Armenia forecasts economy to shrink 2% in 2020 due to coronavirus

YEREVAN, April 29 (Reuters) - Armenia’s parliament on Wednesday revised the ex-Soviet country’s state budget, downgrading its economic forecast to a contraction of 2% this year from its previous call for 4.9% growth.

The budget deficit has been revised down to around 324 billion dram ($670 million), or equivalent to about 5% of this year’s gross domestic product.

The deficit is expected to be covered by loans from international financial institutions, as well as by proceeds from government bonds issued on the domestic market.

The South Caucasus country of around 3 million will need to borrow an additional 260 billion drams to cover the deficit, the Finance Minister Atom Janjughazyan told the parliament.

He said that tax revenues would drop to 1.4 trillion drams, from the earlier expected 1.6 trillion drams, while spending would remain almost the same at around 1.9 trillion drams.

Earlier in April the government had reached an agreement with the International Monetary Fund on an increased financial support package, with the first tranche of $280 million available in May.

Other international financial institutions have also pledged support.

The government is implementing 150 billion dram relief programme to mitigate the economic impact of the COVID-19 outbreak. Armenia has registered 1,932 confirmed cases of the novel coronavirus and 30 deaths so far. ($1=480 drams) (Reporting by Nvard Hovhannisyan; Writing by Margarita Antidze; Editing by Alex Richardson)