2003年-世界发展银行全球_Public_Expenditure_Review_for_Armenia_199页_1mb

Public Expenditure Review of Armenia Summary

Core Content

This report is the first comprehensive Public Expenditure Review (PER) of Armenia, analyzing fiscal trends from 1997 to 2001 and providing recommendations for further fiscal adjustment, expenditure prioritization, and budget consolidation. It is a joint effort between the World Bank and the Ministry of Finance and Economy of Armenia.

Main Fiscal Trends

Macroeconomic and Fiscal Environment

• Economic Growth: Annual growth exceeded 5% since 1994, showing resilience during the 1998 Russian financial crisis and the 1999 political assassinations.
• Export Expansion: From mid-2000, the economy improved due to increased exports.
• Fiscal Adjustment: The government initiated significant fiscal reforms in the mid-1990s, leading to a reduction in the consolidated public sector deficit from over 11% of GDP in 1995–96 to about 7.5% in 2000 and 4.2% in 2001.
• Budget Deficit (Cash Basis): Reduced from -8.9% in 1995 to -4.2% in 2001.
• Quasi-fiscal Deficit: Reduced from 2.4% in 1995 to 1.0% in 2001, but still significant at 2.3% in 2000.
• Public Debt: Remained stable with low inflation, a stable exchange rate, and sufficient international reserves.
• Revenue Performance: Tax collection improved but remained low and unstable due to weak tax and customs administration and the informal economy.
• Budget Arrears: A major issue, undermining budget credibility and causing inefficiencies in public spending.

Expenditure Trends

• Functional Classification: Public spending on education and health increased, while spending on the real sector (e.g., infrastructure) remained low.
• Economic Classification: Expenditures on social sectors and public administration were prioritized, but there was a misalignment between policy and budget allocations.
• Quality of Budget Data: Data was inconsistent, incomplete, and not transparent, affecting the reliability of fiscal reporting.
• Expenditure Inefficiency: Weak correlation between approved budgets and actual disbursements, and inefficient use of public funds, particularly in the social sectors.

Off-Budget Elements

• Extra-Budgetary Funds: These included funds from the Ministry of State Revenues, Pension Fund, and Social Insurance Fund, which were not fully integrated into the regular budget.
• Grants and Donor Assistance: Non-cash grants and donor assistance were significant, especially in the health sector.
• Quasi-Fiscal Subsidies: Mainly from the energy sector, including power, gas, and heating, contributed to fiscal risks.
• Government Guarantees: Provided for commercial credits, increasing fiscal exposure.
• Need for Consolidation: Off-budget activities should be integrated into the regular budget to ensure transparency and accountability.

Strengthening Public Expenditure Management

• Budget System Structure: The system was fragmented, with unclear roles and responsibilities.
• Budget Formulation: Lack of coordination and alignment with policy objectives.
• Budget Execution: Inefficiencies and delays in disbursements, leading to budget arrears.
• Recommendations:
  • Improve budget transparency and accountability.
  • Implement a modern classification system (GFS2001).
  • Strengthen tax collection and customs administration.
  • Streamline budget execution through reforms in the Treasury.
  • Enhance public sector efficiency through sectoral and civil service reforms.
  • Promote program budgeting and strategic resource allocation.
  • Improve reporting and monitoring of public sector activities.

Public Expenditure in Key Sectors

Education

• Financing: Public education spending increased but remained below the OECD average.
• Efficiency: Teacher-to-student ratios were high, and there were inefficiencies in staffing and resource use.
• Equity: Disparities in education access and spending by consumption quintiles.
• Recommendations:
  • Increase investment in basic education and primary health.
  • Improve efficiency in education spending.
  • Expand program budgeting and strategic reallocation.
  • Initiate a comprehensive reform of university education financing.

Health

• Public Expenditures: Health spending was below the OECD average and faced significant arrears.
• Efficiency: Inpatient utilization and personnel ratios were suboptimal.
• Equity: Out-of-pocket payments were high, reducing access for low-income groups.
• Recommendations:
  • Improve health financing and out-of-pocket payment mechanisms.
  • Expand health infrastructure and service delivery.
  • Integrate health sector reforms into the broader fiscal strategy.

Social Protection and Insurance

• Social Assistance: Programs like poverty family benefits and pensions were underfunded and inefficient.
• Social Insurance: The Social Insurance Fund (SIF) had significant non-insurance liabilities.
• Recommendations:
  • Increase old-age pensions through better tax collection.
  • Transfer non-insurance liabilities from the SIF to the regular budget.
  • Improve targeting and accountability in social protection programs.
  • Strengthen unemployment benefits and services.

Public Investments

• Trends: Public investment in infrastructure was low, leading to the need for budget support to maintain existing assets.
• Sources: Investment financing came from both domestic and external sources.
• Priority Sectors: Transport, water, and irrigation were key areas for investment.
• Recommendations:
  • Increase public investment in basic infrastructure.
  • Align investment priorities with strategic goals.
  • Improve capital expenditure efficiency and planning.

Key Recommendations

• Advance fiscal adjustment and budget consolidation.
• Reduce budget deficit to 3.5% of GDP.
• Expand budget coverage to include extra-budgetary funds, non-cash grants, and quasi-fiscal subsidies.
• Improve tax collection by 2% of GDP.
• Strengthen budget transparency and accountability.
• Rationalize and reallocate expenditures to prioritize social sectors and infrastructure.
• Implement program budgeting and strategic resource allocation.
• Accelerate civil service reforms to reduce public employment and increase efficiency.
• Strengthen sectoral reforms to improve the efficiency and quality of public services.
• Streamline budget execution through Treasury reforms.
• Enhance reporting and monitoring of public sector activities.

Conclusion

The report highlights that while Armenia has made progress in fiscal adjustment and economic performance, sustainability and efficiency remain critical challenges. The revenue system is weak, budget credibility is low, and off-budget activities pose significant fiscal risks. The recommendations focus on improving transparency, enhancing efficiency, prioritizing social spending, and strengthening institutional frameworks to support long-term fiscal stability and economic growth.