World Bank2012-03-192012-03-192011-11-01https://hdl.handle.net/10986/2807Armenia's structural reforms since 1999 have led to a strong economic record, including low fiscal deficits and declining public debt over the pre-crisis decade. Between 2001 and 2008 Gross Domestic Product (GDP) grew at an average annual rate of 12 percent and poverty fell from over 50 percent to about 28 percent of the population. Over this period of rapid growth, prudent fiscal management contained fiscal deficits between 0 and 2.5 percent of GDP and helped to reduce public debt from 49 percent to 16 percent of GDP. This fiscal headroom allowed the Government to respond to the crisis with an appropriately large fiscal stimulus. When GDP contracted by more than 14 percent in 2009 and total revenues fell sharply, nominal public spending was increased by 13 percent to shore up the domestic economy and protect the poor and vulnerable. Despite the severity of the crisis, the Government maintained a sound macroeconomic framework while continuing to undertake social protection expenditures to mitigate the impact of the crisis on the most vulnerable people. This was done by securing sizable external financing. The fiscal deficit rose to 7.8 percent of GDP in 2009 and the public debt to GDP ratio rose from 16 percent in 2008 to 40.2 percent. Efforts at fiscal consolidation reduced the fiscal deficit to 5.6 percent of GDP in 2010, but public debt is projected to reach 42 percent of GDP in 2011.The report is in two volumes: a synthesis volume and a background volume. The synthesis volume summarizes the macroeconomic context of Armenia (chapter one), analyzes the recent debt dynamics and its implication for fiscal consolidation (chapter two, then assess the revenue potential the Government can tap (chapter three) while ensuring key growth-sustaining and poverty-reducing expenditures are maintained (chapter four). The background volume provides more details on the assessment of the tax potential of the mining sector (chapter one), and thoroughly analyzes the efficiency of spending on the public sector wage bill (chapter two), health (chapter three) and education (chapter four).CC BY 3.0 IGOALLOCATIONANALYTICAL CAPACITYANNUAL RATEARREARSASSET MANAGEMENTASSET VALUEAUTOMATIC STABILIZERSBASELINE SCENARIOBUDGET ALLOCATIONBUDGET CONSTRAINTBUDGET DEFICITSCAPITAL EXPENDITURECENTRAL BANKCENTRAL GOVERNMENTCHECKSCOMPENSATORY POLICYCOMPLIANCE COSTCOMPLIANCE COSTSCONSOLIDATION PROCESSCONTINGENT LIABILITIESCORPORATE INCOME TAXCREDIT FACILITYCREDITORSCREDITWORTHINESSCURRENCYCURRENT ACCOUNT DEFICITDATA COLLECTIONDEBTDEBT ACCUMULATIONDEBT BURDENDEBT DYNAMICSDEBT LEVELDEBT MANAGEMENTDEBT OBLIGATIONSDEBT RATIODEBT RATIOSDEBT REDUCTIONDEBT SERVICEDEBT SERVICINGDEBT SUSTAINABILITYDEFICIT FINANCINGDEFICIT REDUCTIONDEVELOPMENT BANKDOMESTIC CURRENCYDOMESTIC DEBTDOMESTIC MARKETECONOMIC CLASSIFICATIONECONOMIC CYCLEECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC POLICIESECONOMIC RECOVERYECONOMIC SHOCKSEDUCATION EXPENDITURESEDUCATION SPENDINGEDUCATION SYSTEMEFFICIENCY GAINSENFORCEMENT PROCESSENTRY BARRIERSEXCHANGE RATEEXCHANGE RATE MOVEMENTSEXPENDITUREEXPENDITURE ANALYSISEXPENDITURE CUTSEXPENDITURE PRIORITIESEXPENDITURE RATIONALIZATIONEXPENDITURESEXTENDED FUND FACILITYEXTERNAL BORROWINGEXTERNAL DEBTEXTERNAL DEFICITEXTERNAL DEFICITSEXTERNAL FINANCINGEXTERNAL SHOCKSFINANCIAL ASSETFINANCIAL CRISISFISCAL AFFAIRSFISCAL BALANCEFISCAL CONSOLIDATIONFISCAL DEFICITFISCAL DEFICITSFISCAL FRAMEWORKFISCAL FRAMEWORKSFISCAL IMPACTFISCAL POLICYFISCAL RETRENCHMENTFISCAL STANCEFISCAL SUSTAINABILITYFOREIGN CURRENCYFOREIGN DEBTFOREIGN EXCHANGEFOREIGN INVESTORSFORMAL ECONOMYFRAUDGLOBAL ECONOMYGOVERNMENT EMPLOYMENTGOVERNMENT FINANCEGOVERNMENT FINANCE STATISTICSGOVERNMENT FINANCESGROSS DEBTGROSS DOMESTIC PRODUCTHEALTH CAREHEALTH EXPENDITUREHEALTH EXPENDITURESHEALTH OUTCOMESHEALTH SERVICESHEALTH SPENDINGHUMAN CAPITALHUMAN RESOURCEIMPLICIT TAXINCOME LEVELSINCOME STREAMINCOME TAXINDEBTEDNESSINFLATIONINFORMATION FLOWINFORMATION SYSTEMINFRASTRUCTURE EXPENDITUREINITIAL DEBTINSTRUMENTINTEREST PAYMENTINTEREST PAYMENTSINTEREST RATESINTERNATIONAL FINANCEINTERNATIONAL STANDARDSLEVEL OF DEBTLIABILITYLIQUIDITYLIQUIDITY PROBLEMMACROECONOMIC FRAMEWORKMACROECONOMIC SITUATIONMEDIUM TERM EXPENDITUREMEDIUM TERM EXPENDITURE FRAMEWORKMINISTRY OF FINANCEMONETARY FUNDNATIONAL INCOMENATURAL RESOURCESNEGATIVE EXTERNALITIESNET PRESENT VALUEOPPORTUNITY COSTSPENSIONSPERSONAL INCOMEPERSONAL INCOME TAXPOSSIBILITY OF DEFAULTPOVERTY REDUCTIONPOVERTY REDUCTION STRATEGYPOVERTY-REDUCING EXPENDITURESPRIVATE INVESTMENTPROGRAMSPRUDENT FISCAL MANAGEMENTPUBLIC DEBTPUBLIC DEBT STOCKPUBLIC EMPLOYMENTPUBLIC EXPENDITUREPUBLIC EXPENDITURE REVIEWPUBLIC EXPENDITURESPUBLIC FINANCESPUBLIC REVENUEPUBLIC SECTORPUBLIC SECTOR DEBTPUBLIC SERVICEPUBLIC SERVICESPUBLIC SPENDINGQUALITY OF EDUCATIONREAL GROWTHREAL INTERESTREAL INTEREST RATEREMITTANCESREPAYMENTREPAYMENT CAPACITIESREPAYMENT CAPACITYREPAYMENTSRESERVERETURNRETURNSREVENUE INCREASESROAD MAINTENANCEROAD NETWORKROAD TRANSPORTSAFETY NETSAFETY NETSSHARE OF INVESTMENTSSHORT MATURITYSHORT-TERM DEBTSMALL BUSINESSESSOCIAL CONTRIBUTIONSSOCIAL PROTECTIONSOCIAL PROTECTION EXPENDITURESSOCIAL SECURITYSOCIAL WELFARESOLVENCYSOVEREIGN DEBTSTRUCTURAL REFORMSSUSTAINABILITY ANALYSISSUSTAINABLE FISCAL POLICYTAXTAX ADMINISTRATIONTAX BASETAX CODETAX COLLECTIONTAX EXPENDITURETAX EXPENDITURESTAX LAWTAX PAYMENTSTAX POLICYTAX POLICY ANALYSISTAX RATETAX RATESTAX REFORMTAX REGIMETAX REVENUETAX REVENUESTAX SYSTEMTAXPAYERSTOTAL EXPENDITURETRADE BALANCETURNOVERTURNOVERSWorld Bank10.1596/2807