The draft state budget for 2026 is currently in the phase of active discussion—both in the National Assembly and in expert circles. It is presented as a document aimed at economic stability and development, but at the same time raises a number of questions related to the realism of revenue collection forecasts and the associated risks.
How justified are the revenue and macroeconomic projections embedded in the budget draft, and what factors might affect their implementation, commented former Finance Minister Vardan Aramyan.
“Honestly, even back in 2025, I believed that meeting the budgeted tax revenue targets would be quite challenging, as a rather high bar had been set,” noted Aramyan, addressing the realism of the budget indicators.
According to him, the State Revenue Committee has so far managed to meet the planned targets: over nine months, collections amounted to about 2 trillion 12 billion drams, which is roughly 1–1.1 percent above the adjusted plan.
“Although the difference is small, the planned targets have nonetheless been met. If we estimate the end of the year using extrapolation, we can expect tax revenues to improve by another percentage point at most,” he noted.
According to Aramyan, the improvement in tax collections is mainly due to the refinement of administrative processes rather than legislative changes.
“For 2026, an improvement of another 0.4 percentage points is projected, but I have not noticed any significant legislative innovations. In this regard, there are certain risks, since tax administration is not an unlimited tool,” he emphasized.
In Aramyan’s assessment, a point comes when additional administrative tightenings no longer yield adequate results:
“In such a case, the state spends more than it receives in additional revenues. The shadow economy will always exist, but the question is at what cost you control it. If, for example, you spend 100,000 drams to collect an additional 50,000 drams, that is already an inefficient approach. In developed countries, they are usually cautious on this issue, especially toward microbusinesses, which address not only tax but also social problems—self-employment and poverty reduction.”
According to him, the efficiency of tax authorities cannot be ensured solely by setting new targets: without changes in policy and toolkit, this can be dangerous.
“Tax authorities are inspection structures, not policy developers. If excessively high targets are set for them that the economy cannot support, their behavior may change—shifting to overly rigid administration. This will also harm the business environment,” noted Aramyan.
The expert emphasized that budget risks largely stem from the structure of the economy. According to him, for a realistic assessment of 2026 economic outcomes, it is necessary to understand whether the economy can generate the planned revenues.
“I have always been concerned about the dominant role of the non-export sector in economic growth. This is a dangerous trend, as such a structure does not ensure long-term, qualitative growth,” he said.
Aramyan recalled that in the first half of the 2000s, Armenia also had high economic growth rates, but a significant part of them was due to statistical noise rather than real productivity growth.
“Back then, we thought our economic potential had reached 7–8 percent, but the 2009 crisis revealed the true picture. If average growth since 2010 has been about 3.5%, it means our real capabilities are significantly more limited,” he noted.
According to Aramyan, economic growth potential can only be increased through investments, especially in the export sector. He added that assessments by international financial organizations generally do not differ substantially from government forecasts:
“Forecasts from the International Monetary Fund and the World Bank in various periods have mostly aligned in direction—with a difference of at most half a percentage point. This also indicates that the overall approaches coincide, and our economic growth potential remains moderate for now.”