Pension Increase in Armenia to Raise Budget Burden – Ministry of Finance Warns of Risks

The Government of Armenia has approved a decision to increase pensions and social benefits starting April 1, 2026. However, the country's Ministry of Finance considers this initiative potentially risky for the sustainability of public finances.

As noted in the Ministry's position, the increase in payments will lead to a rise in permanent social budget expenditures, which may limit the state's ability to fund other priority areas in the coming years.

According to preliminary calculations, the additional burden on the budget will amount to approximately 78.7 billion AMD per year. Furthermore, the Ministry of Finance emphasizes that the draft decision does not define specific funding sources for these expenses.

The department warns that in such a situation, the government will likely have to seek resources by optimizing or cutting other state programs to maintain a balanced budget.

Such decisions have a long-term impact on the economy:

1. social payments become a permanent budget expenditure item;
2. in the absence of additional state revenue, this may lead to a reallocation of funds between programs;
3. in the long run, such measures may increase pressure on public finances.

The decision to increase pensions will take effect on April 1, 2026. The government plans to clarify the detailed parameters of the payment increases in the near future.