YEREVAN - 2017 LOCAL SELF-GOVERNMENT IN ARMENIA

107 Pages·2017·8.32 MB·English

FOA

CommunitiesFinance
Officers Association
LOCAL
SELF-GOVERNMENT
IN ARMENIA
(2016)
Book 9
Edited by Vahram Shahbazyan,
Ph.D. in Technical Sciences
Yerevan
<Van Aryan>
2017
This book is published by the support of
American people through the United States
Agency for International Development (USAID).
The contents of this publication are the sole
responsibility of the authors and do not necessarily
reflect the views of USAID and U.S. Government.

Dedicated to the bright memory of Davit Tumanyan,
co-author and editor of “Local Self-government in
Armenia (1996-2015)” 8 books

Local Self-government in Armenia (2016),
Book 9, edited by Vahram Shahbazyan – Yerevan, 2017, 240 p.
This book contains 2016 Armenia local self-government monitoring report.
This book is intended for policy and decision makers in the area of decentral-
ization and local self-government, representatives of local self-government bodies,
international and non-government organizations and larger groups of readers inter-
ested in the field.
¡ Communities Finance Officers Association
ISBN 978-9939-70-217-9
CONTENTS
LIST OF TABLES ................................................................................................................................138
LIST OF FIGURES ..............................................................................................................................139
LIST OF ACRONYMS..........................................................................................................................140
PREFACE.............................................................................................................................................141
1. LEGAL AND PROGRAMMATIC ASSESSMENT OF LOCAL
SELF-GOVERNMENT REFORMS......................................................................................................145
1.1. LEGAL ASSESSMENT OF LOCAL SELF-GOVERNMENT REFORMS.................................145
1.2 PROGRAMMATIC ASSESSMENT OF LOCAL SELF-GOVERNMENT REFORMS................151
1.3. PERFORMANCE UNDER INTERNATIONAL COMMITMENTS.............................................152
2. ADMINISTRATIVE-TERRITORIAL DIVISION AND INTER-MUNICIPAL COOPERATION.............154
2.1. ADMINISTRATIVE-TERRITORIAL DIVISION.........................................................................156
2.2. INTER-MUNICIPAL COOPERATION......................................................................................160
3. FORMATION, POWERS, AUTHORITIES AND ACTIVITIES OF LSGS,
PARTICIPATION OF CIVIL SOCIETY IN LOCAL GOVERNANCE.....................................................163
3.1 FORMATION, POWERS, AUTHORITIES AND ACTIVITIES OF LSGS...................................163
3.2 PARTICIPATION OF CIVIL SOCIETY IN THE LOCAL GOVERNANCE..................................167
4. MUNICIPAL ASSETS, DEVELOPMENT PROGRAMS AND FINANCIAL AUTONOMY................169
4.1. MUNICIPAL ASSETS..............................................................................................................170
4.2 MUNICIPAL DEVELOPMENT PLANS AND BUDGETING PROCESSES...............................172
4.3 MUNICIPAL BUDGET REVENUES.........................................................................................173
4.4 DEBT MANAGEMENT.............................................................................................................177
4.5 FINANCIAL ACCOUNTABILITY...............................................................................................177
5. RELEVANCE OF LSG RESPONSIBILITIES AND MUNICIPAL FINANCES..................................178
6. ADEQUACY OF ADMINISTRATIVE STRUCTURE, HUMAN AND INFORMATION
RESOURCES TO MUNICIPAL ISSUES AND INTERNATIONAL ASSISTANCE................................190
6.1 GENERAL CAPACITIES OF LSGS AND MUNICIPAL STAFF.................................................191
6.2 MUNICIPAL SERVICE.............................................................................................................194
6.3 TRAINING OF MUNICIPAL SERVANTS..................................................................................197
6.4 INTERNATIONAL ASSISTANCE..............................................................................................199
7. DELIVERY OF PUBLIC SERVICES ...............................................................................................204
7.1 PUBLIC SERVICES DELIVERED BY MUNICIPALITIES.........................................................204
7.2 MANAGEMENTOFMUNICIPAL(PUBLIC) SERVICES..........................................................213
8. RESULTS OF THE LOCAL GOVERNANCE ANNUAL ASSESSMENT
(LG INDEX FOR 2015 AND 2016).......................................................................................................215
CONCLUSIONS AND RECOMMENDATIONS....................................................................................218
CONCLUSIONS...................................................................................................................................218
RECOMMENDATIONS........................................................................................................................223
APPENDIXES......................................................................................................................................228
List of Tables
Table 1.Administrative-territorial division and population of Republic of Armenia ...........155
Table 2.Institutions conducting joint bases for land tax and property tax and
municipalities conducting bases on their own...........................................................162
Table 3.Elections of LSG bodies in 2016, by marzes
(Gyumri and Vanadzor are not included).................................................................163
Table 4.Election outcome of Gyumri and Vanadzor avaganis .........................................164
Table 5.Political affiliation of directly elected mayors in 2016 ........................................165
Table 6.Quantitative data of municipality mayor authorities
by individual types and sectors...............................................................................166
Table 7.Municipal expenditures on non-financial assets, 2014-2016................................170
Table 8.Receipts on sales of non-financial assets of municipalities, 2014–2016................171
Table 9.Types of municipal budget revenues and their shares in total revenues,
2014-2016 ...........................................................................................................173
Table 10.Share of Yerevan budget revenues in total revenues
of municipal budgets of Armenia in 2016................................................................174
Table 11.Official grants as revenues of municipal budgets in 2014-2016..........................175
Table 12.Fund budget revenues of the RA municipalities
and the share of Yerevan in 2016 ...........................................................................176
Table 13.Shares of local budget expenditures in total public spending and GDP
(2016 data) in Armenia and the Member States of the European Union.......................178
Table 14.Annual approved, adjusted plans of total revenues, expenditures,
surplus/deficit and actual execution of municipal budgets of Armenia in 2016 ............179
Table 15.Per capita revenues and expenditures of municipal budget of Armenia in
2012-2016 (in AMD and USD) ...............................................................................181
Table 16.Actual budget expenditures of the RA municipalities
(including and excluding Yerevan)
and Yerevan municipality, according to functional classification, 2016 ........................183
Table 17.Actual budget expenditures of the RA municipalities
(including and excluding Yerevan) and Yerevan municipality in 2016,
according to economic classification of budget expenditures .....................................186
Table 18.Indicators on education level of mayors by marzes .........................................192
Table 19. Gender distribution in local self-government bodies and municipal staff............192
Table 20.Gender distribution in local self-government bodies and staffs of Yerevan
municipality and administrative districts .................................................................193
138
Table 21.Number of municipal service positions ..........................................................195
Table 22.Number of appraised municipal servants as well as announced and held
competitions to fill open positions ..........................................................................196
Table 23. The ratio of municipal service positions in administrative staffs to the number
of population in Yerevan and marzes ......................................................................196
Table 24.Number of trained municipal servants ..........................................................197
Table 25.Ratio of municipal service expenditures to general public service expenditures
in municipal budgets (2016) ..................................................................................214
Table 26.Results of the Local Governance Annual Assessment
(LG Annual Index, 2015 and 2016) .........................................................................216
List of Figures
Figure 1.Level of urbanization and GDP per capita in Europe, 2015 ..............................160
Figure 2.Per capita actual revenues of the RA municipal budgets in 2012-2016
(in AMD and USD) ...............................................................................................182
Figure 3. Per capita actual expenditures of the RA municipal budgets in 2012-2016
(in AMD and USD)................................................................................................182
Figure 4.Shares of actual budget expenditures of the RA municipalities
(including Yerevan) in total municipal spending, 2016
(by functional classification)....................................................................................184
Figure 5.Shares of current and capital expenditures of municipal budgets
of Armenia (including Yerevan) in total spending for 2012-2016.................................188
Figure 6. Shares of current and capital expenditures of Yerevan municipal
budget in total spending for 2012-2016 ..................................................................188
139
List of Acronyms
ARF Armenian Revolutionary Federation
CAA Communities Association of Armenia
CFOA Communities Finance Officers Association
CoE Council of Europe
CRRC Caucasus Research Resource Center
ENP European Neighborhood Policy
EU European Union
GDP Gross domestic product
ISDTC Information Systems Development and Training Center
LSG Local Self-government
LTD Limited liability company
MMIS Municipal management information systems
MNCO Municipal non-commercial organization
MTAD Ministry of Territorial Administration and Development
NA National Assembly
PAP Prosperous Armenia Party
RA Republic of Armenia
RPA Republican Party of Armenia
SME Small and medium enterprises
USA United States of America
USAID United States Agency for International Development
140
Preface

Communities Finance Officers Association (CFOA) has been monitoring progress in
local self-government reforms in Armenia since the establishment of local self-
government system.
Since 2004, the CFOA has published eight books. Each volume includes reports for
one or more years with analyses and assessments of reforms in the local self-government
sector with subsequent conclusions, and a series of follow-up recommendations on
further progress of the reforms over the years to come.
The monitoring and evaluation of the local self-government system is conducted
according to the methodology developed by the CFOA expert team. The assessment of the
reforms is based on successful implementation of the provisions set out in the RA
legislation, Government programs concerning the local self-government system,
performance of the LGs, financial and non-financial indicators characterizing the state of
local self-government system, and fulfillment of obligations the Republic of Armenia
assumed towards international organizations in the LSG sector.
The content of the 8 previous books on “Local Self-Government in Armenia” was
compiled by using separate sections with studies and analysis in 7 discrete areas of local
governance, conducted by CFOA and independent experts. According to the
methodology, all the sections were compiled in the same format and included the
assessment of local government sub-sectors: legislation and program activities,
administrative-territorial division and inter-municipal co-operation, municipal assets,
finances, local elections, powers and activities of local authorities, local democracy,
administrative structures, municipal management, and service delivery.
The general professional editing of all 8 books was carried out by late David
Tumanyan, Ph.D. in Economics, deputy chairman and board member of CFOA.
Thanks to David Tumanyan's profound professional knowledge, consistency and
dedication, it was possible to maintain the highest academic level and clarity of the
annual reports in recent years, ensuring their comprehensibility for a wide audience:
local government officials and their staff, public sector officials and their staff, university
and post-graduate students, education officials and lecturers, local organizations and
experts in local self-government sector, international organization and experts. We can
state that a cohort of dedicated readers has been formed over the past years, and that the
book is in high demand every year.
While drafting the current annual report on local self-government reforms, we
attempted to preserve the best traditions created by David Tumanyan and improve the
quality of the report, enriching its content and incorporating timely information on local
self-government reforms and developments in Armenia.
This book is the 9th volume on local self-government reforms drafted by CFOA. It is
devoted to the study and coverage of the reforms carried out in 2016 and identifies the
key issues in local self-government sector, draws certain conclusions and offers
recommendations for the solution of these problems and the continuation of the reforms.
This edition is unique in the sense that for the first time in Armenia it makes the
attempt to provide a numerical assessment of local self-government reforms in the frame
141
of the annual report and based on the expert analyzes. The numerical assessment is
based on the calculation of an annual index for Armenia’s local governance (in the form
of a composite index), which enables to explore the dynamics of the reform processes in
Armenia and compare progress and assessments across the years.
For this purpose, in the framework of CELoG program funded by the USAID, as a
supplement to the methodology of annual reports on local self-government reforms,
CFOA and the Caucasus Research Resource Center (CRRC-Armenia) developed the
methodology for annual assessment of local self-government reforms and the calculation
of local self-government index. The analysis is based on the study of international
experience in that area and localized it as much as possible.
According to the methodology, the calculation of local self-government index is
based on five selected fields (directions), 20 functions and 52 indicators. Their choice
stems from their compliance with the Council of Europe 12 principles of good governance
at local level and the peculiarities of local self-government system of Armenia.
To ensure connection with the previous (2015) annual report on local self-
government reforms, the local self-government index was calculated for 2015 and 2016,
allowing to compare the changes in the local self-government system in the last two years
by individual fields and functions. This report provides summary on the results of
assessment of the local self-government system and calculation of local self-government
index.

Vahram Shahbazyan

142
REPORT

LOCAL SELF-GOVERNMENT IN ARMENIA
(2016)

This report has been produced by members of CFOA expert group:

Vahram Shahbazyan (expert group leader), Vahagn Petrosyan,
Davit Margaryan, Knarik Ayvazova (Arabyan), Levon Tumanyan,
Rouben Hayrapetyan and Vahe Sargsyan.