Armenia’s government approves 2027 budget draft: spending AMD 4.07 trillion, deficit AMD 468.2 billion

Armenia’s government approved the draft law on the 2027 state budget at its meeting on October 1, and will submit it to the National Assembly. The draft projects state budget revenue of AMD 3,603.8 billion (about $9.9 billion), spending of AMD 4,072 billion and a deficit of AMD 468.2 billion.

The consolidated budget for 2027 is estimated at AMD 3,829.9 billion in revenue and AMD 4,298.1 billion in spending (both excluding inter-budgetary transfers), with a deficit of AMD 468.2 billion. Community budgets are estimated at AMD 417.6 billion in both revenue and spending.

Revenue and deficit financing

Tax revenue and state duties account for most of the state budget revenue, at AMD 3,462.7 billion. Official grants are projected at AMD 14.2 billion and other revenue at AMD 126.9 billion.

Of the AMD 468.2 billion deficit, AMD 187.5 billion is to be financed from domestic sources and AMD 280.7 billion from external sources.

Growth forecast and priorities

The government forecasts economic growth of 5.8% in 2027 and an average of 6% a year over the medium term, in line with the targets of the government programme.

According to the government’s statement, the budget prioritises programmes that boost economic growth, employment, productivity and household incomes, with emphasis on capital and infrastructure projects, education, healthcare, employment and professional skills.

In 2027 the government will continue the phased introduction of universal health insurance, a support programme for people with bad loans who are outside formal employment or only partly formally employed, and cashback for pensioners on non-cash payments.

Other provisions

Under the draft, the Central Bank is to base its 2027 monetary policy decisions on a 12-month inflation target of 3%, with a tolerance band of ±1 percentage point. The Central Bank’s administrative budget is set at AMD 13.3 billion, with capital investment capped at AMD 4.3 billion. The Central Bank may reallocate its administrative spending, but no item may be cut by more than 15% or increased by more than 30%.

Under financial equalisation grants, each community with up to 3,500 residents will receive AMD 50 million and each border settlement AMD 5 million. The annual bonus fund for civil servants will be 10% of the annual base salary fund.

Permitted increases in spending during budget execution may not exceed 10% of approved spending for the year, with exceptions set out in the law. If funds run short, the government may temporarily use privatisation proceeds, provided they are restored by December 25, 2027. Operations on 2027 obligations will not continue into January 2028. The law takes effect on January 1, 2027.

Communities and deposit compensation

In 2027 community budgets will not receive the shares of income tax and profit tax provided for by law. Losses in community budget revenue caused by the application of laws will not be compensated either.

Compensation will continue in 2027 for VTB Bank (Armenia) depositors whose savings were placed in the Armenian SSR branch of the former USSR Savings Bank before June 10, 1993. World War II veterans will receive compensation on a priority basis. Compensation will also go to people born on or before December 31, 1946, veterans of combat operations in defence of Armenia, residents of border communities registered as of August 1, 2014 whose land cannot be used because of hostilities or has been shelled, and other social groups defined by the government. Receiving compensation cannot be grounds for removal from family benefit lists.