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Improved Tax Collection Cuts Armenian Budget Deficit

YEREVAN -- The Armenian Finance Ministry says government tax revenues jumped nearly 20 percent in the first quarter this year and have slashed the state budget deficit, RFE/RL's Armenian Service reports.

Today's data seems a further sign that Armenia is emerging from its first major economic downturn since the early 1990s. Renewed economic growth in the country accelerated from January through March, resulting in a first-quarter GDP increase of 5.5 percent.

A budget deficit of 6 billion drams ($15.6 million) recorded during this period was well below almost 35 billion drams projected by the government late last year.

The government's budgetary revenues plummeted in 2009 amid a double-digit decline in economic activity resulting from the global economic crisis. The government needed hundreds of millions of dollars in emergency loans from abroad to avoid significant cuts in public spending. The deficit-to-GDP ratio exceeded 5 percent as a result.

But improved tax collection has significantly eased the fiscal imbalance since then.

The Finance Ministry reported today that the State Revenue Committee (SRC) collected 127.1 billion drams in various taxes in the first quarter of 2010, up 19 percent year-on-year and is about 10 billion drams more than was projected.

Increased proceeds from value-added tax -- the single largest source of the country's budgetary revenue -- were primarily responsible for the gain.

The latest tax data comes on the heels of strong criticism of the tax authority by Prime Minister Tigran Sarkisian, who complained earlier this month that tax evasion among large companies remains widespread and that the SRC has failed to seriously tackle the problem.

SRC data shows that the national gas distribution company ARG is still the country's top corporate taxpayer, having paid 5.24 billion drams in various taxes in the first quarter of 2010. Armenia's leading taxpayers also include fuel-importing, telecommunication and energy firms.