Supporting Diagnostic Assessment of Public Financial Management

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The period 20082018 has been much less promising with economic performance characterized by low growth, low investment, deteriorating infrastructure, and growing income disparities. A rapidly increasing public-debt stock has left Armenia with reduced fiscal space. Second-generation domestic structural reforms are needed to help generate stronger and inclusive economic growth, while preserving fiscal sustainability and reducing external vulnerabilities. While the PFM system in Armenia has undergone several positive developments between 20142018, including a range of legislative initiatives, institutional changes, and improvements in methodologies and guidelines that were identified as high priorities in the PFM Reform Strategy, these have not resulted in the functional improvements that the government aimed to achieve. Although PFM practices in Armenia are nominally sound and considered international standard, in practice there has been a great deal of functional mimicry, institutional fragmentation, overlapping mandates, and ineffective or redundant procedures. These challenges, coupled with inadequate domestic revenue mobilization, have negatively impacted public service delivery and overall economic productivity.