2023 in the first quarter, the government failed to implement the important programs of the Ministry of Defense of the Republic of Armenia. “Luys” Foundation

“LUYS” fund analyzed the 2023 the report on the implementation of the RA state budget in the first quarter.

The analysis of the report showed that in 2023 in the first quarter, compared to the planned budget expenditure, a significant shortfall was recorded, by 23.5% or 130.1 billion drams. Moreover, both current and capital expenses were underpaid by 13.4 and 69.2 percent, respectively. 46.8% of the total shortfall of the state budget’s expenditures against the specified program of the first quarter was allocated to current expenditures, 53.2% to operations with non-financial assets. In this context, it should be noted that capital expenditures in 2023 in the first quarter compared to the same period of 2022 decreased by 18.2% and amounted to 30.4 billion drams. The capital expenditure performance was only 30.8%. Such a low performance indicator shows that the management and implementation of capital projects remains a serious unresolved issue for the government.

Such a large deviation of capital expenditures from the plan and the decrease compared to the same period of the previous year is mainly due to the underperformance of the measures for improving the building conditions of the RA Ministry of Defense. They are in 2023. in the first quarter they amounted to 19.5 billion drams and were 67.9% less than the program index. Moreover, they are 28.9% smaller even than the indicator of the same period of the previous year.

In addition, in 2023 In the first quarter, the government also underperformed the 2023 implementation of programs for the period specified by the state budget. Out of the planned 164 projects, in the first quarter, actual funds were used for 154 projects, and the total cost performance deviation was about 130 billion drams. Moreover, the study of the performance of budget expenditures by program classification shows that, in this regard, the “pioneer” is the defense system, the most significant deviation from the plan, by 46.8% or 52.6 billion drams, was recorded under the responsibility of the Ministry of Defense of the Republic of Armenia. in terms of programs (instead of 112.3 billion drams planned in the revised plan for the first quarter of 2023). In addition to the fact that a very low performance of the programs under the responsibility of the Ministry of Defense was recorded, the actual expenses are even 12.8% less than the indicator of the same period of the previous year. By the way, when presenting the state budget for 2023, the government repeatedly emphasized the unprecedented increase in defense expenses, which is foreseen by the budget.

In fact, although money has been planned and allocated in the budget for the projects, they are not fully or partially implemented, which is first of all evidence of the insufficiently effective work of the relevant bodies. In particular, the underperformance of capital expenditures has become common in recent years, which indicates the inability of the RA government to complete the planned expenditures in full and within the specified period. This fact is more worrying, especially in the context of the under-implementation of the programs under the responsibility of the Ministry of Defense of the Republic of Armenia. Meanwhile, with the current sharp increase in domestic demand and security issues, the government is expected to implement measures aimed at increasing supply. And that, definitely, implies the implementation of large-scale targeted capital expenditures. Moreover, in 2023 Such an underperformance of capital spending in the first quarter is a dangerous impulse. in particular, the recorded fact gives reason to assume that they will most likely be underperformed on an annual basis as well. Meanwhile, in 2023 When presenting the draft budget, the government cited the planning of unprecedented capital expenditures as an important merit.