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Quasi-fiscal activities, hidden government subsidies, and fiscal adjustment in Armenia (Английский)

This paper aims to develop a detailed analysis of quasi-fiscal deficits and subsidies, and their impact on Armenia's fiscal performance in the second part of the 1990s. Based on the flow-of-funds approach, we estimate the magnitude of the quasi-fiscal deficits and the incidence of quasi-fiscal subsidies in Armenia, as well as identify main recipients and sources of quasi-fiscal financing. The principal finding of the paper is that while quasi-fiscal deficits in Armenia remain considerable, their recent decline has been a major contributing factor to Armenia's fiscal adjustment. The paper also shows that households remain a major ultimate recipient of quasi-fiscal subsidies. Thus, the main distortive impact of quasi-fiscal subsidies is on social policy and equity, rather than on enterprise restructuring and private sector performance. Still, the current level of public sector deficit in Armenia remains too high, which requires an additional adjustment effort. The paper suggests that to make fiscal adjustment sustainable a further strengthening of financial control, accounting and reporting in the public sector is needed, including through better Government monitoring of debts and other liabilities accumulated by the large state enterprises and phasing out the phenomenon of implicit (hidden subsidies), such as debt-for-equity swaps. The proposed approach to the analysis of quasi-fiscal deficits and subsidies, based on estimates of accumulated debts in the public sector and its main parts, seems to be fully applicable to other economies in transition, especially to those low-income CIS countries, which are heavily dependent on energy imports.

Подробная Информация

  • Автор

    Lev Freinkman, Gohar Gyulumyan, and Artak Kyurumyan

  • Дата подготовки документа

    2003/09/01

  • Тип документа

    Публикации

  • Номер отчета

    27144

  • Том

    1

  • Total Volume(s)

    1

  • Страна

    Армения,

  • Регион

    Европа и Центральная Азия,

  • Дата раскрытия информации

    2010/07/01

  • Название документа

    Quasi-fiscal activities, hidden government subsidies, and fiscal adjustment in Armenia

  • Ключевые слова

    Poverty Reduction & Economic Management;fiscal adjustment;actuarial deficit;political economy of reform;arrears to energy supplier;foreign exchange reserve accumulation;access to energy resources;advance payment of tax;oil and gas pipeline;budget deficit;public sector deficit;net present value;Energy Sector;tax arrears;budget subsidy;soft budget constraint;multiple exchange rate;high growth rate;public sector operation;Energy Sector Reform;source of financing;accounting and reporting;asset and liability;real exchange rate;economies in transition;copyright clearance center;long-term fiscal sustainability;private sector performance;hidden subsidy;implicit government guarantee;publicly guarantee debt;accumulation of arrears;public sector entity;hard budget constraint;financing of investment;total external debt;educational classroom use;private sector creditor;consumption of energy;nuclear power plant;amount of privatization;provision of good;macroeconomic and fiscal;public sector service;fiscal adjustment effort;exchange rate system;public finance system;social insurance system;domestic interest groups;illusory fiscal adjustment;fines and penalty;high energy price;currency crisis;government deficit;conventional deficit;conventional fiscal;net worth;government budget;fiscal performance;Transition economies;public debt;transition economy;contingent liabilities;enterprise sector;contingent liability;energy subsidies;Tax Exemption;fiscal subsidy;privatization proceeds;deficit country;energy company;fiscal deficit;enterprise restructuring;energy exporter;fiscal outcome;total tax;domestic debt;implicit subsidy;deficit financing;Public Utilities;banking system;energy producer;banking crisis;state enterprises;budget expenditure;international reserve;Bank Credit;electricity tariff;total stock;fiscal policy;Fiscal policies;utility sector;heavily dependent;resource transfer;social policy;social policies;Social Protection;energy import;energy consumer;Public Services;commercial credit;reform process;cash substitute;Financial Sector;foreign reserve;macroeconomic performance;debt profile;Exchange Rates;commercial bank;public liability;money supply;utility company;macroeconomic outcome;water company;commercial term;public holding;budgetary documents;government decision;net liability;deficit level;real sector;gas supplier;residential housing;potential energy;household sector;energy supplies;state holding;Cash Transfer;Macroeconomic Trends;government support;direct credit;budget performance;public asset;government administration;low-income economy;tax debt;large enterprise;public costs;export quota;concessional financing;significant factor;food industry;import quota;bank restructuring;fiscally sustainable;commercial borrowing;stochastic model;subsidized rate;Medical Insurance;government liability;consumer price;borrowing strategy;conventional indicator;liberal trade;total debt;real time;government subsidy;commercial debt;debt restructuring;large debtor;improve revenue;fiscal system;fiscal burden;barter payment;outstanding debt;debt dynamic;tax legislation;public deficit;debt burden;stabilization effort;debt accumulation;macroeconomic crisis;money base;budget arrears;government fiscal;government data;implicit assumption;light industry;external borrowing;asset accumulation;real value;fiscal implication;annex annex;consumption decline;price distortion;price adjustment;relative price;domestic price;energy monopoly;wood processing;construction material;social implications;weighted average;energy monopolies;domestic borrowing;fiscal gap;government's budget;fiscal recovery;unpaid tax;opportunity cost;average pay;energy bill;excessive reductions;world market;commercial entity;free energy;capital gain;adjustment pattern;debt portfolio;currency risk;uninterrupted access;targeted subsidy;implicit tax;capital loss;market reform;implicit liability;public property;fiscal discipline;world price;net transfer;primary source;macroeconomic risk

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