The Armenian government’s draft state budget for 2026 raises serious questions about the country’s technological and defense policy priorities. While almost all countries around the world, including Armenia’s unfriendly neighbors, are increasing their military and technological spending, Armenia is moving in the opposite direction — funding for the defense industry and high-tech sectors is being reduced.
Sharp Cuts in the High-Tech Sector
The budget of the Ministry of High-Tech Industry for 2026 is planned at 37.35 billion drams, down from 47.51 billion in 2025 — a decrease of 10.16 billion drams or 21.4 %.
The defense industry budget has also been cut from 5.72 billion drams to 4.97 billion (−13 %).
The reductions affect the core components of the defense industry:
- Research and development (R&D) — from 4.16 billion to 3.56 billion drams (−14.5 %).
- Prototype production — from 1.50 billion to 1.28 billion drams (−14.1 %).
- Professional training — from 53.7 million to 25 million drams (−53.5 %).
The only budget line showing growth is the “International Exhibitions” program (100 million drams), which remains relatively small.
The IT sector is facing similar trends. State support for IT companies is reduced by 33.7 % — from 29.36 billion to 19.47 billion drams. Only “Digital Transformation” (+13 %) and “Telecommunications” (+76 %) programs show an increase.
Strong Support for the Construction Sector
In contrast, around 103 billion drams are allocated to subsidize mortgage interest payments, essentially stimulating the construction sector. This figure is nearly 20 times the entire defense industry budget. In effect, the government prioritizes housing subsidies over the development of domestic technological and defense capabilities.
Defense Budget Down by Over 100 Billion Drams
The situation in the defense sector is also concerning. In 2025, the Ministry of Defense’s budget was 664.6 billion drams, but in 2026 it is set to decrease to 563.1 billion drams — a reduction of more than 101.5 billion drams.
The main cuts are as follows:
- Military training and retraining — down to 387 million drams from 1.07 billion (a reduction of around 700 million drams).
- Combat readiness and capital expenditures — down to 560.1 billion drams from 660.9 billion (around 100.8 billion drams less). A 116.2 billion dram program for capital needs has been completely removed.
Other areas have only minor changes: international military cooperation remains almost unchanged (about 942 million drams), while medical and demining programs are slightly reduced.
The Dilemma: Construction or Security
These figures reveal a serious challenge for Armenia’s defense and technological sectors. At a time when the regional arms race is intensifying, Armenia is reducing its key defense and technology investments, shifting the focus to stimulating the construction sector.
This raises critical questions:
- What strategic direction is the state pursuing — reliance on a consumer-driven construction boom, or building independent defense capabilities?
- How does the government plan to ensure national security amid such cuts to defense spending?
- And can real military modernization be achieved when budgets for R&D, training, and combat readiness are being reduced?
Former Head of the State Revenue Committee David Ananyan