The realism of medium-term projections is a matter of deep concern

“LUYS” Foundation analyzed the RA government’s 2027-2029. medium-term expenditure plan.

Thus.

2027-2029 of the RA Government. According to the medium-term expenditure plan (MDP), in 2026 The government predicts economic growth of 5.4%, which should gradually accelerate in the medium term and reach 6.1% in 2029.

Meanwhile, forecasts of international organizations regarding economic growth in the medium-term sector continue to remain conservative to a considerable extent. This proves that the MDP–One of the most worrying provisions is the optimistic nature of economic growth forecasts.

Moreover, the arguments presented in the paper for optimism are mostly related to such factors, whose influence is already waning, or their implementation dates have been regularly postponed in recent years. More, It is mentioned in the MEP program at the same time, that RA economic growth forecasts contain great uncertainties, containing downward (negatively affecting) and upward (assuming positive developments) bilateral risks.

And it’s remarkable, that downside risks prevail. In other words, in fact, the authors of the MDPAP themselves admit that the probable deviations of the economic developments of the main macroeconomic scenario of the program formed in the framework of significant uncertainties are mostly in a negative direction.

2027-2029 The forecasts of the total revenues of the state budget and nominal amounts of tax revenues were revised in the direction of growth. Meanwhile, growth is not accompanied by an adequate increase in their ratio to GDP.

The plan predicts that the total budget expenditures in 2029 will amount to 4,461 billion drams, which is 35.0% more than the indicator of 2025, and the government debt, having increased by 43.6% from 5,355 billion drams in 2025, will reach 7,689 billion drams in 2029. In 2029, compared to 2026, in contrast to the continuous growth of the general expenses of the state budget and the debt of the government, their ratio to the GDP is predicted to decrease due to the progressive growth of the GDP.

According to the Program` In the medium term, the government’s debt burden will become much heavier: Interest payments for debt service will be 42.4% more in 2029 compared to the actual size of 2025, from 349 billion drams to 493 billion drams.

It is remarkable, that a number of predictions continue to be repeated in the program, the implementation of which was repeatedly postponed in previous years. The provision on the start of operation of the Amulsar mine is one of its most characteristic examples.

Previous MDP–forgiveness was also mentioned, that the mine will be exploited already in the year of drawing up the project and will contribute positively to the economic growth of that year. Taking into account the fact that such forecasts have been regularly postponed in recent years, skepticism about the implementation of the Project is further justified.

It is remarkable, that the expected size of the current year’s budget expenditures under the Program is even slightly more, than the amount planned by the annual approved budget. While it is known, that during the years of activity of the current government, a sad tradition has been formed: budget expenditures are constantly under-executed.

According to the latest available official information, in the 1st quarter of 2026, budget expenditures were under-executed by 29.6%. In this case, expect, that at the end of the year the actual expenses of the budget will even exceed the amount planned in the budget, is unreasonable optimism. And even if the expected size of the current year is unrealistic, how can the predictions made on its basis for the next three years inspire confidence? In this regard, the realism of the mid-term forecasts built on their basis also gives rise to deep concerns.

Full analysis here.

“LUYS” Foundation

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