Saturday, 10 May 2008
Honorable president of the National Assembly and deputies, I want to start my speech with the following quote by Garegin Nzhdeh: “A nation, the sons of which are not equal in front of the law and death, will not have a victorious country”. Why do I begin my report of the national budget in 2007 with these words? Because, the number one problem for us is the establishment of equal taxing conditions, for everyone to be equal in front of the law. This is the only way of our victory. From this aspect the year 2007 has been an exceptional one. It is exceptional as, for the first time we have managed to abruptly increase the degree of tax recruitment. Our national budget has increased by 33% from the aspect of income. And, moreover, by specific value of 1.6% in tax GDP. This is a great increase for us, as in 2006 it was just 0.2%. We realize that the progress, which was made in 2007, is not enough for us to relax and say, that the problems have all been solved. On the contrary, the execution of the budget in 2007 has discovered the most serious problems in the improvement of tax and custom management. Specifically in 2007 we have registered that we are still collecting the big part of taxes as indirect ones. And the specific volume of direct taxes has decreased in total volume of taxes comparing to 2006. Naturally, it is connected to those economic processes we witness. Like in previous years in 2007 the volume of import grew very rapidly. And, naturally, when import grows, the VAT that we charge gives opportunity to abruptly raise our national budget. The secret of our success is in the improvements of tax administration.
I would like to briefly present the principles on which the budget of 2007 has been built. First, I would like to remind you, that we have adopted the method of building the budget based on projects. And this approach must be deepened. This year 40% of our expenses part will be implemented by this approach and it is going to be deepened. This is going to give the opportunity to National Assembly to supervise the purposefulness of budget expenses. Meaning, how do the money you give to the government for us to implement budget expenses promote the realization of the aims we present you?
The 2nd important principle, on which our budget has been built, is that it is based on middle term financial projects, which are affirmed by the government for three years and that gives the opportunity to ensure the continuance of the budget for three years and every year we update those indexes.
The 3rd important document that underlies our budget is Poverty Overcome project, which is a long term project complex and which explains the logic of our expenses for current year.
The peculiarity of the budget of 2007 is that we have used the GFS-2001 system for the first time, which means insertion of international standard of government financial statistics. From now on our budget is juxtaposed to budgets of other countries and analytical comparisons will give the opportunity to discover our issues and problems. The macroeconomic indexes of 2007 are fairly impressive and at the same time obligatory, as in 2007 we have registered 13.8% increase of GDP and closed the year with 6.6% of inflation, also, our budget has had a 1.5% deficit. If we were to compare the indexes with CIS countries, we would see that the year of 2007 from the aspect of many macroeconomic indexes has been fairly successful, which, naturally, poses most serious problems for newly formed government – to secure acquired tendencies.
A peculiarity exists in transitional countries. That is, political activity is more active when the countries manifest not economic decline, but economic upswing. This means that if the social and economic condition of our citizens is improving, the defects become obvious. First, the defects of government activity become obvious, and create fair complaints from the citizens from the aspect of the correction of those defects. And that gives us a historical chance to direct political, economic and social activities: and those countries succeed who direct that activity to reforms. That principle is going to be the basic one in our government activity. We must speak openly about our defects and blanks, as it is going to be the insurance that we are going to solve those problems. I would like to thank the NA committees and deputies, for actively participating in 2007 national budget report discussions and discovering a number of problems, with which our deputies are concerned today.
In my ending speech I will mention the remarks and suggestion that have been voiced. Including the major tasks raised by Accounting Chamber, which are very important to us.
Taking into account that the deputies will have the opportunity to make accentuations on questions that worry them again, don’t let me stop on that remarks; I will talk about them in my ending speech, also mentioning the directions, with which we must solve the problem raised by you. Thank you for your attention.
