDP ratio at 53.5 per cent. ($1 - 387.51 drams).-0-/pp nbsp;/pp nbsp;/p