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Publication(Washington, DC: World Bank, 2001-05) Lampietti, Julian A. ; Kolb, Anthony A. ; Gulyani, Sumila ; Avenesyan, VahramIncreasing cost recovery for utilities is a cornerstone of the Government of Armenia's economic reform program. This report assesses the 1999 electricity tariff increase and the potential for future improved water sector cost recovery, with particular attention to questions of service accessibility and affordability for the poor . The burden of energy expenditures is large for most households, particularly for the poor. Electricity makes up the bulk of these expenditures, and a further increase in tariffs, without increasing access to low cost substitutes, would lead to the greatest hardship for the urban poor. Future electricity tariff increases should be closely coordinated with improved price response prediction and credible action to mitigate the potential impact on the poor and the environment. The water utilities are caught in a low-level equilibrium trap, characterized by decreasing service quality and revenue. The water utilities must break out of this trap by generating more revenues through improved service delivery. A two-stage approach is recommended. In the first stage, revenues should be increased by enforcing payment from the households that currently have reliable service but are not paying their bills, in the second stage, after collection capacity is strengthened, the utility should start a program of tariff adjustments, based on improved service and meter-based billing.
Publication(Washington, DC: World Bank, 2001-03) Perkins, Gillian ; Yemtsov, RuslanBefore the breakup of the Soviet Union, Armenia had a highly developed and expensive education system, matching the needs of the command economy. The country is now facing a challenge to sustain universal coverage and performance standards in primary-secondary education with a small fraction of the former budget, while reorienting the system to the needs of a democratic society and market economy. The purposes of this paper are to clarify the case for rationalization by quantifying the future cost implications and affordability of various educational policy options, and to identify further measures needed in Armenia to promote restructuring and to secure adequate financing of the education system over the medium term. The paper examines recent evolution of the structure of inputs and expenditure to general education in Armenia in comparison with international norms and practice, and outlines various approaches that have been proposed for restructuring the system in the context of the government's sectoral reform strategy. Conclusions are drawn concerning the depth of rationalization and the financing strategy that would be needed to sustain universal access and quality of the system over the medium term. Finally, some of the practical and institutional obstacles to actually implementing rationalization are identified, and measures are proposed to help overcome these constraints.