Financial study of local self-government in Armenia: problems, strategies and options relative to intergovernmental management

Abstract

"All local affairs, of common interest, shall be administered and controlled by true practical Institutions of Local Self-Government". J. Toulmin Smith, 1850.

To make democratic transition Armenia has fundamentally transformed its old, highly centralized public management system greatly simplifying the structure and giving autonomy and power to the lower levels of government. Yet, despite the efforts taken by the government, current institution of self-government is far beyond to be good enough in Armenia. It still has numerous shortcomings including lack of horizontal and vertical coordination resulting in duplication of functions and discontinuity of policies, lack of policy making and management capacities especially on local level, weak accountability, corruption and clientism. Local authorities have continued to lack real autonomy from central control: the chairmen of regional executive bodies- marzpets - are appointed by the higher state authorities- the president and the prime-minister, local authorities have no real legislative power, elected local councils are actually auxiliaries of the mayors without clearly defined rights and the level of influence, the elected heads of local communities can be removed by the appointed marzpets and the central government. Financial resources are withheld from local governments. Local governments are confronted with a fiscal and budgetary plight increasing their indebtedness, which is widely seen as one of the most severe obstacles to decentralization. Alienation of citizens from politics and their reluctance to participate in public life is part of a syndrome inherited from the previous regime and such attitudes can change only slowly.