Armenia to increase defence spending in 2027 as budget deficit widens

YEREVAN — Armenia plans to increase its defence budget to 616.5 billion drams (around $1.7 billion) in 2027, reversing part of the reduction implemented this year.

Defence spending had fallen by nearly 15 percent in 2026 compared with 2025. Under the government-approved 2027 draft budget, it will rise by approximately 9.5 percent. More than 613 billion drams will be allocated to the Defence Ministry’s main defence program, covering the maintenance and combat readiness of the Armed Forces, military equipment, weapons and ammunition, communications systems, fuel, supplies and other operational requirements.

Additional allocations include 1.07 billion drams for military medical services, 974 million drams for international military cooperation and 306 million drams for humanitarian demining.

The increase comes, however, as the government continues to rely heavily on borrowing to finance overall state spending. Armenia’s 2027 consolidated budget envisages revenues of approximately 3.83 trillion drams and expenditures of 4.30 trillion drams, leaving a deficit of about 468.2 billion drams. The government plans to finance that gap through borrowing.

The borrowing is not specifically earmarked for defence, but the simultaneous expansion of military and other government expenditures means Armenia will be increasing defence spending while continuing to add to its public debt burden. This places additional importance on how efficiently the increased defence allocation is spent and on the government’s ability to maintain fiscal sustainability while meeting security requirements.

The government forecasts economic growth of 5.8 percent in 2027, compared with an expected 5.6 percent in 2026. Other major spending commitments include housing assistance for Armenians forcibly displaced from Nagorno-Karabakh, public-sector salaries, healthcare programs and pension cashback payments.

The draft budget will now be submitted to the National Assembly for consideration.