Armenia approves budget eyeing Russian Customs Union

12th December 2013, Comments 0 comments

Armenia's parliament approved on Thursday a 2014 budget intended to ease entry into a Russia-led Customs Union, despite opposition objections that the proposals fail to tackle poverty.

"This budget for 2014 is marked by the fact that we will be joining (the) Customs Union," Prime Minister Tigran Sarkisian told parliament.

The budget forecasts that the country's gross domestic product will grow by 5.2 percent next year with inflation projected at about 4.0 percent.

In September President Serzh Sarkisian surprised many by turning his back on years of negotiations to sign a free-trade deal with the European Union in favour of joining the Moscow-led Customs Union.

A pet project of Russian strongman Vladimir Putin, the Kremlin-conceived Customs Union -- which already includes the ex-Soviet states of Belarus and Kazakhstan -- is the foundation of a future Eurasian economic union with its own executive body and a single currency.

The customs union is at the heart of a deep political crisis in Ukraine which decided at the last moment not to sign a trade agreement with the European Union, preferring the Russian option instead but triggering strong protests from many Ukrainians who prefer a tie-up with the EU.

In Armenia, the budget put revenues at 1.136 trillion Armenian drams ($2.79 billion, 2 billion euros) and expenditures planned at 1.246 trillion drams ($3.1 billion, 2.2 billion euros), putting the budget deficit at 2.3 percent of output.

The budget also includes a controversial measure to boost the salaries of about 165,000 state employees and the introduction of a contentious obligatory contributory pension system.

Opposition parties refused to endorse the budget and criticised it for bolstering government salaries while failing to address widespread poverty.

"We consider raising salaries for highly-corrupt government officials to be unacceptable when one third of the population lives in poverty," said Levon Zarubyan of the Armenian National Congress.

A landlocked country of 3.2 million that was badly affected by the global downturn, Armenia is economically isolated because its borders with two neighbours Turkey and Azerbaijan have long been closed owing to political disputes.

© 2013 AFP

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