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Increasing fiscal autonomy and fiscal capacity of local authorities in Armenia

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6 May 2021
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Increasing fiscal autonomy and fiscal capacity of local authorities in Armenia

How can states promote decentralisation of powers and competences to local authorities while ensuring a fair distribution of resources and adequate service provision without increasing the fiscal burden on citizens? This is the essence of the question being discussed by senior officials from Austria, Albania, Finland, Italy, and Ukraine in the context of a Peer Review by the European Committee of Democracy and Governance (CDDG) in Armenia this week.

The Ministry of Territorial Administration and Infrastructure (MTAI) of the Republic of Armenia is currently preparing amendments to the legislative framework pertaining to local self-government in order to further fiscal and financial decentralisation, support the reorganisation of tax administration for local self-government units, and promote adherence to Article 9 of the European Charter of Local Self-Government – Financial resources of local authorities.

In successive monitoring reports, the Congress of Local and Regional Authorities of the Council of Europe has raised concerns about the level of financial autonomy and access to adequate financial resources of local authorities in Armenia. It has also noted discrepancies in the financial equalisation system.

Organised by videoconference, the Peer Review team will meet with a broad range of officials and stakeholders, and participate in a public roundtable discussion on possible reforms to the equalisation system and measures to improve fiscal capacity and enhance local taxes. This type of intergovernmental exercise falls at the intersection of Council of Europe monitoring, standard-setting and cooperation activities.

The Council of Europe, through the Democratic Development, Decentralisation and Good Governance in Armenia project implemented by the Centre of Expertise for Good Governance, has been supporting this process. Project activities have included the provision of legal and policy advice and the preparation of a baseline assessment of standard expenditure needs and a pilot benchmarking of municipal services. The project is implemented in the context of the Council of Europe Action Plan for Armenia and funded by the Austrian Development Agency.