The description and assessment included in this report are based on the situation that existed in the Republic of Armenia at the time of the mission in February-March 2001. Since then, the treasury law and the financial disclosure law for the civil service have both been enacted and implemented.
An IMF team consisting of Mr. Foumel (FAD) and Mr. Ramachandran (IMF Treasury Resident advisor in Armenia) prepared this review.
While the fiscal situation of Nagorno-Karabakh is partially reflected in the budget through lending operations involving Nagorno-Karabakh, the report only addresses fiscal transparency practices relating to the Republic of Armenia.
For a detailed presentation of the quasi-fiscal sectors in the Republic of Armenia, see Republic of Armenia: Recent Economic Development and Selected Issues, IMF Country Report No. 01/78, May 2001.
In the irrigation sector, subsidies still amount to around half of the overall production cost.
In the energy sector.
100 percent publicly owned companies are closed joint stock companies and, therefore, not subject to the same requirements as private companies with a shared capital.
In 1995-96, when financial markets were underdeveloped, CBA direct credits were the main sources of budget deficit domestic financing, which complicated the implementation of monetary policy. The development of the government securities market began in 1997 and started playing a significant role in budget deficit financing from 1998, although the CBA remained an important source of intraquarter deficit financing.
During a quarter, the CBA can, however, acquire treasury bills in the secondary market But the stock of CBA net credit will not be allowed to exceed the end quarter target by more than 10 percent of the cumulative monthly revenues within the quarter at any point during the quarter. At the end of each quarter, the stock of the net claims to the government must have returned to its previous end-quarter level.
This increase results from the restructuring of a state-owned enterprise that previously carried the equity holding. The equity holding was passed directly to the central government
There are 10 Marz excluding Yerevan
Respectively adopted in June 1997, November 1998, and June 1996.
Both taxes were split on a 95/5 percent basis in favor of local governments prior to January 2000. For the properly tax, local authorities share the responsibility for collection.
A revision of the Law on Territorial Administration, which would delegate more responsibility to local government, is under consideration
No regulation prohibits local government from borrowing from the banking system, although such borrowing is currently not taking place.
There are 44 Local Treasury Branches.
Constitution of July 5, 1995.
The main extrabudgetary accounts beside the SPA relate to publications (National Statistics Service), external assistance, and schools (for the publication and sales of training material within the framework of a donor- financed program).
Privatization operations are handled according to the Law on the Privatization of State Property adopted in September 1997.
The rule, as specified in the PRGF-supported program, is that at most 50 percent of the account’s assets at the beginning of the year may be used to finance capital expenditure and at least 25 percent should be set aside to pay off nonconcessional external debt, with the remainder being carried forward to the next fiscal year. However, these figures remain indicative rather than normative and, exceptionally, the government has temporarily borrowed from this account to finance priorities (in particular, salaries and pension arrears).
In the tax area, these delays may be compounded by insufficient coordination between the MFE and the MSR, respectively in charge of tax policy and tax and customs implementation.
This is, in particular, the case for the law on organizing and carrying out inspection in the organizations functioning in the territory of the Republic of Armenia, adopted in May 2000, which spells out the rights and obligations of the person carrying out an inspection, the rights and obligations of the person being inspected, and specifies a right for compensation in case of unlawful behavior from the inspection officer. Tax legislation also includes provisions imposing duties on tax officials and mechanisms allowing taxpayers to enforce their rights.
Budget documents include the draft budget and a fiscal statement comprising the budget speech, macroeconomic assumptions, explanations of the fiscal policy stance, and supplementary fiscal data.
The amount at end-2000 for central government is around 4.3 percent of GDP.
According to the Law on the Budgetary System, the contingency reserve cannot exceed 5 percent of the total budget appropriations of the fiscal year.
The Law on the Budgetary System currently includes a fiscal rule-limiting deficit to 10 percent of GDP.
The Law on the Budgetary System states an ex-ante limit to the guarantees that are provided: liabilities resulting from these guarantees must not exceed 10 percent of the tax revenues collected in the previous fiscal year.
Law on the Control Chamber of the Republic of Armenia, adopted in May 1996.
Adopted in April 2000. See also the ROSC data module for more details on the NSS.