The plans of the Ministry of Defense were not completed by 60.1%. “LUYS” Foundation

“LUYS” fund analyzed the 2026 the implementation report of the RA state budget in the first quarter.

Thus.

• 2026 in the first quarter, the total revenues of the state budget amounted to 668.5 billion drams, 5.2% more than the indicator of the quarterly specified plan. The overperformance of the program indicator was mainly supported by “tax revenues” and “other revenues”, while chronic underperformance continues to be recorded in terms of official grants, which indicates shortcomings in the areas of cooperation with donor organizations and the fulfillment of previously assumed obligations.

Accumulation of significant volumes of temporary free funds of the budget (increase in interest income from their bank placement) was recorded, which is mainly a consequence of the continuous underperformance of expenditures on the most important programs and indicates the ineffectiveness of the budget policy. 

• 2026 in the first quarter, the actual total expenditures of the RA state budget, 603.3 billion drams, are 29.6% or 254.2 billion drams less than planned in the quarterly revised plan. 46% (116.8 billion drams) of the shortfall in expenses is related to current expenses, and 54% (137.4 billion drams) is related to operations with non-financial assets. At the expense of internal sources, the quarterly program of financing the state budget was underachieved by 28.7%. The picture is more bleak in terms of financing the state budget at the expense of external sources. this time again (as in the same period of last year) the share of spending on the account of external sources was extremely low: only 0.7% of budget expenditures, or 4.3 billion drams, were financed from external sources, which is about four times lower than the indicator of the quarterly adjusted plan, and about 2.3 times less than the actual size of the same period of the previous year.

The current expenditures of the state budget, 560.9 billion drams, were underachieved by 17.2% compared to the specified plan. In this reporting period, all their components were also underperformed.

Expenditures on non-financial assets (capital expenditures) decreased significantly compared to the same period of the previous year by 43.4%, and were underachieved by more than four times compared to the quarterly specified plan, mainly due to the underachievement of capital expenditures of the RA Ministry of Defense. In the case of capital expenditures, underperformance also applies to all cost components.

A significant part of the under-execution of expenses is related to the programs implemented under the responsibility of the Ministries of Defense, KGMS and Labor and Social Affairs. Performance (in percentage terms) is the lowest for programs under the responsibility of the Ministries of Defence, Ministry of Defense and Security, 39.9%, 62.7% and 65.6%, respectively.

Shortcomings in many of the programs are chronic, which means that the current government is simply not able to ensure the effective implementation of a number of important programs (“Development of the military-industrial complex”, “Implementation of the digital transformation process”, “Tourism development”, “Establishment, construction, improvement of public educational and pre-school institutions”, etc.), in the event that the current government’s 2021-2026 budget is determined by them. providing a significant part of the targets defined by the activity plan. 

• Q:The state budget of 2026 in the first quarter, a surplus of 65.2 billion drams was made, against the planned deficit of 221.8 billion drams. In other words, the deviation of the implementation of the state budget from the plan is 287 billion drams. The formation of the surplus is mainly caused by a significant underperformance of costs.

Low budget performance limits the impact of government programs on economic activity and infrastructure development and is the best indicator of low efficiency of the current government.

The full analysis is available at: by reference

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