YEREVAN, October 8. /ARKA/The government of Armenia launched several economic and social measures to mitigate the coronavirus pandemic at an estimated cost of around 2.3 percent of GDP and pushing current spending in the first seven months of 2020 up by 19 percent yoy, the World Bank said in a latest report t on economic developments in Europe and Central Asia.
Capital spending increased by 62 percent, but from a low base in 2019 and it remains below budgeted levels reflecting persistent challenges in public investment management. Revenues fell by 6 percent yoy resulting in a deficit of around 1.7 percent of projected annual GDP in the year-to-July.
Stepped up domestic and external borrowing financed the deficit and pushed public debt to approximately 60 percent of GDP, with the government invoking an escape clause in the fiscal rule allowing to increase debt during crises.
The current account deficit is estimated to have narrowed but remains elevated. The goods trade deficit improved by 21 percent yoy in the year to July, as imports contracted by 13.7 percent yoy offsetting the 6.4 percent yoy decline in exports.
The smaller trade deficit offset the decline in the services and income accounts, as tourism arrivals were suspended and money transfers from abroad declined (15 percent yoy). Despite slowing FDI inflows, support from IFIs financed the deficit and kept reserves at about five months of imports as of July 2020.
The Armenian government has approved 25 measures to mitigate the economic consequences of the coronavirus crisis. As of September 10, 2020, the government spent 163.4 billion drams (almost $335 million) on 24 measures. Some of them were designed to show assistance to agriculture, tourism, SMEs, microbusiness, IT and other industries, others – to f various groups of the population.