世界银行-亚美尼亚公共支出审查：提高支出效率（英）-2023-188页_9mb

Summary of Armenia Public Expenditure Review: Improving Spending Efficiency

Core Content

This Armenia Public Expenditure Review (PER), published in October 2023 by the World Bank, evaluates the fiscal performance and spending efficiency of Armenia's public expenditures, particularly focusing on capital spending, social protection, and public health. It also assesses the fiscal implications of the 2021–2026 government program, which includes ambitious reforms aimed at inclusive recovery and poverty reduction.

The report highlights that fiscal performance has improved over the past two decades due to reforms in tax policy and administration, with revenue collection increasing from 14.5% of GDP in 2002 to 23.3% in 2021. However, spending efficiency remains a major concern, especially in sectors like infrastructure, health, and education, where expenditures are significantly below the global efficiency frontier.

Main Views

1. Fiscal Performance and Efficiency

• Fiscal performance has improved, with revenue collection converging with regional peers.
• Spending levels have remained prudent, below regional and income averages.
• Debt levels are sustainable, but a high share of foreign currency debt is a key vulnerability.
• Fiscal policy is counter-cyclical and progressive, but its impact on economic growth is limited.
• Spending efficiency is weak, especially in infrastructure, health, and education.
  • In health, more efficient spending could save AMD 3.5 billion to achieve the same under-five mortality outcomes.

2. Government Program and Fiscal Impact

• The 2021–2026 government program includes phased UHC, increased capital expenditure, expanded social assistance, and pension reforms.
• These reforms could increase public spending by 3% of GDP by 2026 compared to a no-reform scenario.
• Debt sustainability concerns arise in the event of an economic shock, with debt potentially breaching the statutory threshold of 60% of GDP by 2026.
• Interest payments could rise to nearly 20% of total spending from 11% in 2022.

3. Spending Efficiency as a Solution

• Improving spending efficiency can provide an important cushion against economic shocks.
• Efficiency gains of 0.5% of GDP are estimated by 2026 through more efficient social protection and health spending.
• Additional efficiency savings in sectors like education and roads could be identified through targeted spending reviews.

Key Information

Key Reforms Proposed

• Capital Expenditures:

  • Improve planning, budgeting, and monitoring data.
  • Update asset registries.
  • Cost all sector strategies.

• Pensions:

  • Phase out contributions to Pillar 2.
  • Harmonize increases in basic and labor pensions.

• Social Assistance:

  • Pilot and implement the new Vulnerability Assessment System for better targeting.
  • Consider a freeze in the nominal amount of the Child-Birth Grant (CBG).
  • Introduce an integrated information system.

• Health:

  • Carefully cost the UHC reform to understand fiscal implications.
  • Introduce pharmaceutical policies to reduce medicine prices.
  • Establish a mechanism to govern benefit package revisions.

Fiscal Implications of the Program

• Baseline scenario: Public spending increases by 3.8 percentage points of GDP between 2022 and 2026.
• Macro-shock scenario: Spending increases by 7.5 percentage points of GDP due to economic contraction.
• Fiscal deficit:
  • Baseline: Could reach 5.3% of GDP by 2026.
  • Shock scenario: Could reach 9.4% of GDP.
• Debt:
  • Baseline: Projected to rise to 60% of GDP by 2026.
  • Shock scenario: Could breach the statutory threshold of 60% of GDP.

Challenges and Trade-offs

• Budget rigidity is high, with 73.2% of the budget allocated to high rigidity areas between 2018 and 2021.
• Spending cuts would likely be concentrated in less rigid areas, such as capital expenditures, which could hinder short-run economic recovery.
• More ambitious revenue reforms may not be sufficient to ensure debt sustainability in the event of a shock.
• Debt financing is not feasible due to high borrowing costs and potential breach of statutory limits.

Policy Recommendations

• Improve spending efficiency in key areas to generate savings and reduce fiscal pressure.
• Articulate clear policy priorities and rigorously cost them.
• Consider budgetary cuts or downgrading policy ambition in the event of an economic shock.
• Enhance tax policy and administration reforms to increase revenue and create fiscal space.
• Implement the Vulnerability Assessment System for better targeting of social assistance.
• Carefully cost the UHC reform and introduce pharmaceutical price controls.
• Update asset registries and improve data for capital spending.
• Harmonize pension increases and phase out Pillar 2.
• Introduce an integrated information system for social protection.
• Conduct targeted spending reviews in areas like education and roads to identify further efficiency gains.

Conclusion

This report emphasizes that while fiscal performance has improved, spending efficiency remains a key area for reform. The 2021–2026 government program presents significant fiscal challenges, particularly in terms of debt sustainability in the event of an economic shock. Improving efficiency in capital, social protection, and health spending is critical to support growth and ensure fiscal sustainability. The PER provides a roadmap for the government to optimize spending and manage fiscal risks effectively.