2016年-世界发展银行全球_Republic_of_Armenia_Programmatic_Fiscal_Work___Supporting_Effective_Fiscal_Management_93页_1mb

Summary of the World Bank Report: "Programmatic Fiscal Work: Supporting Effective Fiscal Management" (Republic of Armenia)

Core Content

This report, the third in a series of programmatic public expenditure reviews (PPERs), aims to identify measures to strengthen public finances in line with the Government of Armenia's strategy to reduce fiscal risks and support budgetary consolidation. It is anchored in the Country Partnership Strategy (CPS) pillars of improving governance, efficiency of public administration, and service delivery.

The report is structured into three main chapters:

• Chapter 1: Macroeconomic and Fiscal Challenges
• Chapter 2: Quasi-Fiscal Pressures in the Energy Sector
• Chapter 3: Assessment of Explicit Public Subsidies

Main Findings and Recommendations

A. Macroeconomic and Fiscal Challenges

• Fiscal Deficit: Increased from 2.1% of GDP in 2014 to 4.8% in 2015, and is projected to remain around 4.1% in 2016.
• Public Debt: Reached 49% of GDP in 2015, close to the legal maximum, leading to a legal amendment allowing more borrowing.
• Public Investment: Declined from 6.7% to 2.3% of GDP between 2009 and 2014, and remains low, limiting growth potential.
• Tax Revenues: Plateaued in recent years, despite efforts to improve tax collection through a unified tax code, which is expected to increase revenues by 2% of GDP.
• Spending Efficiency: Public spending is highly pro-cyclical, suggesting the need for a more countercyclical approach to stimulate growth and support vulnerable populations.
• Recommendations:
  • Strengthen financial management in state-owned energy companies to reduce contingent liabilities.
  • Review and rationalize subsidies to uncover potential cost savings.
  • Improve targeting and efficiency of public spending, especially in social sectors.
  • Increase public investment efficiency and expand fiscal space through structural reforms.
  • Enhance monitoring and evaluation of public spending and subsidies.

B. Quasi-Fiscal Pressures in the Energy Sector

• Power Sector Financial Condition: Deteriorated significantly, with a financial deficit of 1% of GDP in 2014. The sector faces high-interest commercial loans and short-term debt, increasing fiscal risks.
• Liabilities for the State Budget: The power sector's quasi-fiscal obligations, including potential liabilities, are substantial. The accumulated tax credits have led to a net implicit subsidization of the state budget of over 3% of GDP.
• Subsidies and Tariff Reforms: Energy sector subsidies are budgeted to rise exponentially in 2016, and tariff increases have not been sufficient to cover costs due to inadequate O&M and depreciation provisions.
• Impact of Tariff Increases: Poorer households are more affected by increases in energy expenditure, raising concerns about poverty impacts.
• Recommendations:
  • Strengthen financial management and governance in the energy sector.
  • Implement tariff reforms to support cost recovery and improve efficiency.
  • Address the growing fiscal liabilities through improved debt sustainability and risk management.
  • Consider phasing out subsidies and improving targeting mechanisms.

C. Assessment of Explicit Public Subsidies

• Scope of Subsidies: Explicit subsidies account for 0.5% of GDP, but many outlays require review, especially under current fiscal constraints.
• Subsidy Types: Subsidies include traditional ones (as per IMF definition) and others that should be classified as block grants, but these are not consistently reported.
• Social Sector Subsidies:
  • Childcare: Potential savings from moving to family-based childcare.
  • Health: "Catastrophic" health spending may push 6% of households into poverty.
  • Education: Efficiency scores suggest room for improvement.
• Agricultural Subsidies: Mainly for irrigation and credit, but benefit large farmers and discourage water-saving investments.
• Water and Sanitation Subsidies: Mainly for utility providers, with some inefficiencies in service delivery and cost recovery.
• Recommendations:
  • Improve monitoring and evaluation of subsidies.
  • Consider phasing out subsidies where possible and reallocate resources to targeted benefits.
  • Replace subsidies with beneficiary-based or performance-based schemes to improve equity and efficiency.
  • Enhance cost recovery mechanisms in utility sectors.

Key Information

• Fiscal Challenges: Armenia faces limited fiscal space due to slowing economic growth and regional shocks.
• Poverty and Inequality: Poverty and inequality remain higher than in 2008, with 30% of the population below the poverty line in 2014.
• Gini Coefficient: Increased from 0.24 in 2008 to 0.28 in 2014.
• Tax Reforms: A unified tax code is expected to boost revenues by 2% of GDP.
• Debt Sustainability: Public debt is sustainable but faces high downside risks due to external shocks and continued sluggish growth.
• Energy Sector: Requires significant investment in infrastructure and faces high contingent liabilities.
• Subsidies: While not a large share of the budget, they need to be reviewed for efficiency and equity.

Conclusion

The report emphasizes the need for a shift towards more countercyclical fiscal policy, improved efficiency in public spending, and better management of fiscal risks, particularly in the energy sector. It also highlights the importance of rationalizing subsidies and improving their targeting to support vulnerable populations and enhance service delivery. The findings are aligned with the CPS and aim to support Armenia's broader fiscal strategy for sustainable growth and poverty reduction.