Paper/Speech Details of Conference Program for the 15th NISPAcee Annual Conference Program Overview V. Working Group on Public Sector Finance and Accounting Author(s) Suren Poghosyan Open Society Institute Hungary Budapest Hungary Title Community budget reforms in Armenia: introducing new outllok to budgets File Paper files are available only for conference participants, please login first. Presenter Abstract Although during the last decade Armenia has performed noticeable structural reforms at local government level, including decentralization in administrative and financial areas, nevertheless the budgeting system itself in communities has not been reformed to an appropriate extent and, in general, is not in line with overall country reforms pattern. Moreover, budgeting reforms at central government level have extended to a more advanced configuration than local governments’ one, thus creating a noticeable gap between budget systems at community level and the central ones. Limited nature of local budgets is a result of former Soviet methodology of budgeting multiplied by lack of attention paid by the central government on introducing contemporary budgeting models at local level. At the same time, introduction of results oriented budgeting system should naturally be simpler at local level due to its smaller size and less complexity of the system compared with multi-level arrangements within the central budget system. Hence, the paper analyzes the current environment to initiate budgeting reforms and the capacity of local governments to introduce and manage such reforms, as well as the extent of the central government’s role in the overall organization of the reforms. Several aspects of strategic planning and budget formulation processes have been considered to assess the capacity of local governments to introduce results-oriented system. And, although the findings are some positive on local government officials capacity to activate new methodologies in planning exercises, however, the role of the central government is recognized as vital in achieving final results of the reforms to stimulate the local governments in commencing the reforms and to ensure equivalent progress amongst all communities. Another key aspect of the paper is that it emphasizes significance of the reforms of the planning part as the front-end of the budget cycle, although comprehensive changes will be required to link it with the rest of cycle. The reason behind such approach is the necessity to have plans developed appropriately and then suggesting budget delivery, monitoring ad reporting ends of the cycle to meet the requirements of the plan. The central government budget reforms indicate that public officials perceive such sequence as more natural and feasible. General findings are that communities have sufficient capacity to initiate the reforms; however, there is a need for the central government to lead those and to ensure parallel increase of the capacity of local governments employees (as the supply side of the reforms) and public awareness (as the demand side of those). In order to meet the mentioned, the paper presents some options and recommendations, e.g. the central government needs to update the legislation, facilitate public discussions and general recognition of the proposed reforms, as well as provide general methodology and provide massive trainings of local government employees. An obvious advantage in performing the mentioned for Armenian government is current reforms of similar nature at the central government level and based on this experience it must draw valuable and localized conclusions and recommendations on particular direction, speed and stages of the reforms to be implemented in Armenia.
