Statements and messages of the Prime Minister of RA

“Yes, we will have a revolutionary State budget in 2020, and the economic revolution is gaining momentum in Armenia” - Concluding Remarks by Prime Minister Nikol Pashinyan at National Assembly Debate on 2020 State Budget Bill


Dear National Assembly Speaker,
National Assembly Members,
Dear Members of Government,

In my concluding remarks for this round of the 2020 State budget debate, I would like to address two, so to speak, pending issues, namely whether the 2020 State budget bill is a revolutionary one, and when people will benefit from the change?

During the 2018 revolution when I was not yet the Prime Minister of Armenia, I declared that the Armenia’s budget should increase by 30-35% within one-two years: this was one of our revolutionary pledges. Now, the revenue side of the 2020 State budget is 27.4% up the one we had in 2018, and if we take into account the budget performance indicators of 2018, which were over-fulfilled by AMD 62 billion, we can see that revenue has increased by 33%. And if we add to this the losses we had as a result of Tax Code amendments, we will have a growth of 35%. This is the right answer to the question whether this budget is revolutionary or not. Yes, it is a revolutionary budget as it reflects my personal pledge.”

The projected capital expenditures are 135.1% higher in 2020 than the actual figure for 2018, that is, we cannot call it otherwise than revolutionary. Note that the revenue growth - our average statistical revenue growth – used to be 7% before the revolution. We have doubled this rate. That is, if we take this into account, even as projected, our average annual budget comes to 14 percent instead of said 7 percent. What else is needed to call it a breakthrough?

Road construction, maintenance and capital repairs will be earmarked as much money as in 2015-2016-2017 altogether. What else is needed to call it a breakthrough?

We will have a 120% growth in housing construction and utilities as compared to 2018. Have you often heard governments talk about 100%, 110%, or 125% growth?

Healthcare spending will increase by 39.5 percent against the figure of 2018. Education spending is 34 percent up, welfare benefits and pensions will see an increase of 74 billion drams. Social expenditures shall increase by 21 percent, defense spending by 28 percent, with a 41 percent rise envisaged in the field of environmental affairs. The State indebtedness-GDP ratio will make 52.2% next year against 58.9 percent in 2017. Here, I would like to state that today Armenia’s foreign currency reserves are at a historical high.

Now the question is, is this all changing, has it changed and how is it changing people’s lives? The answer is simple. Let us start with the most primitive – with the fact that people will be traveling on better roads next year: is this an improvement or not? It is a change for the better indeed.

As far as capital expenditure is concerned: jobs are being generated; we are talking about unemployment, but today we have numerous job vacancies in the country. I have attended the openings of two manufacturing companies over the last 15 days, and the owners stated that there were about 1,000 vacancies.

Construction companies are “stuck” in orders nationwide, and not in debt, as it used to be previously. Some are actually “stuck” in debt, but it is an old story; I mean the North-South, etc., and so on. Probes are underway to expose those responsible.

This trend will continue into next year: new jobs will be created, and new businesses will be up. Note that the private sector is the supplier of building materials for the new construction projects.

Now, let us speak of healthcare: when a person knows that if he or she happens to get a stroke, he or she will not have to borrow a debt from neighbors or friends, and the patient will not stay on the stretcher. Is it a change in human life or not? Having been hit by a heart attack say in the middle of March, people will not be told in the hospital that the state funding is over. Is it a change in human life or not?

Hospital services for children under 18 are provided free of charge. Teachers’ wages are up. Is it a change for the better or not?

Salaries have been raised for military personnel. Army catering system has been improved. Is it not a contribution to our army’s combat readiness? Our soldiers will no longer have to be treated for 3 or 4 years after consuming bad food. A well-fed soldier is sure to be more vigilant.

A soldier can see that his government and his defense ministry are taking care of him. The parent of a soldier does not think of borrowing from a neighbor to send his son a parcel of normal food. Is it not good news for every one of us?

Some keep saying, “When will our life change for the better?” I wonder whom do they mean? The lives of those who say such things will only get worse day after day, with no hope of anything else.

As of January 1, 2020, 230,000 people will see higher wages owing to the Tax Code Reform. Salaries, pensions, and social benefits for hundreds of thousands of citizens were raised as of July 1. In the meantime, the opposition keeps saying that we are just breaking the fiscal rules.

Let us translate what they say. They just tell us not to raise wages, pensions, and benefits. You say words that no one can understand. Dear Bright Armenia party members, I urge you to stand up and straightforwardly say that you are against raising salaries and pensions.

And most importantly, the perception, philosophy and ideology of human life have changed in our country, because the new government says, “Dear compatriots, we are not going to give you 4 kg more rice or bread: your life can only change through labor and work; the government cannot do it for you and change your life.

The government can create for you unlimited opportunities to earn your wellbeing through honest and fair work. Were there such conditions in the country? I have already told you about what is going on in the private sector. We are short of skilled workforce in the country, but let us see how the philosophy of social policy has changed.

We do not tell people we will give them bread as a favor, so that you they come and vote for us. Today we say that we give livestock to 1,000 families in rural areas of the Republic of Armenia, give money to buy fodder, give advice on how to make a living through hard work.

We say, dear compatriots, we are investing in the so-called Smart Sheds program. Please build smart sheds and stables, and we will give 50 percent of your money back. We say, dear citizens, there is a huge potential for the export of agricultural products.

We provide an opportunity: please build greenhouses and we will refund 30% of the project cost; 50% - in border villages, 30 to 50% - for smart orchards. The amounts so refunded can reach 70% in border villages.

Can you imagine a person spending 1000 drams, who gets 700 drams back after making sure that he or she has created a tool for overcoming poverty? Is this not an improvement in people’s lives?

We are making a revolutionary move today: we are exempting micro-business from taxes with this budget. The volume, the package is too large indeed, and there are some exceptions. That is, if a person is qualified, there is not much logic in helping him or her to overcome poverty. We say that we do not collect taxes from businesses with annual turnover of up to AMD 24 million, we say you are free to live and work. According to preliminary estimates, tourists are spending 200-250 million more dollars annually in our country. We tell our citizen to get their share of money, we have exempted micro-businesses from taxes, from everything that you earn for your well-being, because this is not a way to reinstate citizens’ well-being; this is just a way to restore human dignity, because the working man is a decent man and a decent citizen.

This is how the public system works, and the same is true at the family level. Who is the respected person in the family: the one who works, and how do we deal with those people sitting idle all day long? Of course, I do not mean the disabled persons. Our policy is aimed at expanding the capabilities of people with disabilities in accordance with the logic that people can work and do decent work.

The Minister of Labor and Social Affairs is our best example. And that is a political message. And if the question is whether this budget is revolutionary or not, I say yes, this budget is just revolutionary because a budget cannot be more revolutionary than this one.

Now, let us get down to the most popular question, namely the reasons behind the 4.9 percent economic growth underlying the budget. Yesterday we discussed the development of the Military Complex during a consultation, at which I said that the benchmarks should be set in such a way as not to overpower that barrier, so that the government and the system, as a whole, would not be frustrated. We set it a bit lower, but will try to jump high.

This was the case with the 2019 budget, since the 2019 budget bill also envisaged 4.9 percent economic growth. And today, in November 2019, there is no talk about that 4.9 percent economic growth because 4.9% growth is absurd for today’s Armenia where all forecasts are pointing to more than 6% growth by this yearend, and the most optimistic forecasts foretell up to 7% growth. At least, the index of economic activity was 7.5% in the past 10 months.

And yes, as I said before, a budget has a minimum plan and a maximum plan. And we have argued a lot about that in the government. I agree that the budget should set a minimum plan in order to provide for macroeconomic stability. But that is not our goal: the indicators we set are just the platform on which we develop a higher performance scenario. We were criticized for such an approach in 2018, but I am glad that what we said last year is true today.

What is our strategic vision? Our strategic vision is to achieve a double-digit economic growth, but today we know why we cannot achieve a double-digit economic growth at once. Capital expenditure is our biggest concern. By the way, the underperformance of capital spending has always been a chronic problem in Armenia. It has become overwhelming today as we are reluctant to resort to kickbacks or to do poor work.

And the higher we set the standards, the harder the cost of that money. Without spending that money, we can state an economic activity index above 6%. In the meantime, we are constantly improving the system of public procurement.

Indicators are worse because quality is being improved, and because we are not following today's indicators: we are eyeing tomorrow’s index. As soon as quality and capital spending levels are identified, we will achieve double-digit economic growth, that is my prediction. Therefore, people should understand that substandard work will not be accepted, and the officials prepared to give and get kickbacks will be prosecuted. There will be no mercy no matter the person and the political team. Let everyone record this.

Our strict requirements are the primary impediment to capital spending. It turns out that sometimes we have a problem with construction companies not ready to meet our quality standards. They sometimes do the same thing three times in order to live up to the mark. If they did things once, we could earmark more funds for capital expenditures.

The next issue I want to talk about is the budget philosophy. It is in this context that we must state that the state budget of the Republic of Armenia is the strongest and most vivid form of government-society cooperation. In fact, we are guided, and I think we should be guided by the motto: “Armenia is our home, and the people are our family.” Therefore, the state budget of the Republic of Armenia is our family budget. All citizens of the Republic of Armenia should treat the state budget as their own family budget.

What needs to be done to maintain this 30% growth rate? Businessmen must pay taxes, a seller must provide the cash-register ticket, or otherwise the customer must ask it, officials should not rob the Treasury; instead they should spend funds efficiently. This is the formula that will take us to the desired destination.

Back to the aforementioned 24 million dram threshold for micro-businesses, I wonder how we can determine the turnover, if not mediating the cash-register. Consequently, the excuse that entities avoid giving receipts because they cannot afford to pay high taxes will not work at all from January 1. I want to make it clear that starting next year we will not accept the excuse of having meager sales or a poor annual turnover. Those facing sales constraints should print the ticket to show that they are a micro-business in fact. Those who fail do so rob our soldiers, our army, our pensioners, and so on. Therefore, they should be punished. I want everyone to remember this rule.

Dear Compatriots,
Dear National Assembly Speaker,
National Assembly Members,
Dear Members of Government,

The 2020 state budget is a revolutionary budget. Not only is the economic revolution on its way in the Republic of Armenia, but it is gaining momentum day by day, and it will be given a fresh boost from January 1.

← Back to list