Central government’s expenditures for local governments in Armenia

Abstract

Currently, Government of Armenia undertakes an ambitious territorial administrative reform with a far-reaching goal to decentralize more power to consolidated local governments. The aim of this specific study is to find out about the problems connected with the decentralization policy and try to suggest the ways of improving the policy. The research uses quantitative and qualitative methods. Data collection instruments involve secondary and primary data. Specifically, it includes the review of the Reports on RA Budget Implementation from 2010 to 2014, the RA State Budget for 2015, the Law of the Local Self-Government and in-depth interviews. The study concentrates specifically on the budget allocations for communities spent through line ministries and governors’ offices. The study found that aside from intergovernmental transfers, the central government spends funds on the projects in communities that are not strictly under its discretion. The paper tries to find whether this practice is effective in terms of cost and citizen participation in the selection of projects. The main conclusion is that state budget funding for local government purposes is an issue in Armenia that needs to be addressed. Furthermore, it gives hints of how to make central government financial support to local governments effective.