Armenia's government has decided to auction a historical building located in the heart of the capital city of Yerevan, which currently hosts the transport ministry, in order to raise funds for the state budget, Radio Free Europe/ Radio Liberty's (RFE/RL) Armenian service reported on October 7.

The 7,800-square-metre property was built in the 1940s and is valued at over $28mn, the source added. The country's new prime minister, Karen Karapetyan, a former executive at Russia's gas giant Gazprom, approved the sale on October 6.

The move illustrates Karapetyan's corporate management approach to running the government by increasing efficiency. Armenia has long sustained budget deficits, which have been financed from external sources, pushing the country's public debt to GDP ratio to 50%. In the first eight months of the year, the budget deficit increased by 51.1% y/y to AMD82.7bn (€155.7mn), according to statistics agency Armstat.

Armenia relies on tax collection for almost 90% of its state budget, and slow economic growth, as well as suboptimal tax collection, have affected budget revenues. In 2016, tax authorities will likely fall short of meeting the revenue target set in the state budget by AMD80bn, Finance Minister Vartan Aramian said in early October.

Yerevan targets a 23.8% reduction in the budget deficit to AMD150.1bn in 2017, according to the 2017 draft budget.

In order to quell fears about the possible alteration of historical heritage buildings, the government said that the prospective buyer would need permission from the government to alter the building. Yerevan has previously sold an even bigger historical building located in the same square as the transport ministry headquarters in 2013 for $52mn, RFE/RL added.