Republic of Armenia: Selected Issues

International Monetary Fund

No 2025/324, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper evaluates the effectiveness of Armenia’s fiscal framework, with a specific focus on the design and implementation of fiscal rules. Armenia's existing fiscal framework has been effective, but further improvements are necessary to align with international best practices and support the fiscal consolidation outlined in the 2026–28 Medium-Term Expenditure Framework. Key policy recommendations focus on improving the countercyclicality of fiscal rules, such as upgrading the expenditure rule with forecast error adjustments and incorporating structural deficit targets into the balanced budget rule. Simplification is also essential, replacing complex rules with a clearer, more monitorable set, and establishing transparent, well-defined escape clauses to manage economic shocks while preserving discipline. Furthermore, enhancing transparency through legally mandated reporting and consolidating rules in unified legislation is crucial. The framework's coverage should be broadened to include off-budget entities and contingent liabilities. Finally, strengthening enforcement via statutory codification and enhancing institutional oversight, potentially through an independent fiscal council, will bolster the rules' credibility and accountability, supporting Armenia's public finance resilience.

Keywords: expenditure rule; rule compliance; staff team; IMF country; strength Index; Fiscal rules; Fiscal governance; Current spending; Global; Middle East; Central Asia (search for similar items in EconPapers)
Pages: 21
Date: 2025-12-05
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