2003年-世界发展银行全球_Armenia___Public_Expenditure_Review_210页_17mb

Armenia Public Expenditure Review Summary

Core Content

This document is a Public Expenditure Review (PER) conducted by the World Bank and the Armenian Ministry of Finance and Economy. It provides an in-depth analysis of Armenia's fiscal and expenditure management systems, highlighting the country's economic performance, fiscal adjustment, and the challenges in improving the efficiency and transparency of public spending. The review also outlines policy recommendations for enhancing fiscal sustainability and public expenditure management.

Main Views and Key Information

1. Economic and Fiscal Performance

• Economic Growth: Armenia experienced strong economic growth since 1994, with annual growth rates exceeding 5%.
• Macro Stability: The economy has shown resilience against the 1998 Russian financial crisis and political events in 1999.
• Fiscal Adjustment: Significant fiscal adjustment occurred from 1995–1996 to 2001, reducing the consolidated public sector deficit from over 11% of GDP to about 5.2% of GDP.
• Exchange Rate and Inflation: The Armenian Dram remained stable, and inflation was low.
• International Reserves: International reserves were sufficient to support the economy.

2. Revenue Challenges

• Revenue Collection: Despite improvements, tax and customs collection remains low and unstable.
• Informal Economy: A significant informal economy persists, affecting the reliability of tax data.
• Tax Performance: Tax arrears and exemptions are below the regional average, but there are still major inefficiencies in the system.
• Tax Compliance: Only about 60% of formal sector wages are subject to payroll taxation, indicating poor compliance among high-income groups.

3. Budget Deficits and Off-Budget Elements

• Consolidated Deficit: The public sector deficit decreased from 11.3% of GDP in 1995 to 5.2% in 2001.
• Off-Budget Deficit: The off-budget deficit (budget arrears + energy sector losses) was also reduced but still significant (1.0% of GDP in 2001).
• Quasi-Fiscal Deficit: The quasi-fiscal deficit, especially in the energy sector, was estimated at 2.3% of GDP in 2000.
• Unaccounted Expenditures: A large portion of public spending is not included in the official budget, including non-cash grants, sectoral extra-budgetary funds, and quasi-fiscal subsidies.

4. Public Expenditure Trends

• Functional Classification: Expenditures were classified by function, with major allocations to education, health, and social security.
• Efficiency and Equity: Public spending on education and health was analyzed for efficiency and equity, revealing disparities in resource distribution and quality of services.
• Sectoral Shares: Education and health accounted for a significant share of public expenditure, but their performance was mixed.

5. Challenges in Expenditure Management

• Budget Credibility: Budget credibility remains low due to accumulated arrears and inconsistent budget execution.
• Weak Accountability: There is a weak correlation between approved budgets and actual disbursements, indicating inefficiencies in the budget process.
• Legacy Issues: The pre-reform structure of public expenditures continues to influence the current system, leading to imbalances and inefficiencies.

6. Recommendations for Fiscal Reform

• Revenue Improvement: Increase tax collection by at least 2% of GDP in the medium term.
• Budget Consolidation: Expand the official budget to include all extra-budgetary funds, non-cash grants, and quasi-fiscal subsidies.
• Transparency and Accountability: Introduce a new budget classification (GFS2001), improve budget reporting, and adopt international accounting standards.
• Expenditure Rationalization: Reduce subsidies and reallocate resources to more efficient and equitable uses, particularly in education, health, and social security.
• Sectoral Reforms: Accelerate reforms in education, health, and public administration to improve service delivery and reduce inefficiencies.
• Civil Service Reform: Implement reforms to reduce public employment and increase budget wages.
• Privatization: Revitalize the privatization program, which slowed in 2000–2001.
• Debt Management: Address the financial performance of state-owned enterprises (SOEs), especially in the energy sector, to reduce fiscal risks.

7. Strategic Priorities

• Sustainable Fiscal Policy: Ensure the public sector deficit is reduced to 3.5% of GDP in the medium term.
• Targeted Social Assistance: Redirect implicit subsidies to more efficient and targeted social programs.
• Infrastructure Development: Focus on improving public infrastructure and social services to support long-term growth and reduce social tensions.

Key Tables and Figures

• Table A: Fiscal Deficit Trends (1995–2001) show a reduction from -11.3% to -5.2% of GDP.
• Table B: Main recommendations include budget consolidation, tax collection improvement, and expenditure rationalization.
• Figures: Highlight the performance of public spending on education and health, as well as the impact of budget arrears on fiscal credibility.

Conclusion

The report underscores the need for a more comprehensive and sustainable fiscal strategy in Armenia, emphasizing the importance of improving revenue performance, enhancing budget transparency, and rationalizing public expenditures. It also highlights the role of institutional reforms and the need for stronger government ownership of the reform process to address persistent inefficiencies and governance challenges.