Cuts and underperformance in state funding allocated for the development of the defense industry are not only a governance failure, but a direct crime. This assessment is voiced by former head of the Defense Industry Committee Avetik Kerobyan, commenting on the execution of Armenia’s 2025 state budget.
According to him, the Ministry of High-Tech Industry is required to fully implement the programs approved in the budget. In 2025, about AMD 5.7 billion was allocated for this purpose. The funds covered prototype production and military research and development work.
Prototype Production: Funding Reduced to Zero
“Prototype production refers to developments that companies have already financed themselves and brought to maturity,” Kerobyan explains. The state was expected to support testing. This would assess effectiveness and limits of use. However, funding in this area was cut by AMD 1.4–1.5 billion. Only about AMD 65 million remained. Actual budget execution was effectively zero.
Cuts in Funding for New Weapons Development
Funding for military research and development related to new weapons and equipment was also reduced. The originally planned AMD 4.2 billion fell to AMD 2.3 billion. Of that amount, about AMD 1.3 billion was spent.
Technological Gap and State Responsibility
Kerobyan warns that this situation is especially dangerous. Armenia faces a serious technological gap compared to adversary states. “If Armenia does not spend the defense industry development budget today, it is a crime,” he says. The state must reduce this gap. It must help companies adopt new technologies and produce modern systems.
Unspent Budget as a Loss for the State
The former official notes that unspent funds harm not only defense capacity, but also the state budget. According to his calculations, full spending of AMD 5.7 billion would have generated AMD 1.5–2 billion in tax revenue. This includes income tax, VAT, and profit tax.
Salaries Paid in Full, Programs Implemented Selectively
Kerobyan describes the problem as systemic. Of the ministry’s AMD 48 billion budget, only about AMD 14 billion is actually spent. At the same time, salaries and administrative costs are almost fully covered. “The question is why salaries are paid at 100 percent when legal obligations are met selectively,” he says.
He also reminds that defense industry development is a mandatory program approved by the government and parliament. “This is not a matter of management preference,” Kerobyan concludes.